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Ethereum added this ‘gas’ component to provide an munity.’ Confusion can exist regarding who owns,
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user-defined upper limit on the computational power controls and can legally act and conduct business on
desired in terms of the dApp being processed on the behalf of a blockchain project.
Ethereum blockchain. In many public blockchains, management can
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tend to circulate among a small group of ‘core’
4�5 Governance of DLTs and Inherent Risks developers who are primary contributors to an open
Decentralization is an underlying premise of block- source project. Consensus mechanisms are used to
chain technology and can influence perception on manage decentralized governance, such as the for-
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how efforts should be governed. malization of Bitcoin Core’s voting process in its Bit-
There is no standard model of ownership, organi- coin Improvement Proposals.
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zational structure, formalities or governance mech- The risk though, especially with public blockchains,
anisms for many (public) DLT projects. Criticisms is that if the software development process is cen-
of these models are often that they are partially if tralized to a small number of developers, the system
not fully centralized and parties to a transaction are as a whole could not be considered decentralized,
still dependent upon a trusted third-party interme- even if mining was widely distributed and there were
diary to conduct business. That is, even private and thousands of nodes spread throughout the globe. It
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permissioned DL implementations are reliant to a is not only the ‘blockchain participants’ and ‘cliques’
large degree on the evolution of the public ‘mainent’ who undertake improvements to the underlying
blockchain, for example Ethereum. 58 code which render the concept of decentralization
DLTs which incorporate higher institutional trust somewhat fuzzy, but also that to undertake many of
and centralization (such as private and/or permis- the public type trading of crypto-tokens, a level of
sioned blockchains) more often include only one or centralization is required, particularly through cen-
a few parties and are handled in a more traditional tralized) crypto trading exchanges. Some, but not all
fashion are directly regulated, but invariably all require the
Challenges of governance are most readily appar- identification of persons or entities doing trading
ent with open source community-led blockchain through the exchange. Unlike Bitcoin, Ethereum
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projects (such as Bitcoin) which did not originate has to a large degree had more of a collegial evolu-
under the umbrella of a formalized legal entity but tion, using ERCs - Ethereum Request for Comment
rather a project which is now of and for ‘the com- – to make improvements to the Layer 1 main-net.
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5 COMMERCIAL AND FINANCIAL USES CASES FOR DLTS
5�1 Overview 5�2 Evolving Use Cases of Distributed Ledger Tech-
In the financial industry, and in business networks nologies
generally, data and information currently mostly flow
through centralized, trust-based, third-party systems • Financial: Clearing and settlement (C&S); Clear-
such as financial institutions, clearing houses, and ing houses; Correspondent banking; Credit pro-
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other mediators of existing institutional arrange- vision; Derisking ; Digital Fiat Currencies; Factor-
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ments. These transfers can be inefficient, slow, costly, ing; Insurance contracts; Interoperability between
and vulnerable to manipulation, fraud and misuse. banking and payment platforms; Remittances;
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Bilateral and multilateral agreements are need- Results-Based Disbursements; Share registries;
ed, which are typically recorded by the parties to Shareholder voting ; Small medium enterprise
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the agreements in different systems (ledgers). As (SME) finance; Trade finance and factoring; Taxes 71
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noted above, a number of blockchains and DLTs have • Financial Integrity: Electronic know your custom-
emerged in recent years that aim to address these er (e-KYC); Identity (ID) systems
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issues. Each may have its own different use cases, • Legal: Notarization of data ; Property registration
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offering benefits such as larger data capacities, • Utilitarian: Agricultural Value Chains; Food Sup-
transparency of and access to the data on the block- ply Management; Medical Tracing; Project Aid
chain, or different consensus methods. Monitoring; Supply Change management; Internet
of Things (IoT)
• Intellectual Property: Digital rights management
Security Aspects of Distributed Ledger Technologies 17