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The best free research papers on #Fintech and #Blockchain

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There’s been a large number of white papers produced recently about Fintech and Blockchain, so I decided to collate the most notable ones here.  All links are to file downloads and if I’ve missed any, please let me know.

Bitcoin: A Peer-to-Peer Electronic Cash System (9 pages, October 2008)

The origins of the whole thing in this 2008 white paper by Satoshi Nakamoto.

Abstract: A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

Bitcoin and Cryptocurrency Technologies  (308 pages, February 2016)

A free 300 page book from Princeton University.  

Abstract: There’s a lot of excitement about Bitcoin and cryptocurrencies. Optimists claim that Bitcoin will fundamentally alter payments, economics, and even politics around the world. Pessimists claim Bitcoin is inherently broken and will suffer an inevitable and spectacular collapse. Underlying these differing views is significant confusion about what Bitcoin is and how it works. We wrote this book to help cut through the hype and get to the core of what makes Bitcoin unique. To really understand what is special about Bitcoin, we need to understand how it works at a technical level. Bitcoin truly is a new technology and we can only get so far by explaining it through simple analogies to past technologies. We’ll assume that you have a basic understanding of computer science — how computers work, data structures and algorithms, and some programming experience. If you’re an undergraduate or graduate student of computer science, a software developer, an entrepreneur, or a technology hobbyist, this textbook is for you. In this book we’ll address the important questions about Bitcoin. How does Bitcoin work? What makes it different? How secure are your bitcoins? How anonymous are Bitcoin users? What applications can we build using Bitcoin as a platform? Can cryptocurrencies be regulated? If we were designing a new cryptocurrency today, what would we change? What might the future hold?

National Security Implications of Virtual Currency (102 pages, December 2015)

Interesting report commissioned by the US Military and Department for Homeland Security and written by Rand Corporation on the possible uses of virtual currencies to undermine national security.

Abstract: This report examines the feasibility for non-state actors, including terrorist and insurgent groups, to increase their political and/or economic power by deploying a virtual currency (VC) for use in regular economic transactions. A VC, such as Bitcoin, is a digital representation of value that can be transferred, stored, or traded electronically and that is neither issued by a central bank or public authority, nor necessarily attached to a fiat currency (dollars, euros, etc.), but is accepted by people as a means of payment. We addressed the following research questions from both the technological and political-economic perspectives: (1) Why would a non-state actor deploy a VC? That is, what political and/or economic utility is there to gain? How might this non-state actor go about such a deployment? What challenges would it have to overcome? (2) How might a government or organization successfully technologically disrupt a VC deployment by a non-state actor, and what degree of cyber sophistication would be required? (3) What additional capabilities become possible when the technologies underlying the development and implementation of VCs are used for purposes broader than currency? This report should be of interest to policymakers interested in technology, counterterrorism, and intelligence and law enforcement issues, as well as for VC and cybersecurity researchers.

Two Deutsche Bank Papers:

Blockchain – attack is probably the best form of defence (3 pages, July 2015)

Abstract: Debate over blockchain technology is raging in many online and offline media at present. In principle, the technology constitutes a decentralised ledger system that can be coordinated via peer-to-peer (P2P) networks. Any ownership or security issues arising in connection with the decentralised transactions conducted across the ledger system are handled by P2P mechanisms as well, i.e. also without a central node. Ownership status is established via the digital exchange of cryptographic keys (public vs private), while fraudulent transactions can largely be ruled out with the help of the cryptographic "proof of work" system. Using a proof of work, blockchain technology enables the rapid, inexpensive transfer of assets and financial products between individuals who neither know nor trust one another, without a compelling need for an intermediary to reduce existing information asymmetries.

FinTech 2.0: Creating new opportunities through strategic alliance (28 pages, February 2016)

Abstract: The degree to which the payments industry has changed in just a decade is off the scale. We’ve witnessed the arrival of new currencies, technologies, business models and forms of transactions; all within an environment of global economic upheavals and increasingly comprehensive regulation. The most significant change has been the arrival of new players; non-bank financial institutions (NBFIs) that bring a groundswell of innovation and are turning market models on their head. Digitalisation has come in overwhelming waves, driven by the growth of e-commerce – first in the B2C, and now the B2B space – and the proliferation of smart devices. With it has come continuous innovation to meet the demand for technologies that drive efficiency, lower transaction costs and boost convenience. Innovative and nimble new players – fintechs and digital ecosystems – have entered the payments game, creating increased competition for already-pressured banks. But without access to a client base, the expertise to navigate the regulations and licensing of the finance industry, client confidence, and robust global infrastructure, these new entrants can only go so far on their own. Collaboration between incumbents and new players will be essential to fully comprehend the effects (both positive and negative) of technological developments on the industry’s risk profile. Disruption in payments will continue, with ongoing innovation shaping customer behaviours, business models and the structure of the industry. The time has come for one further change; a shift in mindset from one of competition to collaboration. By exploring strategic partnerships, traditional banking providers and new innovators can together create long-term success and revolutionise the payments market and wider financial sector for the benefit of all.

The Fintech 2.0 Paper: rebooting financial services (20 pages, June 2015)

Not specifically just about blockchain, but the first paper to gain headlines as it was released by a bank – Santander InnoVentures – talking of billions of dollars of savings from blockchain use cases.

Abstract: Over the last decade, however, a new source of innovation in financial services has emerged from financial technology start-ups (“fintechs”) and technology companies (“techos”). These new firms have been quicker than banks to take advantage of advances in digital technology, developing banking products that are more user-friendly, cost less to deliver and are optimised for digital channels. This relative success is unsurprising. These new players are less burdened by the demands of regulatory compliance which banks are subject to. They are unencumbered by complex and costly to maintain legacy systems. They can focus on creating single-purpose solutions, designed to offer an improved experience within just one product or service. They are more in tune with the peer-to-peer (P2P) culture engendered by the explosion of social media. And they are smaller organisations, designed for the purpose of innovation. Capital has flowed into the fintech sector: $23.5 billion1 of venture capital investment in 2013/14. Of this investment, 27% has been in consumer lending, 23% in payments and 16% in business lending. Fintechs have two unique selling points: better use of data and frictionless customer experience. But to date these have been limited to relatively simple propositions such as e-wallets and P2P lending.

Banking on Blockchain: Charting the Progress of Distributed Ledger Technology in Financial Services (28 pages, January 2016)

Discussion with a group of financial services experts about use cases of blockchain in capital markets, payments and trade finance.

Abstract: Blockchain – the shared ledger technology which allows any participant in a business network to see the system of record – will have a transformative impact on a number of industries, including financial services, in the future. Blockchain is still in its relative infancy, but a number of initiatives under way are already driving its progression to an industrial solution which will yield several important benefits in the context of the transfer of assets within business networks. Today, participants in business networks are all maintaining their own traditional ledgers to record transactions between them within their ecosystems. Despite efforts to reduce the complexity and increase the interconnectedness of these systems through investment in integration and B2B technologies, business network participants are still typically swapping files of data between them. As a result, the processes to underpin asset ownership and asset transfer in business networks are frequently inefficient, expensive and vulnerable. Blockchain holds the potential for all participants in a business network to share a system of record. This replicated, shared ledger will provide consensus, provenance, immutability and finality around the transfer of assets within business networks – reducing costs, complexity and time, underpinning shared, trusted processes, enabling trusted recordkeeping and improving discoverability.

Blockchain in Capital Markets: The Prize and the Journey (24 pages, February 2016)

Expanding on the work with Santander, Oliver Wyman then took a deep dive into blockchain use cases in capital markets with Euroclear.

Abstract: The blockchain concept, most known for being the technology underpinning Bitcoin, has generated a huge amount of interest within capital markets. Blockchain (or distributed ledgers) offers a new approach to data management and sharing that is being proposed as a solution to many of the inefficiencies afflicting the industry. The prize on offer is a new architecture, where all capital market participants work from common datasets, in near real-time, and where supporting operations are either streamlined or made redundant. Technology experts in Fintech start-ups, incumbent market infrastructure providers and banks are working on the underlying technology and its potential uses. However, the journey from today’s system to a new technological paradigm will take time. The obstacles to be overcome are significant, and it is far from clear what will ultimately emerge. We see three routes to the adoption of the technology: • Challenger disruptions developed outside of the core capital markets ecosystem. We expect to see these in the next 18 to 24 months. • Collaborative efforts to shift the existing value chain to blockchains. While such efforts are already starting, with potentially massive benefits, it is likely to take more than ten years to overhaul core parts of the system. • Mandated policy where supervisors direct the industry to introduce new market infrastructure, so that costs are reduced or that operational or systemic risk is lessened. In order to work together to shape a new future, the industry needs to take a collective view on the potential of the technology. It must embrace this potential, show patience with its development and invest in various innovative solutions to bring it to bear. It is up to major established players in the market to work with innovators to develop standards, while also preserving the existing strengths of the ecosystem, and navigating the complex worlds of regulation and legal oversight.

How Can Cryptocurrency and Blockchain Technology Play a Role in Building Social and Solidarity Finance? (25 pages, February 2016)

Nice paper commissioned by UNICEF and written by Brett Scott on the opporuntinty to use blockchain for social change.

Abstract: The decentralized digital currency Bitcoin—and its underlying “blockchain” technology—has created much excitement in the technology community, but its potential for building truly empowering social and solidarity-based finance has yet to be tested. This paper provides a primer on the basics of Bitcoin and discusses the existent narratives about the technology’s potential to facilitate remittances, financial inclusion, cooperative structures and even micro-insurance systems. It also flags up potential points of concern and conflict; such as the tech-from-above “solutionism” and conservative libertarian political dynamics of some of the technology start-up community that surrounds Bitcoin. As a way of contrast the paper considers “blockchain 2.0” technologies with more overtly communitarian ideals and their potential for creating “cooperation at scale”. It concludes with suggestions for future research.

Distributed Ledger Technology: beyond block chain (88 pages, January 2016)

A recent paper from the UK Government’s Chief Scientific Officer promoting the benefits of blockchain ledgers for tax collection, benefits distribution and passport issuance.

Abstract: The progress of mankind is marked by the rise of new technologies and the human ingenuity they unlock. In distributed ledger technology, we may be witnessing one of those potential explosions of creative potential that catalyse exceptional levels of innovation. The technology could prove to have the capacity to deliver a new kind of trust to a wide range of services. As we have seen open data revolutionise the citizen’s relationship with the state, so may the visibility in these technologies reform our financial markets, supply chains, consumer and business-to-business services, and publicly-held registers. We know there will be challenges as Distributed Ledgers mature and disrupt how we think about and store data. The UK is in a unique position to explore those challenges and help maximise the benefits to our public services and our economy. We already have world-class digital capability, innovative financial services, a strong research community and growing private sector expertise. It is vital that our key assets – including the Alan Turing Institute, Open Data Institute and the Digital Catapult – work together with the private sector and with international partners to unlock the full potential of this technology.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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