The document discusses the blockchain and its potential to revolutionize trust and transactions through distributed ledger technology. It provides background on blockchain, explaining that it allows digital transactions to be recorded and distributed across a network without a central authority. This could enable more efficient, secure and inclusive digital transactions by digitizing trust. The document outlines several potential uses like financial services, provenance tracking, record keeping and more. It also discusses challenges to overcome like scalability, regulation and competition between standards. Overall the document analyzes how blockchain could transform the digital economy by facilitating transactions through procedural rather than interpersonal trust.

1. Sept 2016
www.hhs.se

2. Time will tell…..
The Blockchain is the glue that is going to
drive a productivity revolution across the
globe on par with what Henry Ford did
with the automobile.
— Paul Brody, Americas Strategy Leader,
Technology Sector, Ernst & Young

3. Considerable investments by
VCs and Corporates
>USD 1 bln VC investment

4. Significant attention
from established players

5. What is the blockchain?
A combination of several technologies,
arranged in a novel way
• Distributed systems
• Peer-to-peer networks
• Hashing functions
• Public-private key cryptography
• Cryptographic signatures
• Elliptic curve cryptography

6. A blockchain is a data structure that makes
it possible to create a digital ledger of
transactions and share it among a
distributed network of computers.
It uses cryptography to allow each
participant on the network to manipulate
the ledger in a secure way without the
need for a central authority.

7. So again, what is
the blockchain?

8. A means to
digitalize trust?

9. Trust
A belief by one party that the other
party will behave in an expected
manner in a transaction
Uncertainty about the other’s actions in
the future
Control cannot be exerted

10. Interpersonal trust
Institutional trust - brand
Institutional trust - platform

11. –

12. “Trusted third parties”
verify and secure digital payments
http://dataconomy.com/fintech-explained-payments/

13. How well does the system work?
 High fees charged
 Slow process
 Chargebacks possible
 Microtransactions
cost prohibitive
 “Walled gardens”,
e.g., Swish
 Fraud not prevented
despite KYC, AML
extensive regulations
>USD 200 bln in fines

14. Trust is the “currency
of the sharing economy”
-Botsman

15. All kinds of digital transactions increasing!
Today
Remittances
SME retailers
Ecommerce
Online banking
Sharing economy
Gig economy
Tomorrow
Internet of Things
M2M payments

16. 38% of world are unbanked

17. But if we were to start over
and design for today’s world
of digital transactions….?

18. Banking is essential,
but banks are not.
-Bill Gates

19. https://bitcoin.org/bitcoin.pdf
“…an electronic payment system based on cryptographic proof
instead of trust, allowing any two willing parties to transact directly
with each other without the need for a trusted third party.”
The beginnings of Bitcoin on the
Internet in 2008-2009

20. Institutions
EmergentCollective
VS
E.g., Central Bank
~ Long-standing financial
institutions and regulations
E.g., Bitcoin Community
~ Self-organizing community of strangers
across globe connected through Internet
Teigland, Yetis, Larsson 2013

21. Continued growth of Bitcoin
On September 19, 2016
• 1 BTC = USD 609
• 15.9 mln bitcoins in circulation
• Market capitalization of ≈USD 9.5 bln
• ≈245,000 transactions daily
https://blockchain.info/charts

22. Bitcoin – one of 100s of cryptocurrencies
http://coinmarketcap.com/

23. - Andreas Antonopolous
Saying that Bitcoin is a currency
is like saying that the Internet is email.
Currency is just the first app!
http://startusingbitcoin.com/blog/1-what-is-bitcoin/

24. http://www.iftf.org/blockchainfutureslab/

25. Procedural trust
No third party overseeing
• Timestamped, public
distributed ledger
• Decentralized, P2P
network
• Permanent record of all
transactions
• Chronology and integrity
enforced by cryptography
Procedural
trust

26. Digitalization of trust?
The practical consequence [..is..] for the first time, a
way for one Internet user to transfer a unique piece
of digital property to another Internet user, such
that..
 the transfer is guaranteed to be safe and secure,
 everyone knows that the transfer has taken place,
 and nobody can challenge the legitimacy of the
transfer.
The consequences of this breakthrough are hard to
overstate.
- Marc Andreessen, Inventor of the Internet browser

28. Benefits of blockchain for financial services
 Lower costs through shared infrastructure
 Faster settlement that leads to lower capital
and liquidity needs
 Increased transparency, especially with
cross border payments
 Greater security through cryptography,
transparency
Citi Research, Jan 2016

29. > 50 financial institutions join forces

31. Blockchain technology (DLT) vs The Blockchain
http://www.slideshare.net/CoinDesk?utm_campaign=profiletracking&utm_medium=sssite&utm_source=ssslideview
Blockchains represent a trade-off in which
disintermediation is gained at the cost of
confidentiality.

32. Hyperledger: 81 members and counting

33. Blockchain insurance

34. Smart contracts
Weather data
algorithm
Insurance
claim payout
Software code run on a blockchain that
enables external data to modify some
other data

35. DAO:
Decentralized autonomous organization
Democratizing ownership
of organization through
smart contracts on
blockchain

36. Four basic use cases
 Lightweight financial systems
− Crowdfunding
− Gift cards, loyalty points, local currencies
− P2P trading between asset managers not in direct competition
− Internal accounting systems
 Provenance tracking
− Tracking origin and movement of items, e.g., luxury goods,
pharmaceuticals, cosmetics, electronics
− Critical items of documentation, e.g., bills of lading, letters of credit
 Interorganizational recordkeeping
− Collectively recording and notarizing any type of data, e.g.,
healthcare, legal documents
 Multiparty aggregation
− Sharing of databases
− IoT
http://www.coindesk.com/four-genuine-blockchain-use-cases/

37. https://letstalkpayments.com/blockchain-use-cases-comprehensive-analysis-startups-invoved/

41. Blockchain risks and challenges
 Technology risks
− Scalability
− Mining centralization
− Hacking scandals
− Interoperability
− Flexibility
 Perception risks
− Terrorists, criminal activity
 Regulatory risks
− Government regulation, bans
Adapted from 12 Sep 2016m Blockchain Smartnetworks

42. Other issues
 Competition vs standardization?
− R3CEV
 Immutability?
− Ethereum hard fork
 Supply of blockchain plus distributed systems skills?
− Hyperledger’s call
 Energy usage?
− 24 billion smart devices by 2020

43. Will blockchain recede like virtual reality in
the 1990s? A technology over-hyped and
still decades away from mainstream?
http://www.coindesk.com/making-sense-blockchains-summer-stupid-perfect-illusions/

44. In 1996

45. Enablers of a “true”
Collaborative Economy?
IoT/sensors
Sharing/
Collaborative
Economy
Blockchains
P2P/M2M
micropayments
Big data

46. http://bluzelle.com/ripple-versus-the-blockchain/

47. Robin Teigland
robin.teigland@hhs.se
www.slideshare.net/eteigland
www.funnovation.se
@robin.teigland
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