Blockchain 7 11 2017 Agenda What is Blockchain

Blockchain 7. 11. 2017

Agenda What is Blockchain? 3 How can we use it? 10 Use cases 17 Crypto currencies 20 Video – Smart Identity DTT 22 2

What is Blockchain? 3

Blockchain Explained 4

What is Blockchain? Fundamentally a digital ledger system for recording business transactions and events Near real time The blockchain enables the near real time settlement of recorded transactions, removing friction and reducing risk, but also limiting ability to charge back or cancel transactions. Trustless environment Blockchain technology is based on cryptographic proof, allowing any two parties to transact directly with each other without the need for a trusted third party. Distributed ledger The peer-to-peer distributed network records a public history of transactions. The blockchain is distributed and highly available. The blockchain retains a secure source of proof that the transaction occurred. Irreversibility The blockchain contains a certain and verifiable record of every single transaction ever made. This mitigates the risk of double-spending, fraud, abuse, and manipulation of transactions. Censorship resistant The crypto-economics built into the blockchain model provide incentives for the participants to continue validating blocks, reducing the possibility of external influencers to modify previously recorded transaction records. 5

What is Blockchain? Blockchain is a series of interconnected blocks, with new blocks added on the end of the chain Consensus BLOCK 1 Consensus BLOCK 2 BLOCK 3 FUTURE BLOCKS Each block contains: • Transactions (currency transfers from one party to another) • Data • A Reference to the Previous Block (creating the CHAIN) 6

Blockchain – decentralised Every node maintains an identical copy of the blockchain – there is no one master node Node 1 BLOC K 2 BLOC K 3 FUTURE BLOCKS Node 2 BLOC K 1 BLOC K 2 BLOC K 3 Node 6 FUTURE BLOCKS BLOC K 1 BLOC K 2 Node 3 BLOC K 3 FUTURE BLOCKS Node 5 BLOC K 3 FUTURE BLOCKS Node 4 BLOC K 1 BLOC K 2 BLOC K 3 FUTURE BLOCKS 7

Three Innovations Laid the Groundwork for Blockchain’s Invention 1 2 3 Peer-to-peer network Public key cryptography Proof-of-work In a peer-to-peer model, every peer in the network is a server and client, both supplying and consuming resources Public key cryptography is a method for verifying digital identity with a high degree of confidence, enabled by the use of private and public keys Proof-of-work is a piece of code appended to data that validates that data’s authenticity and controls when it can be written into the system Enables the facilitation of a currency without a central, privileged third party Allows for individual ownership and exchange of bitcoin among users Prevents double spend by ensuring data is recorded chronologically Blockchain The first blockchain was created through the formation of bitcoin Transaction 1 Transaction 4 Transaction 7 Transaction 10 Transaction 2 Transaction 5 Transaction 8 Transaction 11 In its bitcoin application, a blockchain is a Transaction 3 Transaction 6 Transaction 9 continuously growing database of transactions, organized in chronological blocks, that is shared Past between multiple nodes in a network In a blockchain, data is captured chronologically in blocks Transaction 12 Future 8

Blockchain – what we do know is… In it’s technology evolution, blockchain technology remains nascent and immature. MISCONCEPTIONS CHALLENGES It’s not a panacea Standards need to be formalised It’s not Bitcoin, that is just a use case Not all regulators are on board Traditional technology is not redundant or obsolete Does it scale? You will still need to integrate data from other systems Collaboration is required to make it a success It’s not real time 9

When to use blockchain? 10

Introduction: When is Blockchain the Right Fit? Client needs should lead our strategy when determining where we start our own Blockchain development Shared Data Multiple Writers Structured repository of information More than one entity generating the transactions that modify the database Absence of Trust Level of mistrust between the entities writing to the database (e. g. , one user will not accept the “truth” as reported by another user) Opportunity for Disintermediation Lack of trusted intermediary or central gatekeeper to verify transactions Transaction Interaction or dependency between the transactions created by different entities 11

When is blockchain not the right fit Blockchain is a good solution only when specific requirements are united No You need data storage to be immutable Yes No Does it required shared write access amongst multiple participants? Yes Are writers known and trusted? Are writers interests unified? Yes Don’t use Blockchain No No Yes Do you want to use a trusted 3 rd party? No No A limited number of data has to be stored Yes The outcome is deterministic and does not required a court in case of dispute No Intra-firm Where is consensus determined? Yes Should one entity or group of entities have full control over the data or accesses? Yes No Do participants want messages to be private or public? Interbank settlement of securities Inter-firm Use a hybrid Blockchain Share KYC information between corporations Private Yes Use a private Blockchain Public Use public Blockchain Crypto currencies 12

APPLICATION The Key Components of Blockchain SERVICES NETWORK AND PROTOCOL INFRASTRUCTURE Application Layer Customer interaction, business logic, and user interface design Services Layer 010 10 User Interface Logic Application Integration Multi-signatures Trackers Oracles Wallets Event Managers Application Server Distributed File Store Programming Languages Smart Contracts Digital Assets Connectors Digital Identity Blockchain services to enable operation of the application and connection to other technology Network and Protocol* Network participation requirement, base protocol, and method of consensus Distributed Databases Permissionless Permissioned Bitcoin Ethereum Sidechains Proof-of-Work Proof of Stake Byzantine Fault Tolerant Gossip Infrastructure Layer Blockchain as a service (Baa. S)* or in-house infrastructure to operate the nodes Compute Storage Network Virtualization Mining as a Service * Many Baa. S providers move up in the reference architecture to offer network and protocol and services layer solutions Note: The representation is not meant to be exhaustive (e. g. , Ethereum and Bitcoin are not the only protocols and the represented consensus mechanisms are also not exhaustive) 13

Blockchain growing faster than anticipated Many sceptics believe blockchain is far away but indications suggest the level of adoption is quickening Blockchain Adoption Growth Curve Decentralize d Everything Today Year of Production Invention of Bitcoin 200 8 Year of the Use Case 201 5 Year of the Proof of Concept 201 6 Year of Increasing Adoption STEP 3: Decentralise d Internet STEP 2: Autonomous Digital Entities Year of the Pilot STEP 1: Increasing market disruption 201 7 201 8 201 9 BEYON D 14

Blockchain activity overview (i / ii) Blockchain trends are suggesting we are moving closer to adoption Blockchain Equity Investment Consortia Top blockchain companies invested by FS Circle $136 M Ripple $94 M $60 M + Blockstream $76 M DAH 341 496 461 600 2014 2015 2016 2017 Blockchain Investment. . . Source: www. cbinsights. com B 3 i ISO / TC 307 Examples of Pilots JAN MAY 2016 2017 30 142 40 80 15 40 20 75 0 0 11 6 16 0 15 With support from both Dubai Customs and Dubai Trade, IBM launched the Trade Finance Po. C which is designed to track items shipped using different shipping methods Visa & BTL have partnered to pilot BTL’s cross border settlement platform Interbit. It is now ready to be used for real bank-to-bank transactions, as an alternative to the widely-used Swift messaging system Northern Trust and IBM launched a blockchain-based solution for the private equity world. It allows the parties involved in a PE deal to look at one version of transaction data IBM together with Secure. Key and 6 Canadian Banks started working on a technology through which customers will use an app to verify their identity to anyone An issuer was able to use its Nasdaq Linq blockchain ledger technology to successfully complete and record a private securities transaction - the first of its kind using blockchain technology 15

Blockchain activity overview (ii / ii) Blockchain trends are suggesting we are moving closer to adoption Patent Filings Cross Industry Data Yearly Patent Grants Blockchain Deployment blockchain related patents Major applicants to date l. ia nc na T TM Currently Deployed Millions . . ec (T ie Sc fe Li 24 12 h. . nc . . . su on 17 31 35 17 Fi 28 30 C Total data processing patents Cryptocurrency ICOs 2017 600 m 20 100 50 0 er 600 400 200 0 0 20 9 1 20 0 1 20 1 1 20 2 1 20 3 1 20 4 15 60, 000 40, 000 20, 000 0 Initial Coin Offerings 500 400 300 200 100 0 Planned for 2017 Jan Feb Mar Apr May Jun Jul Major reasons for take off outside FS ‘This sort of behaviour is antithetical to innovation, collaboration & openness that’s at the hear of the new digital age’ – Don Tapscott (Source: Deloitte Centre for Financial Services Analysis) 37% better security 36% greater efficiency 24% new business models Total Raised: $1, 253, 843, 935 Total Number of ICOs: 93 Position Project Total Raised 1 Tezos $232, 319, 985 2 Bancor $153, 000 3 Status $90, 000 (Source: ICO Tracker) (Source: CIO Journal) 16

Use cases 17

Common Use Cases Numerous use cases for blockchain have already been identified Transfer of Value Cross Border Payments Digital Identity Clearing and Settlement Blockchain can efficiently facilitate transfers on peer- to-peer, business-to- business, and computer-to- computer transactions for minimal cost Blockchain can transfer payment across currencies almost instantly for a fraction of today’s cost and provide access to the unbanked in remote areas Blockchain can create an auditable source of information shared and verified across a network of organizations (e. g. , KYC compliance) Blockchain shows promise to drive efficiency in the clearing and settlement process of digital assets through the use of colored coins Provenance Multi Party Aggregation Record Keeping Smart Contracts Blockchain offers an immutable and irreversible source of information that can track the true ownership of a product across the supply chain Blockchain can be used as a shared master data repository for common industry information allowing members to query the data Blockchain provide a method for collectively recording and notarizing any type of data, whose meaning can be financial or otherwise Contractual terms and obligations can be programmed directly into the blockchain, maximizing adherence (e. g. , syndicated loans, derivatives)

Blockchain across industries: use cases pursued by startups Blockchain Implementations are vastly broad and far from being limited to any one particular industry • Cryptocurrency integration to existing gas stations • Digitizing warranties for • Enabling oil commodities management and transferability • Preventing trade of stolen goods • Distributing and trading in digital assets Consumer Business Energy & Resources investment Trading in carbon emissions LITTLEGREEN ASSET CO Warranteer • Seamless cross currency Technology, Media, & Telecommunications • Verification of videos and photos authenticity Financial Services settlement • Replacing legacy FSI networks with Blockchain infrastructure • Direct peer-to-peer payments • Decentralized sharing of goods and services as part of the Shared Economy • Transforming mobile phones to portable Blockchain wallets • Setting industry standards for Life Sciences & Healthcare Real Estate migrating Real Estate management onto Blockchain • Transferring existing land deeds • Migrating the entire land registry of Honduras onto Blockchain • Preventing medical data forgery • Tracing and preventing counterfeit pharmaceuticals • Creating an exact representation of a person’s genetic map on Blockchain Public Sector • Managing registered IDs • Blockchain-based public records keeping • Time stamping of certifications directly onto a Blockchain ledger Manufacturing • Managing very large volume arrays of devices such as manufacturing sensors • Enabling machinery to autonomously manage service times and supply schedules • Full supply chain transparency enabling secure traceability for materials Provenance 19

Crypto curencies 20

Examples of crypto currencies and digital assets Diverse value propositions Currency Market cap $117, 902, 896, 245 $27, 809, 282, 073 $7, 939, 192, 406 $597, 996, 196 Asset Value proposition Digital gold Smart contracts Instant intl. payments Anonymous transactions Market cap Value proposition $158, 609, 293 Distributed supercomputer $189, 561, 900 Decentralized prediction market $97, 873, 875 Digital asset management 21

Video – Smart Identity DTT 22

Blockchain Explained 23

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