This talk will focus on the role of blockchain in the new digital economy and the characteristics of a sustainable blockchain company. Professor Lee will talk about the 4Ds and LASIC, Hinternet and the type of deep business skill and strategy that are needed to excel in the blockchain industry. Those who are looking into fundraising by ICO/ITS’s and investing in Blockchain technology will find this talk interesting.

1. The Deep Skill of Blockchain
Business
David LEE Kuo Chuen
Professor, Singapore University of Social Sciences
Founder, Left Coast
Vice President, Economic Society of Singapore
https://www.linkedin.com/in/david-lee-kuo-chuen-%E6%9D%8E%E5%9B%BD%E6%9D%83-07750baa/

2. A Talk for
Blockchainers
• This talk will focus on the role of blockchain in
the new digital economy and the characteristics
of a sustainable blockchain company. Professor
Lee will talk about the 4Ds and LASIC, Hinternet
and the type of deep business skill and strategy
that are needed to excel in the blockchain
industry. Those who are looking into fundraising
by ICO/ITS’s and investing in Blockchain
technology will find this talk interesting.

3. Who Invented the Term Blockchain？
• Satoshi Nakamoto (2008) did not use the word blockchain in the seminar paper but there
were a few sentences linked to blockchain such as Chain of Blocks
• The concept of Cipher Block Chaining was first mentioned by Ehrsam, Meyer, Smith and
Tuchman (1976). Basically, the encryption of the message or information is sequential.
• It is suspected that the original word for blockchain was separated as two words Block Chain.
• Hal Finnay wrote in a note to Satoshi on Nov 9 2008 as archived in The Cryptography Mailing
List with three reference to Block Chain.
• http://ethereum.stackexchange.com/questions/4454/who-coined-the-term-block-chain/4455

4. Satoshi’s White Paper
On Page 3
• “As later blocks are chained after it,
the work to change the block would
include redoing all the blocks after
it."
01
On Page 7
• "This prevents the sender from
preparing a chain of blocks ahead of
time by working on it continuously
until he is lucky enough to get far
enough ahead, then executing the
transaction at "that moment.
02

5. The Late
Hal Finnay
wrote to
Satoshi in
2008
• “it is mentioned that if a broadcast transaction does not
reach all nodes, it is OK, as it will get into the block chain
before long.”
• “Does she need to go back through the coin's entire
history of transfers, and make sure that every
transaction on the list is indeed linked into the
"timestamp" block chain?”
• “The recipient just needs to verify it back to a depth that
is sufficiently far back in the block chain, which will often
only require a depth of 2 transactions.
• See
http://satoshi.nakamotoinstitute.org/emails/cryptograp
hy/6/

6. The 4Ds:
Digitalization,
Disintermediation,
Democratization, and
Decentralization
The New
Digital
Economy

7. The Future Thinking
1. “It is not the economy that is in
trouble, it is your business that is in
trouble.”
2. “Failure is an option here. If things
are not failing, you are not
innovating enough.”
3. “The red pill and its opposite, the
blue pill, are popular culture symbols
representing the choice between
embracing the sometimes painful
truth of reality (red pill) and the
blissful ignorance of illusion (blue
pill).”
http://www.inc.com/larry-kim/50-innovation-amp;-success-quotes-from-spacex-
founder-elon-musk.html

8. Factors of
Production
Old Economy:
• Land, Labour and
Capital
New Economy:
• Data, Time and
Ability to Raise Fund

9. The Essential
Factors of
Production
• The 4th industrial revolution, evolved from the digital
innovation, has rewritten the entire production function
with emphasis on different factors.
• Data, Time and Capital Raising Ability are now more
important than land, labour and capital.
• Geographical location and hard infrastructure are less
important because the computational powerful server
that occupies a small area can be located far away in the
cloud.
• Labour is less important as they can be replaced by
Robots powered by Artificial Intelligence.
• Ability to raise funds has become more important than
merely capital stock.
• Perhaps there is little point in making distinction between
primary or secondary factors of production and more
important to focus on the essential factors of production.

10. Data, Time
and Ability to
Raise Capital
• Data that have the characteristics of being
voluminous, high velocity, collected in various
forms, with veracity is an essential production
factor.
• Time Compression, measured as Computational
Power or otherwise (such as drones for delivery
time) that are harnessed from hard- and soft-
wares, is also essential for production.
• Finally, the ability for fund raising/capital will
ensure that companies with negative cashflow
can be sustained for a longer period.
https://www.forbes.com/sites/ciocentral/2011/10/31/the-new-factors-of-
production-and-the-rise-of-data-driven-applications/2/#690bea4c795a

11. LASIC PRINCIPLES
Start Low to:
• Attract & Build Critical Mass
• Prevent CompetitionLOW MARGINS
Ride on Existing Infrastructure
• Internet
• E-Commerce
• Telecom Companies
ASSET LIGHT
• Expandable without Exponential
Costs
• Technology allows for Large Scale
Adoption and Changes
SCALABLE
• Use of Technology such as Social Media
to find Untapped Markets
• Disruptive & Inclusive (NOT Exclusive)
• Solves Real Issues/Problems
INNOVATIVE
• Great Likelihood for Govt
Support
• Lowly Regulated
COMPLIANCE EASY
CHARACTERISTICS
Lee, David K.C. and Teo, Ernie G. S., Emergence of Fintech and the Lasic Principles (September
30, 2015). Available at SSRN: http://ssrn.com/abstract=2668049
DESCRIPTION

12. Do you need a
blockchain to
build a
Hinternet?
• Hinternet is a large population of sticky customers
using a service in the virtual space such as the
Internet.
• Alipay and Grab have a large LASIC Hinternet that
they can sell a wider range of products to the sticky
customers.
• Blockchain is not needed to build a Hinternet
business but to sustain growth, you may need the
last D, i.e., Decentralization.
• Digitalization + Disintermediation + Democratization
is enough to build a Hinternet of sharing services.
• Decentralization builds a higher barrier so that a
monopoly and oligopoly market structure will not
take shape easily.

13. Why does
Satoshism
flourish?
• Lack of Transparency
• Transactions Fees
• Transaction Details
• High Cross Border Fees
• Lack of Resilience
• Lack of continuity with a single
point of attack
• Lack of protection of historical
record
• Lack of Distribution of Wealth
• Lack of decentralized and super-
divisible money (10^-8 BTC=1
Satoshi but theoretically higher
precision is possible)
• Lack of technology to distribute
wealth and assets over time
• Lack of Individual Control of Privacy
• Lack of control of encrypted
personal data

14. Weakness of Satoshism
Inefficient
• Computation (Transactions
Per Sec, POW, Latency)
• Storage (Multiple Copies,
Block Size, Block Storage)
• Energy Consumption
(POW)
01
Lack of Privacy of
Ledger
02
Lack of Guidance
• First mover advantage in
ownership (No Expiry Date
of Ownership)
• Technology can do bad
03

15. Essential
Features of
Successful
Blockchain
• LASIC
• Resilience
• Transparency of transactions
• Personal control of privacy
• An enabler for 4Ds
• An enabler for collaboration of
untrusted parties globally
• An enabler for asset ownership sharing
globally

16. What is not a blockchain
April 9th 2017

17. Private Blockchain
• Reality vs Hype
• A new form of database that allow shared ownerships
across organizational boundaries.
• Between Private Blockchains with Public Blockchains
• Similar in design but worlds apart in use cases.
• Between Private Blockchains and databases
• Similar in use cases but worlds apart in design.
http://www.infocorp.io | info@infocorp.io | Copyright 2017
Roy Lai
SUSS Fellow
Multichain Guru
What is a Private Blockchain?

18. Private Blockchain vs Public Blockchain
Conditions Private Blockchain Public Blockchain
Centralization /
Purpose
Semi-Decentralized
Business-to-Business
Decentralized
Peer-to-Peer
Authentication Authenticated Not-Authenticated
Permissions Permissioned Permission-less
Advantages • Support legal entities
• Higher performance
• Better scalability
• Support anonymity
• High immutability
• Trustless environment
http://www.infocorp.io | info@infocorp.io | Copyright 2017

19. Private Blockchain vs Traditional Database
Conditions Private Blockchain Traditional Database
Ownership
Designed for shared
ownership
Not designed for shared
ownership
Performance Slower Faster
Scalability Easier and Cheaper Harder and Expensive
Immutability Append-only Editable
http://www.infocorp.io | info@infocorp.io | Copyright 2017

20. http://www.infocorp.io | info@infocorp.io | Copyright 2017
MultiChain Private
Blockchain Platform

21. MultiChain Private Blockchain Platform
• Light-weight - only 3 files
• Easy to use – create blockchain network in 5 minutes
• Strength of Bitcoin protocol
• Used By:
• Wolfram Language for Mathematica users.
• Seal Software as a shared data layer for contract document tracking.
Designed for Off-The-Shelf
http://www.infocorp.io | info@infocorp.io | Copyright 2017

22. MultiChain Private Blockchain Platform
Multi-Level Permissions
http://www.infocorp.io | info@infocorp.io | Copyright 2017
Install
MultiChain
Configure
Admin node
Configure
Permission
Connect Other
Nodes

23. MultiChain Private Blockchain Platform
Payment vs Delivery
http://www.infocorp.io | info@infocorp.io | Copyright 2017
Issue Assets
Configure
Permission
Send Assets
Exchange
Assets

24. MultiChain Private Blockchain Platform
http://www.infocorp.io | info@infocorp.io | Copyright 2017
Create Streams
Configure
Permission
Publish
Streams
Confidential
Streams
Secure Immutable Storage

25. 2. Digitization and Democratization: Now 6 People can own a cow via a ledger
or blockchain on the smart phone. The cow is identified, verified alive,
located by GPS with a chip injected into the ear or using a wearable device.
Each person or farmer owns a cow token digitized on the blockchain.
1. Old Economy: Previously, one has to form a company at the
company registrar, and owns the cow through this legal entity,
followed by issuing shares to the shareholders ($20 x 6
shareholders = paid-up capital of $120 = the initial investment).
3. Disintermediation and Decentralization: Now, we can trade Peer-to-
Peer using the cow token anywhere in the world. We can pledge the
token to another crypto bank as collateral. We don’t need an exchange
to sell or buy.
4. Bounty and Network Economy: The 4Ds apply to music, video,
picture, land, collector items, and any other form of ownership
with a chip or digitized certificate. Online crowd sourced wisdom
can be rewarded by a bounty, global crowd funding can be done
via borderless cryptocurrency, and usage can be charged using
micropayments. Activities are on a Hinternet!

26. 1. Old Economy:
Previously, one has to form a
company at the company
registrar, and owns the cow
through this legal entity,
followed by issuing shares to
the shareholders
($20 x 6 shareholders = paid-
up capital of $120 = the initial
investment).

27. 2. Digitization and Democratization:
Now 6 People can own a cow via a ledger
or blockchain on the smart phone.
The cow is identified, verified alive,
located by GPS with a chip injected into
the ear or using a wearable device.
Each person or farmer owns a cow token
digitized on the blockchain.

28. 3. Disintermediation and
Decentralization:
Now, we can trade Peer-to-Peer using
the cow token anywhere in the world.
We can pledge the token to another
crypto bank as collateral.
We don’t need an exchange to sell or
buy.

29. 4. Bounty and Network Economy:
The 4Ds apply to music, video, picture, land,
collector items, and any other form of
ownership with a chip or a digitized certificate.
Online crowd sourced wisdom can be rewarded
by a bounty, global crowd funding can be done
via borderless cryptocurrency, and usage can
be charged using micropayments.
Activities are on a Hinternet!

30. The Future
• Blockchain will likely be the main driver for the
4th industrial revolution.
• A peep into the future world will invariably be
looking into the storage of data, smart
contracts, IoT, AI and computing power.
• The most powerful feature of blockchain is
sharing of asset ownership.

31. With e-commerce
itself rapidly becoming
a “traditional
business,” pure e-
commerce players will
soon face tremendous
challenges.
Over the next 30 years,
with computing power
as the new
“technology
breakthrough” and
data as the new
“natural resource,” the
landscape of retail,
financial services,
manufacturing and
entertainment will be
transformed.
Jack Ma,
http://www.alizila.com/letter-to-shareholders-from-executive-
chairman-jack-ma/ Oct 13 2016, Letter to shareholders

32. At the beginning of Singapore's independence, the then Prime
Minister Lee Kuan Yew said that in 20 years’ time, Singapore
would have caught up with Burma
"I think we have to change that a bit and say: In 20 years’ time,
Myanmar will have overtaken Singapore.”
Aung San Suu Kyi,
30 Nov 2016,
IE Singapore’s Global Conversations business dialogue
http://www.channelnewsasia.com/news/singapore/myanmar-hopes-to-
overtake-singapore-economically-in-20-years/3330330.html

33. The Leapfrog Economy
Low margin, asset light, scalable, innovative
and compliance easy (LASIC)
It is about large sparsely populated area
connected by digital devices
It is about areas with low income and currently
excluded from the system
Real Time Transparency will lead to more
Investment and philanthropic acts!
It is about digitalization, democratization,
disintermediation, and decentralization!
Myanmar is
the
Leapfrog
Economy
https://www.youtube.com/watch?v=700IRrOjxtA
https://www.google.com.sg/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwil986I9KfSAhWFqo8KHUi1D_gQFggYMAA
&url=http%3A%2F%2Fskbi.smu.edu.sg%2Fsites%2Fdefault%2Ffiles%2Fskbife%2Fresearch_papers%2FEmergence%2520of%2520FinTech%2520and%25
20the%2520LASIC%2520Principles.pdf&usg=AFQjCNED32eC-IIy6Ro-e_tA97N9d7ZQzg

34. Initial Coin Offerings
Initial Token Sales
An Invite to the world of like-minded experts to participate?
Where technology can do good?
Not an IPO in local currency?

35. Source: Matt Chwierut
SUSS Fellow
ICO/ITS Guru

36. ICO/ITS’s As at 15 April 2017
ICO/ITS’s
Status Number
Past 139
Ongoing 15
Upcoming 57
Total 211
Top 10
Name Amount($)
ETHEREUM $ 18,439,086.00
COSMOS $ 16,800,000.00
WAVES $ 16,436,095.00
QTUM $ 15,664,829.30
GOLEM $ 8,600,000.00
FIRSTBLOOD $ 6,267,767.32
LISK $ 6,150,000.00
DIGIXDAO $ 5,500,000.00
AUGUR $ 5,133,000.00
Total $ 98,990,777.62
DAO $ 150,000,000.00
Total $ 248,990,777.62
Source:
https://cyber.fund/radar
http://Icocountdown.com
https://www.ico-list.com
http://iof.hexun.com/2016-07-25/185142280.html
https://en.wikipedia.org/wiki/List_of_highest_funded_crowdfunding_projects
http://icorating.com
https://tokenmarket.net/ico-calendar
https://coinmarketcap.com/assets/maidsafecoin/#charts
http://digitalmoneytimes.com/equinoxcoin-turns-into-a-scam-after-bittrex-ico-despite-coinssource-rating/
https://safenetwork.wiki/en/FAQ

37. Initial Coin
Offerings
Initial Token Sales
• Online Identity
• Standing in the Community (Community,
Creativity, Compassion)
• Whitepaper
• Technology and Source Codes
• Pre Sales and Reward/Incentives Structure
• Use of Proceeds and Valuation
• Governance Structure
• Advisors and Governors

38. What is the role of the
tokens being sold?
• User Tokens or App coins or Protocol
Tokens: to access the service provided
by the distributed network.
• Commodity Tokens: to finance the
development of the network, but are
not needed to access the services
provided by the underlying protocol.
• Debt Tokens: As a 'short term loan' to
the network, in exchange for an interest
rate on the amount. (Alarm bell?)
• Both user and commodity tokens
• Only user tokens
• Only commodity tokens
• User, commodity and debt tokensSource: http://www.coindesk.com/tokens-
crowdsales-startups/ and D Lee

39. More
Questions
• Voting Rights?
• Distribution of Cash Flow Predetermined by
Algorithm?
• No Legal Rights and Recourse?
• No Group Decision?
• Not Shares or Debts?
• No Avenue to Remove the Management?
• Building Users or Investors Base?

40. Matt Chwierut
SUSS Fellow
ICO/ITS Guru
Token Economics: Rights

42. Token Economics:
Hybrid Legal or Crypto Structure
• US Security Regulation: Under the Howey test four-pronged test, an
instrument is a security if it A) involves an investment of money or
other tangible or definable consideration used in B) a common
enterprise with C) a reasonable expectation of profits to be D) derived
primarily from the entrepreneurial or managerial efforts of others.
• Another US legal question: Is Blockchain a transfer agent?
http://www.casebriefs.com/blog/law/securities-regulation/securities-regulation-keyed-to-coffee/definitions-of-
security-and-exempted-securities/securities-and-exchange-commission-v-w-j-howey-co/

43. Token Economics: Creating Legal Air Gap
• In countries where tokens are not securities:
• Award of Contract: A legal entity (e.g. Pte Ltd) awarded a contract by a client
(blockchain) to write the code for the blockchain, and subsequently have an
ICO/ITS of the resulting blockchain with tokens.
• Commodity Sales: A foundation (e.g. Swiss GmbH-LLC) initiates a sale of a
commodity (Fuel/Token) required to run the blockchain on an open source
platform.
• CODE: Centralized Organized (CO) legal entity spends the tokens collected
from the Decentralized Entity (DE) blockchain ICO/ITS and the CO also collects
the revenue generated after the project of building the app as an example.
• Plain Vanilla Token Allocation: Tokens are first mined by allocators and allocated
via a computer algorithm that does not specify any specific public addresses to
receive funds.

44. Is ITS & DAO Structure all Bad? – Lior Zysman
• Flows of funds are recorded real-time on an open blockchain.
• The new JOBS Act Title 3, which opens investment in
startups to individuals, requires startups to publish financials
once a year; in contrast, blockchain accounting guarantees
their investors financial reporting all year long.
Lior Zysman is a crypto legal advisor to Wings.ai and a legal contributor to Smith+Crown. He is a practicing lawyer in
Israel. https://www.smithandcrown.com/daos-securities-regulation/

45. Is ITS Structure all Bad? – Lior Zysman
• The Act also requires businesses to publish a business plan once a year.
• In contrast, some ITS’s are powered by transparent open-source code that
any machine on a distributed network can run.
• The funds the ITS directs are also published on the blockchain, and the by-
laws themselves that determines the relationship between the ICO/ITS
participants are embedded in the code.
• The execution of those bylaws and the ITS’s accounting don’t depend on
familiar figures, like the CEO or an auditor, although the status of humans
on the edges of the network or curators has never been debated in case
law and might be replaced using formal verification methods.
• Given all this, investor expectations, a big concern for lawmakers and
regulators, are being met directly by the ITS’s code, perhaps for the first
time in corporate history.
Amended from https://www.smithandcrown.com/daos-securities-regulation/

46. Initial Token Sales (ITS’s) or Initial Con
Offerings (ICO’s)
• Many Scams! Buyers Beware!
• Risk and Complexity Classification
• High Risk?
• High Complexity?
• Definitely high uncertainty of outcome!
• Who should invest?
• Certainly not for widows and orphans
• Definitely not for speculators
• Absolutely not a traditional instrument and not advisable for the public or even sophisticated
investors
• Who? Members of the community that know the community well
• Who? Those who understand that these are experiments
• Who? Those who can mentor the companies and blockchain angel investors
• How much allocation to one’s portfolio?
• Prepare for zero return of capital
• A learning portfolio
• It is not part of the traditional portfolio but possibly the new alternatives

47. For those
Launching a
Initial Token
Sales
• Advice given by Lior Zysman
• Communication is key
• Transparency is essential
• No over promise of product goals
• No promise of Returns on Investment
• Emphasize that it is an Experiment
• Be Aware of Fiduciary Duties

48. Conclusion
and
Final
Observations
• Blockchain is not needed in many use cases that need only a
database
• For sustainability and network effect, blockchain has to scale to
serve the underserved for easy compliance
• Blockchain will scale faster if it is open, engages AI, Big data,
and IoT
• Watch and plugged into China which has mastered the skills of
scaling, financial inclusion, and user experience
• The business strategies of combining economies of scales and
economies of scope in Fintech will spill over to blockchain in
China with emphasis on financial inclusion and green finance
• China will dominate the blockchain industry because of its size
and capital expenditure on R&D
• ITS’s are for those interested in the technology and its
associated experiments
• Online identity with community spirit, good understanding of
fiduciary duties, transparent communication, under promise in
technology goals, no promise of ROI, assisting communities to
serve the underserved are key success factors.

49. Seriously, do you
need a blockchain?
Most probably
not unless you
are into financial
inclusion and
green finance!

50. The most powerful feature of blockchain is sharing
of asset ownership in a currently centralized
environment without full trust and in need of
democratization of information, technology and
services, as well as micro ownership!