Want to go beyond Bitcoins? We outline what is needed for a successful blockchain industry in 9 simple building blocks. We view each one as critical infrastructure to enable sustainable commercial businesses to operate on a blockchain.

1. 9 BUILDING BLOCKS
FOR SUCCESS
What’s required for a sustainable
blockchain industry
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2. 1. Cross-Chain Bridges
2. On / Off Ramps
3. Roles & Responsibilities
4. Identity
5. Reputation
6. Effective Governance
7. Stable token of exchange
8. Usable Security
9. Economically Viable Processing

3. • Growing ecosystem of blockchain‘s’
• Made up of both increasingly specialised
private blockchains designed for enterprise
grade solutions and customisations
• Or Sidechains off core bitcoin blockchain
protocol but that link in parallel
• Promises blend of private / public chains
• Need for ease of ‘cross-chain’ calls
1. Bridges

4. 2. On / Off Ramps
• Regulation highly localised / emotionally led (fear
of crypto / Bitcoin in particular)
• Encourages blockchains to start as decentralized
as possible then localise pragmatically
• Leverage friendly jurisdictions with history in
innovative financial services industries (e.g. Isle of
Man)
• Big opportunity for locales that move first to
become epicentre of physical economy

5. 3. Roles & Responsibilities
• No clear successful business models for
decentralized economy as yet
• If you don’t own code or data how do you
make money in a way you can protect?
• Ethical and legal requirement for clear
definitions and responsibilities
• Watch out for legal precedents and landmark
prosecutions that define space

6. 4. Identity
• Semi / Pseudo Anonymity as current basis of
blockchain is limiting for commercial use without
some linkage into real world
• Especially legal requirements like KYC (Know Your
Customer) #Finserv
• Identification currently a duplication-of-work for
blockchain start-ups
• ID with real world verification for people and
possessions a must
• As well as universal ID for DApps login

7. 5. Reputation
• Reputation in a ‘trust-less’ marketplace is a challenge
• Need strong incentives and disincentives for behaviour.
• Currently reputations siloed (best e.g. Dark markets)
• Questions around Smart Contracts & their real world
enforcement
• Universal reputation; individuals and collectives of
individuals beyond specific purpose
• White-listing (building trust networks) vs. black-listing
is central debate

8. 5. Governance
• Who drives core development of base layers such as
Ethereum or Bitcoin Blockchain and to what agenda?
• How is this financed and what transparency is offered?
• Balancing serving libertarian vs. commercial agendas
challenging
• How is core development aligned with niche vertical
interests and trade-offs
• Is there a role for est. trade organisations to lead dev of
industry side-chain
• Untangling Bitcoin 1% interests and broader more
diverse ecosystem

9. 6. Stable Token of Exchange
• 99% of Bitcoins are in the hands of 1% of people
making vulnerable to market manipulation
• Bitcoins exchanged largely for exchange itself
rather than utility. Increasingly so by VCs and
traders
• Price volatility exposes merchants treasuries to
too much risk to make viable means of exchange
• Need tokens that can be pegged to currency of
business costs at point of transaction

10. 7. Usable Security
• Basic tech is extremely secure but history is riddled with
hacks & theft
• Why? Largely centralisation. If Bitcoin exchange stores
private keys its Bitcoin addresses in a badly secured
database server bad actor obtains access to this server,
they can steal the Bitcoin funds.
• The weakest links are in the technologies surrounding the
blockchain and the people using them.
• Encrypting all interactions between components and
actors, and handling the encryption keys in a secure way.
• We expect to see more user-friendly security principles.
E.g. two-factor authentication, multisig transactions and
hardware cold storage wallets etc. will become more
mainstream.

11. 9. ECONOMICALLY VIABLE PROCESSING
• Economics of Bitcoin mining only make sense at a centralised
industrial scale
• Which is in direct opposition to Bitcoins algorithm which seeks
to cancel out these efficiencies
• In other words its deliberately wasteful. Which is unsustainable
both from a financial and ecological perspective.
• Pressure to reduce costs and increase output could result in
sweat shops.
• Possible solutions; 21s putting mining into everyday devices,
tapping into existing latent processing networks such as
gaming or replacing with P2P distributed systems of users

12. Follow
@blockstarsio