Financial Executives International Canada Blockchain and Cryptocurrencies Halifax

Financial Executives International, Canada Blockchain and Cryptocurrencies Halifax June 15, 2018 Hilary Carter | www. blockchainresearchinstitute. org | hilary@blockchainresearchinstitute. org| Twitter: @tweetfromhilary 1 | © 2016 The Tapscott Group. All Rights Reserved.

Hilary Carter, MSc CBP • Blockchain Research Institute – a multi-million dollar think tank founded by Don Tapscott & Alex Tapscott, co-authors of Blockchain Revolution • Director of Research – working with 40+ leading subject matter experts in blockchain from all over the world • 75+ Research Projects – exploring blockchain transformations in government, enterprise, and society • Today’s discussion: benefits & use cases of blockchain; implementation challenges

Technologies of the Fourth Industrial Revolution

From the Internet of information

To the Internet of value

Network Security Both databases & blockchains: Store data & record transactions Databases: Are centralized on a single server; subject to a single point of failure. Breaches (Equifax, Home Depot) result in loss of trust Blockchains: Are decentralized. Multiple stakeholders verify information, maintain network consensus, and govern transactions, achieving unprecedented security

What is bitcoin & what is blockchain? What are the applications & implications? Who created it? Why was it created? How does it work?

What is bitcoin? • World’s first cryptocurrency: the mother of all blockchains • A social construct: entirely human designed, created, & sustained • A fungible unit of value exchange with a fixed supply: 21 million • A form of payment: Overstock. com, Virgin, Expedia, Microsoft (Xbox) • A store of value - with plenty of volatility in the mix! • A decentralized, public utility: not backed by any government or central bank, no board of directors, no shareholders • A community of stakeholders: owners, miners (parties who sustain the network), entrepreneurs, developers, and innovators who write applications and tools (such as hardware wallets, exchanges, etc. )

What is blockchain? • A software protocol that enables digital value exchange – the technology underpinning bitcoin & cryptocurrencies • Also known as distributed ledger technology (DLT) – resembling Excel • Decentralized because of the global distribution of network participants (called nodes) • Secured by high levels of computing power & private key cryptography • Sustained by mass network collaboration & competition for rewards • Solves the double-spend problem: you can’t send bitcoin you don’t have • Enables peer to peer exchange of units of value: currencies, votes, land titles, health data, etc. • Characterized by design features such as transparency & immutability

Who created bitcoin? Josh Wardini, Lean. Media. Co

Why was it created? “Necessity, who is the mother of invention. ” Plato

Necessity: 2. 5 Billion Unbanked Adults

Necessity: An inefficient system

Necessity: Government Bailout of Banks?

1. Mary sends John some bitcoin 2. The transaction is given an 3. The transaction is broadcast to identification number called a hash all the nodes in the network 4. The successful node 5. The block is added to all previous 6. The bitcoin moves from validates the transaction & forms a new blocks & the node receives 12. 5 BTC Mary to John

“Self-interested actors (miners) pursue private gain, but in doing so protect a public good. ” Michael Casey

Bitnode. com: Globally Distributed Settlements

Trade. Block. com: The Bitcoin Blockchain

<10 Years of Crypto: coinmarketcap. com • 1640 Cryptocurrencies • Market Cap: $337, 624, 972, 153 • BTC Dominance: 37. 9% # Name Market Cap Price 1 Bitcoin $128, 177, 943, 919 $7, 506. 75 2 Ethereum $59, 186, 589, 511 $592. 64 3 Ripple $25, 676, 358, 227 $0. 65 4 Bitcoin Cash $18, 923, 720, 824 $1, 102. 43 5 EOS $12, 217, 295, 642 $13. 63 6 Litecoin $6, 770, 781, 358 $119. 14 7 Cardano $5, 589, 720, 846 $0. 22 8 Stellar $5, 398, 280, 610 $0. 29 9 IOTA $4, 788, 491, 386 $1. 72 10 TRON $3, 871, 794, 523 $0. 06 *As of June 4 th, 2018

Protocols & Applications: Ethereum & beyond • Ethereum – created by Vitalik Buterin – built upon the architecture of the Bitcoin blockchain and designed a new platform for a new purpose • Open source blockchain protocol – enables the creation of applications & smart contracts (coded business logic) that can run on top of it • Facilitates venture fundraising through Initial Coin Offerings (ICOs) – individuals accept full risk investing cryptocurrency into a startup. Investors then receive ERC-20 tokens instead of shares, each token having pre-programmed economic rights built into the software. Tokens trade in secondary markets • Enables small amounts of money to be invested – as low as $100. $8. 3 billion has been raised via ICOs in the last 12 months

CIVIC: a self-sovereign identity & privacy token • Problem to be solved: authenticate identity & maintain privacy • CIVIC: raised $33 million in July 2017. Investors received 1000 Civic tokens for every $100 invested. Trades on 36 exchanges today • CIVIC app: available on Apple Store & Google Play • Consensus 2018 proof of concept: a crypto-beer vending machine.

Crypto. Kitties. co: Digital Collectibles on Ethereum • Like baseball cards: Crypto. Kitties are digital, collectible cats that you can buy, breed, or sell, each with unique features • Most expensive: $115, 000 • Project finance: Following successful launch, VC firm Andreesen Horowitz invested 12 million in April • Gregor: named after Gregor Mendel

The Ethereum Ledger in Action

7 Failed Transactions = scaling challenges

Hyperledger • The Linux Foundation’s Hyperledger Fabric is an example of a private (permissioned) blockchain framework • Designed to meet the needs of enterprise clients with restrictions on who can participate in a chain • Only known participants are given permission to maintain a replica of the shared, append-only ledger of digitally signed transactions (only a few nodes) • Features frequently in supply chain applications, tracking provenance & authenticity of goods

Product Life Cycles using Hyperledger • Fish is caught and immediately tagged with Io. T-enabled sensors • Sensors continually transmit data about the time and location of the catch to the blockchain • Distribution points, transport conditions, & inspections by regulators are tracked and recorded • Consumers (and stakeholders) can access a record of the fish’s provenance within seconds by scanning a barcode • Only approved participants on the supply chain may update the network

Enterprise Applications: Walmart’s Pork & Mango Pilots with IBM

Retail Payments: Overstock

Financing Entertainment Ecosystems: Music & Film 30 | © 2016 The Tapscott Group. All Rights Reserved.

Blockchain Vertical Opportunities Retail BEAUTIFUL POWERPOIN T TEMPLATE Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nulla imperdiet voltpat dui at fermentum. Aliquam erat volutpat. Aenean lacinia lacus Financial Services Technology Media & Telecom Energy & Resources POWR Manufacturing Healthcare Government

Blockchain Horizontal Opportunities 1. CEO: Making the Case for Disruption, Leading the Transformation 2. COO: Asset Chains – the Future of Supply Chain Management 3. CLO: Smart Contracts and the Legal System 4. CFO: Triple Entry Accounting and Corporate Finances 5. CMO: The Next Era of Sales and Marketing 6. CIO: Enterprise Technology Architecture 7. CHRO: Managing Talent in a Distributed Economy

Blockchain & the CFO by Iliana Oris Valiente • Explores the downstream impact of blockchains, distributed ledger technology, and cryptocurrencies on the CFO role & CFO readiness: o Triple entry accounting o Wages & services paid in crypto o Corporate Finance through Initial Coin Offerings o Blockchain pilots & budget approvals o Skillsets of the future

What’s the big deal about ledgers? Michael Casey “Blockchain technology can upend a millennia-old, centralized model installed with the first ledger, the Code of Hammurabi, which was founded around 1754 BC in Babylon. Until now, we've had to rely on centralized ledger keepers. We've assigned regulators and auditors to randomly check their work, but for the most part we are blind to the accuracy of the data, beholden to what the bookkeeper tells us. Blockchains promise to supplant this centralized approach with a distributed, shared ledger whose updates follow a robust, ongoing consensus in real-time. At any given time, everyone can know the current state of agreed-to transactions and balances. No more need for weekly, monthly, quarterly, or annual reconciliations and audits. The entire rhythm of our financial system could change. ”

Where to go from here? • Global bestseller – First edition published May, 2016, translated into 18 different languages • Updated edition released June 11 in NYC 25, 000 additional words, including a new taxonomy for understanding crypto assets and Initial Coin Offerings • “This book has had an enormous impact on the evolution of blockchain in the world. ” – Satya Nadella, Microsoft CEO

Thank you! Follow us on Twitter @Blockchain. RI Hilary Carter | www. blockchainresearchinstitute. org | hilary@blockchainresearchinstitute. org| Twitter: @tweetfromhilary 36 | © 2016 The Tapscott Group. All Rights Reserved.