DIGITAL ASSET & DIGITAL CURRENCY

Blockchain Roles in Financial Industry

Andry Alamsyah
10 Juni 2024
 Introduction
Andry Alamsyah
•Researcher / Data Scientist / Blockchain Innovator
•Associate Professor, School of Economic and Business, Telkom University
•Chief and Founder of Lab. Social Computing & Big Data
•Faculty Members, Bank Indonesia Institute
•Chairman & Founder Indonesian Data Scientist Society (AIDI)
•Honorary Member of Asosiasi Blockchain Indonesia (ABI)

Research Field :
Social Computing, Social Network, Complex Network / Network Science, Computational Social Science, Data Analytics, Big Data,
Artificial Intelligence, Blockchain Technology, Disruptive Innovation, ICT Entrepreneurial Business, Token / Crypto Economy
Education :
S1 : Mathematics - ITB, Topic: Statistics
S2 : Informatics - Universite Picardie, France, Topic: Information System,
S3 : Electro and Informatics - ITB, Topic: Social Network, and Big Data
Links :
email andry.alamsyah@gmail.com
blog andrya.staff.telkomuniversity.ac.id
repository telkomuniversity.academia.edu/andryalamsyah
repository researchgate.net/profile/Andry_Alamsyah
repository arxiv.org/a/0000-0001-5106-7561
linkedin linkedin.com/andry.alamsyah
twitter twitter.com/andrybrew
 Blockchain Technology (in Short)
1 3
2

decentralized peer to peer

distributed ledges & trust

ordered records
Intermediaries removal
5 6
4

Encryption & Hashing

Network
Proof of Work
Consensus
Immutable
tampered-proof smart contract
created and enforced by the code
security orientation
 Blockchain Features
Trust Machine & Token Economies

1. Distributed Ledger Technology (DLT) secured by Cryptographic mean. 5.Support Internet of Value (today is Internet of Information).
2.DLT is Transparent; Increase E ciency; Trust Machine. 6.Token -> self organize product to create emergent coordination, enable
3.Separation between Identity and Identi ers; Secure but Protect Privacy. to coordinate human/agents/things activities in much larger scale
4.Smart Contract automate transaction between entities (human or things); 7.Token Economies -> to reward / incentives "good" behavior
Modular; Programmable. 8.Blockchain -> Information Technology + Institutional Technology
ffi
fi
Why Finance Needs Blockchain
Internet Evolution to Decentralization Idea
From This

1. Central Authority, Central Decision

2. Data Exploitation (Privacy Problem)
3. Intermediation
4. No native settlement / less incentivization

To This

1. User Ownership
2.Enhance Security
3.Censorship Resistance
4. Innovation in the Digital Economy
 Financial Innovation
Decentralized Finance (DeFi)

Rely on extensive intermediation - limited Asset move through open, secure settlements
hours, high latency, manual error. network that run 24/7
DeFi Real-World Applications:
Remittance, Loans, Exchange, Trading, etc.. Infrastructure is closed and proprietary Infrastructure is open + open liquidity

Global protocol and agnostic to jurisdictional

High compliance burden
regulations -> compliance at app layer

New entrants require licenses/partnership

Startup costs are low
with banks

borrow & token exchange & market prediction & stablecoin

Corporations own the services + extract
Users own the services + capture value
lending value from users
trading crowd wisdom project
 DeFi

DeFi Layer

๏ The ability to apply composability in new categories expanded as the

“building blocks” of DeFi were established
๏ Rapid experimentation led to the rise of many exciting projects
DeFi Ecosystem
 Web3/Crypto Transaction Mechanism Smart Contract
inside Blockchain

SMART CONTRACT

Execute Command

Implemented on Web3
DAO = Decentralized Autonomous Organization
 Tokenization

Tokenization unites Tradi and DeFi with share belief that all
assets will eventually move onchain, including RWA.
 NFT as Digital Asset
• NFT is a unique and non-interchangeable unit of data stored on a
digital ledger (blockchain).

• NFTs use blockchain technology to provide public proof of ownership. Their

lack of interchangeability (fungibility) distinguishes them from
blockchain cryptocurrencies such as Bitcoin.
 Digital Currency

Feature Stablecoins (Private Issuance) CBDCs (Public Issuance)

Issuer Private Company Central Banks (government)

Value Stability Pegged to Assests Equivalent to National Currency

Regulation Value by Jurisdiction, Private Regulation Centralized Regulation

Transparency Depends on Issues Policy Managed by Central Bank

Use Cases Payments, Remittances, Tradings, DeFi Apps. National Payment, Financial Inclusion, Monetary Policy

Technology Blockchain, Smart Contract Blockchain or Other Non DLT

Accessibility Varies, Generally High If on Public Blockchain Intended for Widespread Public Use
CBDC = Central Bank Digital Currency
REVIEW
F1000Research 2023, 12:457 Last updated: 01 AUG 2023

Our Research Review

future internet

The Taxonomy of Blockchain-based Technology in the A Review on Decentralized Finance Ecosystems

Andry Alamsyah * , Gede Natha Wijaya Kusuma and Dian Puteri Ramadhani
Financial Industry [version 2; peer review: 2 approved]
School of Economics and Business, Telkom University, Bandung 40257, Indonesia;
Andry Alamsyah , Syahputra Syahrir nathawijaya@student.telkomuniversity.ac.id (G.N.W.K.); dianpramadhani@telkomuniversity.ac.id (D.P.R.)
* Correspondence: andrya@telkomuniversity.ac.id
School of Economics and Business, Telkom University, Bandung, West Java, Indonesia

Abstract: The future of the internet is moving toward decentralization, with decentralized networks
and blockchain technology playing essential roles in different sectors. Decentralized networks offer
v2 First published: 02 May 2023, 12:457 Open Peer Review equality, accessibility, and security at a societal level, while blockchain technology guarantees security,
https://doi.org/10.12688/f1000research.133518.1
Latest published: 18 Jul 2023, 12:457 authentication, and openness. Integrating blockchain technology with decentralized characteristics
https://doi.org/10.12688/f1000research.133518.2 Approval Status has become increasingly significant in finance; we call this “decentralized finance” (DeFi). As of
January 2023, the DeFi crypto market capitalized USD 46.21 billion and served over 6.6 million users.
1 2
As DeFi continues to outperform traditional finance (TradFi), it provides reduced fees, increased
Abstract
inclusivity, faster transactions, enhanced security, and improved accessibility, transparency, and
The decentralized approach of blockchain technology has resulted in version 2
programmability; it also eliminates intermediaries. For end users, DeFi presents asset custody
innovations across various industries, including finance which is facing (revision)
challenges due to the rise of decentralized finance (DeFi) in the
view view options, peer-to-peer transactions, programmable control features, and innovative financial solutions.
18 Jul 2023
market. Decentralization improves business processes and spurs Despite its rapid growth in recent years, there is limited comprehensive research on mapping DeFi’s
product innovation through increased transparency and removing benefits and risks alongside its role as an enabling technology within the financial services sector. This
version 1
intermediaries. A taxonomy created through a literature review research addresses these gaps by developing a DeFi classification system, organizing information, and
02 May 2023 view view
outlines the four dimensions of these advancements: key drivers, clarifying connections among its various aspects. The research goal is to improve the understanding
products, benefits, and emerging threats. Proposed solutions are also of DeFi in both academic and industrial circles to promote comprehension of DeFi taxonomy. This
included to tackle the threats. 1. Giulio Caldarelli , Universita degli Studi di
well-organized DeFi taxonomy aids experts, regulators, and decision-makers in making informed and
Torino, Turin, Italy strategic decisions, thereby fostering responsible integration into TradFi for effective risk management.
Keywords
Blockchain, Financial Innovation, Decentralization, FinTech, This study enhances DeFi security by providing users with clear guidance on existing mechanisms
2. Wisnu Uriawan , Universitas Islam Negeri
Decentralized Finance, Review and risks in DeFi, reducing susceptibility to misinformation, and promoting secure participation.
Sunan Gunung Djati Bandung, Bandung,
Additionally, it offers an overview of DeFi’s role in shaping the future of the internet.
Indonesia
Keywords: blockchain technology; digital economy; decentralized finance; financial institutions;
Any reports and responses or comments on the
Citation: Alamsyah, A.; Kusuma, traditional finance
A Taxonomy on Blockchain-based Technology in the article can be found at the end of the article. G.N.W.; Ramadhani, D.P. A Review
on Decentralized Finance Ecosystems.

Financial Industry: Drivers, Applications, Benefits, and Future Internet 2024, 16, 76. https://
doi.org/10.3390/fi16030076 1. Introduction

Threats
Corresponding author: Andry Alamsyah (andrya@telkomuniversity.ac.id)
Author roles: Alamsyah A: Conceptualization, Data Curation, Formal Analysis, Methodology, Supervision, Validation, Writing – Review &
Academic Editor: Gianluigi Ferrari The development of the internet has led to the emergence of blockchain technology,
which has the potential to improve various aspects of human life significantly. Blockchain
Editing; Syahrir S: Data Curation, Formal Analysis, Resources, Validation, Visualization, Writing – Original Draft Preparation Received: 31 December 2023
technology has emerged as a transformative force with promising implications in the digital
Revised: 7 February 2024
Competing interests: No competing interests were disclosed. realm [1]. Blockchain technology offers a plethora of advantages, including enhanced
Accepted: 21 February 2024
Grant information: The author(s) declared that no grants were involved in supporting this work. credibility, transparency, accessibility, and cost-effectiveness, thereby positioning it as a
Andry Alamsyah* and Syahputra Syahrir
Copyright: © 2023 Alamsyah A and Syahrir S. This is an open access article distributed under the terms of the Creative Commons
Published: 26 February 2024
viable solution to tackle the persistent issue of financial inclusion faced by the unbanked
Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly population [2]. Blockchain technology finds widespread adoption across diverse sectors
cited.
such as education, healthcare, and finance, showcasing its versatility and relevance [3].
School of Economic and Business, Telkom University, Bandung, Indonesia
How to cite this article: Alamsyah A and Syahrir S. The Taxonomy of Blockchain-based Technology in the Financial Industry
Furthermore, blockchain technology’s presence as a potent enabler fosters anticorruption
[version 2; peer review: 2 approved] F1000Research 2023, 12:457 https://doi.org/10.12688/f1000research.133518.2 Copyright: © 2024 by the authors.
andrya@telkomuniversity.ac.id Licensee MDPI, Basel, Switzerland. efforts, adding another layer of societal significance [4]. In the financial sector, the rise
First published: 02 May 2023, 12:457 https://doi.org/10.12688/f1000research.133518.1
syhptrsyahrir@gmail.com This article is an open access article of DeFi has proven instrumental, particularly within the crypto economic phenomena.
distributed under the terms and Prominent DeFi platforms, including Ethereum, Binance Smart Chain, and Tron, play
conditions of the Creative Commons pivotal roles in this landscape. It is worth noting that DeFi implementations can be
Attribution (CC BY) license (https:// conducted on authorized distributed ledger technology (DLT) platforms or alternative
creativecommons.org/licenses/by/ technologies that offer akin functionality [5].
Page 1 of 31
Abstract. Blockchain technology, renowned for its decentralization capabilities, 4.0/).

has led to numerous innovations across various sectors. One of the most heavily
regulated sectors, the financial industry faces a significant challenge as
Future Internet 2024, 16, 76. https://doi.org/10.3390/fi16030076 https://www.mdpi.com/journal/futureinternet
decentralized finance (DeFi) advantages are increasingly recognized and
adopted. The decentralized nature of blockchain technology has two primary
facets: improved operational efficiency and product innovation. The first facet
concerns transparent record-keeping, establishing trust in business processes,
enhancing efficiency, and reducing stakeholder coordination efforts. The second
aspect involves the creation of innovative digital financial products that
circumvent intermediaries, ensure security, and maintain privacy. However, most
practical implementations and academic resources primarily focus on the
centralized paradigm within the financial industry. This chapter, therefore,
proposes a taxonomy that outlines how the aspects above can be realized. Our
THANK YOU
& any question?