The BitFury Group Issues White Paper: “Digital Assets on Public Blockchains”

White paper available here.

EXECUTIVE SUMMARY

Today the BitFury Group issued a white paper titled, “Digital Assets on Public Blockchains,” which explores how digital assets can be securely stored and transferred on the bitcoin-secured public Blockchain.

A digital asset is a floating claim of a certain service or goods, ensured by the asset issuer, that is governed using computer technologies and the Internet.

Throughout the compilation of this white paper, The BitFury Group found that using blockchain infrastructure for digital asset management would allow the global economy to create purely digital assets and manage them entirely online. Our white paper concludes that this allowance opens many new doors to opportunity throughout the world.

Digital assets secured on blockchains could prove effective both in established financial services (e.g., for securities) and on emerging consumer-to-consumer and Internet of Things (IoT) markets. In the latter case, digital assets could be used in a variety of applications, including innovative financial services (e.g., crowdfunding, charity, peer-to-peer lending), smart property, digital subscription / access, and event tickets. Use of blockchains could also facilitate management of assets by businesses, e.g., for discounts, gift cards, vouchers, and coupons. Blockchains could also prove effective in reducing the cost and expanding the reach of electronic money services for currencies both pegged to fiat money and alternative currencies. Additionally, the algorithmically enforced properties of public blockchains, including impossibility of counterfeit and increased transparency and auditability, could prove attractive for regulatory bodies.

The BitFury Group white paper explores the relative merits and risks of the various types of blockchains for asset management and concludes that public blockchains alone could create the ubiquitous infrastructure for the Internet of Value (IoV). In contrast, private blockchains retain reliance on trusted third parties for basic operations, thus limiting their innovative potential. A blockchain secured by bitcoin is more secure than alternatives, both in terms of attack costs and intense review by cryptographers. While the bitcoin protocol currently lacks a native support for user-defined assets, digital assets could be implemented with the help of overlay asset protocols, such as colored coins. An alternative to overlay protocols is blockchains with native support of digital assets, which could be pegged to the bitcoin ecosystem.

In summary, blockchains could be one of the most transformative technologies for digital asset management and its growth potential is significant. Public multi-asset blockchains could form the basis for the IoV — a global, ubiquitous, largely permissionless network for digital asset transfer. While the technologies for this hypothetical network are not yet mature, and the operation of the network poses unsolved regulatory and legal challenges and hurdles, blockchains could transform asset transfer in the same way the Internet transformed data transfer.

The BitFury Group is committed to the growth of the bitcoin and blockchain ecosystem and frequently issues white papers on trends and issues facing the industry. You can read other white papers issued by The BitFury Group here.