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CONFIDENTIAL
Blockchain is Calling
on Financial Services
Bonnie Cheung
May, 2018
500 Startups is an Active and Global Early-Stage Investor
Since July 2010$390M+ in Capital Committed1 2,000+ Portfolio Companies
San Francisco
Silicon Valley
Los Angeles
Mexico City
New York
Miami
Sao Paulo
London Istanbul
Tel Aviv
Riyadh
Bahrain
Bangalore
Kuala
Lumpur
Bangkok
Ho Chi Minh City
Singapore
Tokyo
Taipei
Seoul
People
Countries Where
We’ve Invested
Primary Geographies
2017 WAS
BLOCKCHAIN
PROJECTS’
COMING OUT
YEAR
EVERYONE IS DOING BLOCKCHAIN
Where do I start?
5 Things You Should
Know To Help You Cut
Through the Noise
# 1 – What Makes a Blockchain
Unique
Trust & Cryptoeconomics
WHAT IS REVOLUTIONARY
ABOUT
BLOCKCHAIN?
To allow mutually untrusting parties to
perform economic transactions with each
other
THROUGH CRYPTO-
ECONOMICS
A study of how to use digital
incentives to drive distribution of
resources and behaviors on a
decentralized network that leads to
some globally desired outcome (e.g.
improved security).
This requires a wide spectrum of
expertise from game theory,
behavioral economics to math, logic,
distributed computing and bc.
Public
Slower
Open & Transparent
Public Membership
Trust Free
Faster
Managed Upkeep
Private Membership
Trusted
Private
# 2 – Understanding the Big
Picture about Currencies
BLOCKCHAIN 1.0 =
INVASION OF FINANCIAL INDUSTRY
BANK
- 68.96% of all crypto projects are focused
on Currency use-case
NOT A LOW HANGING FRUIT DUE TO
IMPACT ON MONETARY POLICY
• Impact on Monetary Policy • Serving in times of crisis
BUT A GREAT CATALYST
# 3 – Fastest Impact is on Fund
Raising
FUNDRAISING
LANDSCAPE IS
CHANGED FOREVER
 Both VCs and public market fund investors need
to adopt
 Pure ICOs will fizzle out replaced by hybrid of
equity + token offerings for fundraising
 Digitization of existing asset classes will
accelerate
 Fully compliant professional players entering
market
# 4 – Regulation is welcome
WHEN CRYPTO MEETS
REGULATIONS
 2018 is the year regulators will come down
hard on fraudulent ICOs that has no
underlying business to back up the token
 Step up self-regulation of token projects
 Existing fully compliant players entering
the market
SIMPLIFY AND STREAMLINE
COMPLIANCE WITH KYC
A Thomson Reuters survey found that
Financial Institutions are spending on
average $60 million per year on
compliance with KYC.
Financial Institutions, the opportunity to vastly reduce
overheads needed to meet KYC regulations while providing
secure and simple systems
Need for debit/ credit/ atm cards or even smartphone
payment systems could also be eliminated
# 5 – Don’t Lose Sight of the Big
Picture
77% OF CIOS HAVE ‘NO PLANS’ FOR BLOCKCHAIN
ENTERPRISE BLOCKCHAIN ADOPTION
DEGREE OF INNOVATION
POTENTIALIMPACT
COST
Blockchain 1.0
GROWTH
Blockchain 2.0
TRANSFORMATION
Blockchain 3.0
WHAT INTERNET DID TO MEDIA, BLOCKCHAIN
TECHNOLOGY WILL DO TO FINANCIAL SERVICES...
BUT WE ARE EARLY IN THE TIMELINE.
Questions?

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Blockchain is Calling on Financial Services

  • 1. CONFIDENTIAL Blockchain is Calling on Financial Services Bonnie Cheung May, 2018
  • 2. 500 Startups is an Active and Global Early-Stage Investor Since July 2010$390M+ in Capital Committed1 2,000+ Portfolio Companies San Francisco Silicon Valley Los Angeles Mexico City New York Miami Sao Paulo London Istanbul Tel Aviv Riyadh Bahrain Bangalore Kuala Lumpur Bangkok Ho Chi Minh City Singapore Tokyo Taipei Seoul People Countries Where We’ve Invested Primary Geographies
  • 4. EVERYONE IS DOING BLOCKCHAIN Where do I start?
  • 5. 5 Things You Should Know To Help You Cut Through the Noise
  • 6. # 1 – What Makes a Blockchain Unique Trust & Cryptoeconomics
  • 7. WHAT IS REVOLUTIONARY ABOUT BLOCKCHAIN? To allow mutually untrusting parties to perform economic transactions with each other
  • 8. THROUGH CRYPTO- ECONOMICS A study of how to use digital incentives to drive distribution of resources and behaviors on a decentralized network that leads to some globally desired outcome (e.g. improved security). This requires a wide spectrum of expertise from game theory, behavioral economics to math, logic, distributed computing and bc.
  • 9. Public Slower Open & Transparent Public Membership Trust Free Faster Managed Upkeep Private Membership Trusted Private
  • 10. # 2 – Understanding the Big Picture about Currencies
  • 11. BLOCKCHAIN 1.0 = INVASION OF FINANCIAL INDUSTRY BANK - 68.96% of all crypto projects are focused on Currency use-case
  • 12. NOT A LOW HANGING FRUIT DUE TO IMPACT ON MONETARY POLICY • Impact on Monetary Policy • Serving in times of crisis
  • 13. BUT A GREAT CATALYST
  • 14. # 3 – Fastest Impact is on Fund Raising
  • 15. FUNDRAISING LANDSCAPE IS CHANGED FOREVER  Both VCs and public market fund investors need to adopt  Pure ICOs will fizzle out replaced by hybrid of equity + token offerings for fundraising  Digitization of existing asset classes will accelerate  Fully compliant professional players entering market
  • 16. # 4 – Regulation is welcome
  • 17. WHEN CRYPTO MEETS REGULATIONS  2018 is the year regulators will come down hard on fraudulent ICOs that has no underlying business to back up the token  Step up self-regulation of token projects  Existing fully compliant players entering the market
  • 18. SIMPLIFY AND STREAMLINE COMPLIANCE WITH KYC A Thomson Reuters survey found that Financial Institutions are spending on average $60 million per year on compliance with KYC. Financial Institutions, the opportunity to vastly reduce overheads needed to meet KYC regulations while providing secure and simple systems Need for debit/ credit/ atm cards or even smartphone payment systems could also be eliminated
  • 19. # 5 – Don’t Lose Sight of the Big Picture 77% OF CIOS HAVE ‘NO PLANS’ FOR BLOCKCHAIN
  • 20. ENTERPRISE BLOCKCHAIN ADOPTION DEGREE OF INNOVATION POTENTIALIMPACT COST Blockchain 1.0 GROWTH Blockchain 2.0 TRANSFORMATION Blockchain 3.0
  • 21. WHAT INTERNET DID TO MEDIA, BLOCKCHAIN TECHNOLOGY WILL DO TO FINANCIAL SERVICES... BUT WE ARE EARLY IN THE TIMELINE.

Editor's Notes

  1. :  Private chains are like the intranet of the 90s.  Security wise, one is controlled by Proof of Work or similar algorithms where as private one just as vulnerable as any centralized systems.  Examples of consortium chains:  R3 (Banks), EWF (ENergy), B3i(Insurance).  As you can see the differences are on the infrastructure level (security, performance,…) and the level of business model (who is able to participate, think outside the box,…). So start thinking from the business and not the technology point of view. Are there requirements to share information or processes with business partners which are not digitally integrated today? Do you want to get in cooperation with new partners? Do you have the requirement to give third parties access to a subset of the transaction data to verify them? In that cases, the public blockchain is an interesting opportunity for you. If you have very hard regulatory or special data security and data protection requirements and are you working in a predefined, stable partner network? Then a permissioned chain may be a good option for you
  2. https://www.freepik.com/premium-vector/route-to-the-top-of-mountain_2191906.htm https://www.freepik.com/premium-vector/route-to-the-top-of-mountain_2191908.htm