Page 151 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

2 DLT designs

2.1 Overview

As noted above, there are many different types of DLTs. While there are still significant challenges in the
development and implementation of DLTs, many incorporate some or all of the following design features:

• cryptographic techniques to reach consensus on data entry and accuracy
• scalability
• transparency of data entry

• authentication of the entry of data
• disintermediation of trust
• replication of data to avoid single point of failure

• immutability of the data record
• evidence of tampering
• borderless

• quick to update
• permanent uptime
• access control & authentication through cryptographic keys

• smart, self-executing contracts. 34
New DLTs are constantly being announced. Hence, just a sample of these are enumerated below. 36
35

2.2 Bitcoin

As noted earlier, Bitcoin is a cryptocurrency and is considered the first DLT. It uses the public, permissionless,
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Bitcoin blockchain where each transaction is given a unique cryptographic number. It also uses a POW
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consensus algorithm.

2.3 Ripple

Ripple developed the open source codebase that is used to run the Ripple Consensus Ledger (RCL). This
is a distributed ledger which uses a digital currency – called XRP ‒ as its native asset. The Ripple network
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differentiates itself from most other DLTs in that it is designed specifically for payments and supports payments
in any currency, including fiat currencies.

The Ripple network’s open payment network is underpinned by the RCL which is a simpler type of DLT, providing
instant, certified, and low cost international payments targeted at banks and non-bank financial services

34 Not all DLTs have smart contract capabilities. For example, Bitcoin lacks smart contract capabilities.
35 For a sample of those announced up to November 2016, see Coindesk (2016) State of Blockchain Q3 2016, available at http://
www. slideshare. net/ CoinDesk/ state- of- blockchain- q3- 2016.
36 The top 10 cryptocurrencies as of November 2016 were (in ranking order): Bitcoin, Ethereum, Ripple, Litecoin, Monero, Ethe-
reum Classic, Steeem, Dash, NEM, and MaidSafeCoin. See Coindesk (2016) 6 Takeaways from CoinDesk's Q3 State of Blockchain,
available at https:// goo. gl/ JCFOSO .
37 See Section 1.1; and Narayanan et al (2016) ibid for an extensive overview of Bitcoin technology.
38 Blockchain technology is often incorrectly conflated with Bitcoin: although Bitcoin uses blockchain technology, other blockchains
are, of course, not ‘Bitcoin.’
39 XRP was pre-mined. In other words, unlike some other virtual currencies like Bitcoin, XRP ‘coins’ were fully generated prior to
their distribution.

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