Innovationstag Digital Banking Liechtenstein 2016

50 Mrd.
Geräte bis
2020
Internet
of
Things

50 Mrd.
Geräte bis
2020
Internet
of
Things
Internet
of
Money

50 Mrd.
Geräte bis
2020
Internet
of
Things
Internet
of
Money
> 40%
des Daten-
verkehrs

50 Mrd.
Geräte bis
2020
Internet
of
Things
Internet
of
Money
> 40%
des Daten-
verkehrs
KI
>4 Mrd.
Internet
User 2020

50 Mrd.
Geräte bis
2020
Internet
of
Things
Internet
of
Money
> 40%
des Daten-
verkehrs
KI
>4 Mrd.
Internet
User 2020
Simula-
tionen

Internet
of
Things
Internet
of
Money
Simula-
tionen
KI
50 Mrd.
Geräte bis
2020
> 40%
des Daten-
verkehrs
>4 Mrd.
Internet
User 2020
Regulatorische Rahmenbedingungen

The Age of CryptoFinance
How CryptoFinance Will Transform the World
Johann Gevers, Founder and CEO
johann.gevers@monetas.net

Two Ways to Interact
voluntary > moral
violent > immoral
voluntary interactions create value
violent interactions destroy value
business = voluntary trade > creates value = moral
How do we increase voluntary trade
and thereby create more value in our world?

We need a version 2.0
of the ﬁnancial system.
— Andrew Lo, Financial Times, 27 August 2012

The ﬁnancial system is at the epicenter
of a fundamental transformation that is
radically changing geopolitics.

Terrorism
Financial crises
Corrupt governments
Natural disasters
Climate change
Problems

1. Trade barriers
2. Health (contraception, disease,
malnutrition)
3. Education (illiteracy)
— Copenhagen Consensus
The World’s Biggest Problems

Removing trade barriers is
over 30 times more eﬀective
than any other intervention.
— Copenhagen Consensus

Free trade is
50 times more eﬀective
than democracy at reducing violent conﬂict.
— Economic Freedom of the World 2005 Report

Wealth creation
is the fundamental driver
of individual and social well-being.

How do we build wealth?
1.  Greater security of property
2.  Lower transaction costs
3.  Larger economic networks
⇒  Greater division of labor and specialization
⇒  Higher productivity
⇒  Rising wealth creation and standard of living

1. Secure Property Rights
Development is very complex. But if you do not
have an order that tells you who owns what, none
of the rest works.
— Hernando de Soto
Two-thirds of the world’s population — four
billion people — are locked out of the capitalist
system.

2. Eﬃcient Trade
A mere 0.1% reduction in transaction costs
quadruples a country’s wealth
— the diﬀerence between Argentina
and Switzerland.
Low transaction costs are the fundamental
driver of economic growth.

0–25% 26–50% 51–75% 76–100%
Percent of total adult population that do not use
formal financial services
Estimates
used to calculate
regional averages
0–25% 26–50% 51–75% 76–100%
Estimates
used to calculate
regional averages
Fully 2.5 billion of the world’s adults
don’t use formal banks or semiformal
Counting the world’s unbanked
Alberto Chaia, Tony Goland, and Robert Schiff
Alberto Chaia is a
The microfinance movement, for
example, has long helped expand
savings products, about 800 million live
on less than $5 a day. Large unserved
choices, lower-income consumers will
benefit from credit, savings, insurance,
Sub-Saharan Africa
326 million adults
Middle East
136 million adults
Latin America
250 million adults
East Asia,
Southeast Asia
876 million adults
South Asia
612 million adults
Central Asia & Eastern Europe
193 million adults
High-income OECD countries
60 million adults
(Members of Organisation for Economic
Co-operation and Development)
Percentage of total adult population who do not use formal or
semiformal ﬁnancial services
80%
67%
65%
49%
59%
58%
8%
Total
2,455 million adults
53%
0–25% 26–50% 51–75% 76–100%
Estimates
used to calculate
regional averages0–25% 26–50% 51–75% 76–100%
Estimates
used to calculate
regional averages% 26–50% 51–75% 76–100%
f total adult population that do not use
ancial services
Estimates
used to calculate
regional averages
% 51–75% 76–100%
population that do not use
es
Estimates
used to calculate
regional averages
Sub-Saharan Africa
Middle East
East Asia
South Asia
Adults who use formal or semiformal financial services,
millions of adults
332 283
<$5/day >$5/day
396 45
56 25
4526
Yet serving adults who live
on less than $5 a day is
not only possible at scale—
to a large degree, it is
already happening.
The unbanked are not unservable
76–100%
do not use
Estimates
used to calculate
regional averages
Adjusted for purchasing-power parity
3. Economic Network Size

Two Problem-Solving Paradigms
1.  People-based systems
2.  Technology-based systems

People-based systems
don’t scale beyond Dunbar’s number
Technology-based systems
scale virtually without limit

Finance 2.0
Replacing expensive, fallible people-based systems
with cheap, reliable technology-based systems

What if we could develop a
technology
that
§  secures property rights
§  reduces trading costs
§  integrates people into the global economy?

CryptoFinance
Uses cryptographic (encryption) algorithms to:
§  secure property
§  reduce trading costs
§  enlarge economic network size
and thereby:
⇒  extends division of labor & specialization
⇒  raises productivity of labor
⇒  dramatically boosts wealth creation and
quality of life.

CryptoFinance
will catalyze
the greatest explosion of wealth
creation the world has ever seen.

Bitcoin emerges:3 January 2009

CryptoFinance:
The Main Innovation
Peer-to-peer transactions
in a decentralized network
using bearer instruments
that require no trust
between the parties
nor in any third party
— BIS report, November 2015

The Key Innovation in Cryptoﬁnance:
Digital Bearer Instruments
A bearer instrument is a contract
that entitles the holder to ownership
of the property described in the contract.
No ownership information is speciﬁed
in the instrument itself — whoever holds the instrument
is the owner of the property.
e.g. physical cash or digital tokens

The Big Story
The invention of digital bearer instruments enables the
creation of true digital wallets
— making traditional accounts unnecessary.
=> Fundamental shift
from centralized, provider-centric, account-based systems
to decentralized, user-centric, wallet-based systems
This changes everything.

$20
Wallet-based
systems
$20
Account-based
systems

Users transact directly:
=> real-time value transfer
=> peer-to-peer exchange of value
- without an intermediary
- without accounts
- without liabilities
> no reconciliation
> no clearing
> no settlement
No settlement required
Payment = Settlement

The digitization of bearer instruments enables value to
ﬂow instantly and at negligible cost via the internet
Payment Message
Record
Process
Reconcile
Clear
Settle
Value Transfer
Instant Transfer
via Digital Bearer Instruments
TODAY TOMORROW
Debts <> Accounts Asset tokens <> Wallets

True Digital Wallets
Financial services providers
oﬀer advanced ﬁnancial services
based on digital tokens
stored in true digital wallets
controlled by users

The role of central banks
What would happen if we combined
the best attributes of cryptoﬁnance platforms
with the features of established national currencies
under the sponsorship of a central bank?
— Deloitte, July 2015

Digital Legal Tender
Central banks issue digital legal tender
101001010111010101010
101010100000111010101
101010101011000000010101011010
101010101010101001111
1010101010101111111000001011
1011010101011100001

The Solution
Central banks issue national currencies on an
open cryptofinance platform — digital legal tender
> Financial services operators can leverage their niche,
while benefiting from a unified global system

Central Bank Digital Currency
Bank of England sees big beneﬁts:
•  3% boost to GDP
•  New tool for central banks to
manage business cycles
•  Greater control of interest rates for
consumers
•  Reduction in systemic risk due to
fractional reserve banking
McKinsey estimates:
•  $3.7 trillion GDP boost to emerging economies in decade
•  $110 billion per year reduced leakage in public spending and tax collection
•  $400 billion per year cost savings for ﬁnancial services providers

The CryptoFinance Ecosystem
in greater detail

Society — Structure and Process
1.  Rules of the Game
(framework of freedom)
> politics / law
w social consensus
2.  The Game
(production of prosperity)
> economics, entrepreneurship
w individual contracts

The CryptoFinance Ecosystem
§  probabilistic consensus systems (e.g. Bitcoin)
ü  community standards and infrastructure
x  slow, expensive, limited scalability, public
>  secure voting systems, property registries,
uncensorable data, inﬂation-proof currencies, etc.
§  deterministic contract systems (e.g. Monetas)
ü  trading parties
ü  fast, cheap, unlimited scalability, private
>  secure, eﬃcient retail transactions, micropayments,
resource allocation, internet of things, etc.

Contract
systems
(Monetas)
contract <>
consensus
Consensus
systems
(Bitcoin)
Speed milliseconds
1 000 x
faster
10 min to 18 hrs
Cost 1/10 000th cent/tr
1 000 000 x
cheaper
USD 5/tr
Scalability millions tr/sec
1 000 000 x
more scalable
7 tr/sec
Contract Systems vs Consensus Systems
— suitability as transaction platform

Consensus technologies and
Contract technologies
are complementary
and synergistic

Best of both worlds
Store assets securely in consensus systems
> asset layer
Trade assets eﬃciently in contract systems
> transaction layer

<$1
$1-5
>$5
The Transaction Business
Where is the volume?
In Kenya, 80% of all transactions are less than $5
In Switzerland, the average transaction size is $27
In the internet of things, transactions will be fractions of a cent

Current cashless systems are
too expensive for daily transactions

Still surprised that people prefer cash
and resist cashless systems?

The Hidden Cost of Physical Cash
Developed countries: 1–2% of GDP
Developing countries: 5–7% of GDP
Billions of people are un(der)banked — no access to
formal ﬁnancial services (savings products, insurance, etc.)
The unbanked lose 15–25% of their savings every year
=> Why save if the savings will be lost anyway?
=> The unbanked stay poor

Monetas is the ﬁrst transaction platform
that can compete with cash:
ü  Requires no bank account
ü  Instant settlement
ü  Cheaper than cash
And it oﬀers features cash cannot match:
ü  Security
ü  Smart contracts
ü  Global payments and trade

What is a transaction?
A transaction is a legal agreement
> a contract
Transaction systems are
contracting systems.

Monetas has built a universal contracting platform.
A universal platform for global commerce.

Standardized Financial Contracts
Major breakthrough
§  5 fundamental building blocks
§  32 standard contracts cover 99.99% of all use cases
Dramatic simplification, standardization, risk reduction,
and efficiency gains across the financial system
ü Being built into the Monetas platform

Bank in a Box
SoftwareHardware
Smart contracts
Digital wallets

Monetas
A universal platform for global commerce
Open, standards-based:
§  All ﬁnancial instruments, all national and digital currencies
§  Interoperable across instruments, platforms, and borders
Globally scalable, high performance:
§  Processes entire world’s transactions (1 million per second) in
real time on low-cost distributed server infrastructure

The world’s global distribution platform:
The mobile phone
Cryptographically secure, decentralized
communication and trading systems
— delivered globally via the mobile phone —
become the enabler of
individual freedom and prosperity.

Radical Transformation of
Financial systems
Communications systems
Production systems
Governments and Legal systems
Explosion of Wealth creation

Implications and Opportunities
For Finance, Business, and Society

The Big Trend
From Fragmented Local Systems
to Integrated Global Systems
> The Rise of Global Platforms

What is killing ﬁnancial services today?
Compliance – the production of trust – is
unreasonably costly because of:
1.  Dated technology
2.  Unwise regulation

Dated Technology
§  Legacy infrastructure
•  slow, expensive, manual
•  insecure
•  limited functionality
§  Fragmented ecosystem
•  non-standard instruments
•  closed, incompatible systems
•  complicated, unsensible rules

CryptoFinance
§  Modern infrastructure
•  fast, cheap, automated
•  highly secure
•  advanced functionality
§  Uniﬁed ecosystem
•  standardized instruments
•  open, interoperable systems
•  simple, sensible rules

Reduce the cost of
physical cash

Maintain clear
oversight
Eﬃciently manage
monetary policy
Expand ﬁnancial
inclusion
Eliminate
counterfeiting risk
Create a fully
interoperable
economy
The Opportunity for Central Banks

Benefits for commercial banks
§  Offer true digital wallets with advanced functionality
§  Expand market coverage without costly branch networks
§  Run new and legacy platforms in parallel > interoperable
§  Develop unique products and services on open platform
§  Improve security and privacy
§  Improve efficiency, automation, and scalability
§  Reduce compliance costs and liability
§  Reduce financial, operational, and regulatory risks

The fragmented digital ﬁnance ecosystem
and the threat from Global Tech Giants
Apple Pay, Google Wallet, PayPal, etc.:
1.  are merely wrappers for legacy systems
2.  take over the customer relationship
3.  leave banks with the cost of legacy systems
=> not the solution

The Opportunity for the Financial Industry
Cryptofinance technologies solve critical problems
and enable financial institutions to refocus on their
core strengths:
§  Trusted financial partner
§  Integrated financial services
Leapfrog expensive brick-and-mortar infrastructure
and reach billions of new customers.

The Internet of Things (IoT)
§  In 2008, there were already more "things" connected to the internet
than people.
§  By 2020, there will be 50 billion things connected,
with USD 19 trillion in proﬁts and cost savings over the next decade.
§  The convergence of machines, data, and analytics will become a
USD 200 billion industry over the next three years.
— General Electric (GE)

The Internet of Things is still missing a
critical enabling technology
desert before rain desert after rain

The Internet of Things needs:
An extremely fast, extremely eﬃcient,
globally scalable ﬁnancial transaction platform
to enable resource allocation for peer-to-peer
technologies
=>

Digital Finance Compliance Association
(DFCA)
A consortium of cryptofinance companies
working to create a friendly regulatory environment
for cryptofinance,
thereby enabling Switzerland to reinvent itself as
the financial center of the future

Regulating CryptoFinance
for Security, Innovation, and Economic Growth

The Purpose of Regulation
1.  To prevent harm to persons
and their property
2.  To foster prosperity.

The Limits of Regulation
Good people don’t need laws.
Bad people ﬁnd a way around laws.
– Plato
When regulations are unreasonable,
we drive people into the black market
– with highly destructive consequences for
the economy, the rule of law, and social integrity.

The Costs of Regulation
FATCA is estimated to raise less than USD 10 billion
over the next ten years,
but the compliance costs and the loss of foreign
capital investment resulting from the law will likely
cost several orders of magnitude more than the
expected revenue.
This is economic madness.

Reasonable Regulation
§  Risk-based
§  Beneﬁts exceed costs
§  Principles-based, not rules-based

Proposed Regulatory Framework
for CryptoFinance
Digital technologies enable more effective and more efficient regulation:
§  Transparency > all digital transactions leave a digital trail
§  Accountability > identify transaction parties via behavioral identity
§  Privacy > enabled by default (presumption of innocence)
> lifted for bad actors (targeted investigation)
§  Innovation > regulate criminal actions (harms to persons or property)
— not persons, entities, structures, processes, or technologies
§  Efficiency > digital compliance measures can be efficiently automated.

The Age of CryptoFinance
A new era in human social evolution
The Technology of Trust
The transformation
of our world

A new generation of visionary
entrepreneurs is building
Society 3.0
Join Us.

The world’s most advanced transaction platform
Johann Gevers, Founder and CEO
johann.gevers@monetas.net

Intelligent Software
and the Implications for Banking
Sascha Corti
Technical Evangelist, Microsoft Switzerland
sascha.corti@microsoft.com| techpreacher.corti.com| @techpreacher

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“Software is eating
the World”
Marc Lowell Andreessen
Published in the Wall Street Journal, 2011
“The Cloud is
eating Software”
Joseph Sirosh
The Future of Analytics Conference, 2015

“Data is the
New Electricity”
Satya Nadella
Data Driven Event, 2016
New York City
https://www.microsoft.com/en-us/cloud-platform/data-driven

Machine Learning
Cloud
Big Data

Cortana Intelligence
Data
Sources
Apps
Sensors
& devices
People
Apps
Automated
Systems
Data Intelligence Action

Data Intelligence Action
People
Automated
Systems
Apps
Web
Mobile
Bots
Data
Sources
Apps
Sensors
and
devices
Data
Intelligence
Dashboards &
Visualizations
Information
Management
Big Data
Stores
Machine
Learning and
Analytics
Cortana
Event Hubs
HDInsight
(Hadoop
and Spark)
Stream
Analytics
Bot
Framework
SQL Data
Warehouse
Data
Catalog
Data Lake
Analytics
Data Factory
Machine
Learning
Data Lake
Store
Cognitive
Services
Power BI

Data Creation Data Ingestion Storage Analytics Presentation & Action
Event Hub SQL Database
Machine
Learning
App Service
IoT Hub
Table/Blob
Storage
Stream
Analytics
Power BI
Service Bus DocumentDB HDInsight
Notification
Hubs
External Data
Sources
3rd party
Databases
Data Factory Mobile Services
Data Lake BizTalk Services
{ }

General A.I. Specialized A.I.
Project Malmo
T-800
Google AlphaGo

Best of Microsoft
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Junk Email
Filtering
Search
Engine built
with ML
Enable Data
Mining of
DBs
Traffic
Prediction
Service
using ML
Understand
User’s
Gestures
Realtime
Speech-to-
Speech
Translation
Azure ML
Launches

Machine Learning Purposes
Historical Data Predict Future Trends Behavior
Predicting future performance from historical data

Class Outlook Temp Wind
Play Sunny Low Yes
No Play Sunny High Yes
No Play Sunny High No
Play Overcast Low Yes
Play Overcast High No
Play Overcast Low No
No Play Rainy Low Yes
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? Sunny Low No
Outlook
Temp WindTrue
True False True False
Machine
Learning

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Data Scientist / IT

Model as a
Web Service
Classic and New
Machine Learning Studio
ML STUDIO
Data Science / Analytics Business

The Gallery contains many examples specific to the banking industry that can serve
as models for the machine learning solutions you’re developing. These examples
include predicting credit risk, monitoring for online fraud, and anticipating
economic factors that can affect your customers and your business.
Democratizing
Artificial Intelligence

Specialized Artificial Intelligence
Machine Learning
Features Algorithms
Training
Data
Human
In The
Loop

Event Hubs
Stream Analytics
Machine Learning
Storage
SQL database
HDInsight
Power BI
• Analytics for everyone, even non-data experts
• Your whole business on one dashboard
• Create stunning, interactive reports
• Drive consistent analysis across your org
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Here are some of the things I
can help you with…
Cortana in Windows 10
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Event predictions
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Flight status, traffic conditions, changes in weather, …
Setting reminders, scheduling meetings, getting directions, …
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Here are some of the things I
can help you with…
With the Cortana Analytics Suite
Answers from organizational data in Power BI
“What were our biggest deals that closed last month?”
Integration with prediction solutions
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quarter?”
Monitoring KPIs and preemptive alerting
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Line of business process integration
Assistance with expense report submission on-time within policy
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Data Scientist / IT
Developer

JSON: [
{
"faceRectangle": {
"left": 175,
"top": 187,
"width": 215,
"height": 215
},
"scores": {
"anger": 0.000008473417,
"contempt": 0.0000987896055,
"disgust": 0.00003328445,
"fear": 0.0005069857,
"happiness": 0.132762313,
"neutral": 0.0136927208,
"sadness": 0.0000227907713,
"surprise": 0.852874637
}
}
]
“Enable your Apps to See, Hear, Interpret, and
Interact in more Human Ways.”
Emotion
API

Cognitive
Services
Give your solutions
a human side

https://www.microsoft.com/cognitive-services/en-us/computer-vision-api

Analyzes unstructured text.
Sentiment analysis
How do your customers feel
about your brand or products?
Key phrase extraction
What are your customers
talking about?
Interactive experience

Understand what Users are
Saying
• Determines Intent
• Detects Entities
Seamless Integration with
Speech Recognition
Learns over Time
Use pre-built, World Class
Models from Bing and
Cortana
Intent: TextToSpeech
Content: NewsHeadlines
Read the
headlines
Play
yesterday’s
Daily Show
Intent: PauseDevice
DateTime.duration: 5 Min
Pause for
5 minutes
Intent: PlayEpisode
Content: Daily Show
DateTime.date: T-1 Day
Language
Understanding
Intelligent Service

At Peak
1’600 Cores, 5.6 TB RAM
Over 2000 Images per Second uploaded
75
38
13
82 Million Unique Users
565 Million Images uploaded
1 Developer, 0 Downtime
… to reach 50 Mio users:

Bots:
• Purpose built Services
• Transactional in Nature
• Need to know Information &
Context for specific Task
Completion only
Agents:
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your behalf
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• Knows your Personal Information like
Interests Calendar, etc.
• Can get help from relevant Bots

Developer
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Cloud Computing, Machine Learning and Big Data are
moving Business Decisions from Reactive to Predictive.
Cognitive Computing allows Systems to Understand the
Users Sentiments, Emotions and Intents.
Consumer’s use of Technology is Shifting.
Digital Assistants and Bots are the Next Generation UX.

Learn about Cortana Intelligence
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Proactively Drive User Engagement with Your Apps
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DAOs - the better companies?
Challenges and Potential of Decentralized Autonomous Organizations
in the Financial Sector
Dr. Mathias Bucher – Diamond Coin
Vaduz, Liechtenstein – October 27, 2016

Slide
Blockchain – World Computer???
Latency
• 14 sec for 1 block,
• 3 min for de-facto finality
Scalability
• 15 transaction / sec with
current PoW consensus
algorithm
Privacy
• Low at protocol level
Storage
• Expensive
• Limited size compared to
modern storage drives
2, 31/10/2016 © Mathias Bucher, www.Blockchain-Innovation.com

Slide
Analogy: Blockchain V1.0 (Bitcoin)

Slide
Analogy: Blockchain V2.0 (Ethereum)

Slide
Ethereum Blockchain:
Secure, resilient state transition machine
- Decentralized architecture
 Resilience – no data loss in case of server outage
 DoS attacks unlikely to succeed
- Immutable data + smart contracts = single source of truth
 Enable “trustless” cooperation between parties
 Allow for decentralized autonomous governance schemes
- Cryptographically signed transactions and messages
 No phishing
 No viruses
Tx 1
…
Tx n
Tx 1
…
Tx n
Tx 1
…
Tx n

Slide
Evolution of the Ethereum Eco-system
Building the
Blockchain
Refining the
Blockchain
Scaling the
Blockchain
2015 2016 2017
Creating Toolsets/
Tech Stack
Refining the Tech
Stack
Building
Real-World
Applications

Slide
Smart Contracts: Neither “Smart” nor “Legal Contracts”

Slide
Smart Contracts: Enablers of efficient, trustless cooperation
Formally: Code
• Stored on Blockchain
• Verified by Blockchain
• Executed on Blockchain
• Can hold balance of crypto-currency or –asset
• Can control other smart contracts
Conceptually: Interaction Protocol
• Between two or many parties
• Who do not need to know or trust each other
• But can rely on the exact execution according
to the agreed terms
• No cheating or unilateral modification possible

Slide
DAO: Decentralized Autonomous Organization
A smart contract implemented on the Blockchain. Created to ensure:
Governance
- Voting system based on digital tokens
- Rules are transparent and enforceable
Participation
- Distribution of revenue or inflows/royalties according to pre-agreed terms
Compliance
- System needs to respect legal framework and regulations of jurisdictions
where it is used

Slide
Blockchain: Enabling the Age of Decentralization
- DAOs won’t replace companies
- DAOs can help making companies more efficient, and more credible
- Big disruption is a different one: The nature of companies will change
 Shift away from centralized companies to decentralized production
 Removal of “Man in the middle” /Disintermediation
 Organizational Economies of Scale of companies will disappear

Slide
Impact of the Blockchain on Financial Industry?

Slide
Roles of a Bank
Payments
Credit
Custody
Investment
management
Blockchain Disruption over time
Complexity of coordination

Slide
Payments
- Inside the banking system
 SWIFT under massive attack of Ripple
 Early Ripple adopters:
Barclays, CIBC, Intesa Sanpaolo, Royal Bank of Canada, Banco de Santander
- Disruptors
 Bitcoin as pioneer
 ZeroCash: Full privacy on the Blockchain
 Micro-payment channels (e.g., Ethereum Raiden, Bitcoin Ligthning)
 Payments are already happening on the Blockchain

Slide
Future of Credit
- Presumption:
 all parties have a unique ID on the Blockchain (which means clear identification of all
parties)
 Access to the Blockchain is easy and user-friendly
- Example of decentralized Blockchain credit market
 SME company seeks credit for new project, and submits project to Blockchain for
review
 Specialized credit analyst (company) rates project. It’s reputation tokens define both
weight of opinion, and compensation
 Decentralized market mechanism defines interest rate
 Smart contract enforces payment of interest tranches
 Credit mechanism without Banks

Slide
Future of Custody
- Presumptions:
 all parties have a unique ID on the Blockchain
 Assets are represented digitally on the Blockchain
- Example of decentralized custodian solution
 KYC provider (company) creates customer file
 Links KYC file to unique ID of customer on Blockchain
 Every asset transaction includes encrypted Blockchain ID of customer
 Customer uses the service of Portfolio aggregation and –analysis provider for reporting
and recommendations
 Custody of customer assets on the Blockchain, not at custodian bank

Slide
Future of Investment Management
- Presumption
 All parties have a unique ID on the Blockchain
 Access to the Blockchain is easy and user-friendly
 Assets are represented digitally on the Blockchain
- Example of decentralized Blockchain credit market
 High-net-worth client would like to delegate investment decision to professional provider
 Investment manager (company), rated transparently by reputation tokens, competes for mandate
with other investment managers
 Mandate details are specified in smart contract between client and investment manager
 Smart contract supervises the mandate execution of investment manager. Compensation of
manager paid automatically via smart contract.
 Investment Management without Banks

Slide
Blockchain will disrupt Banking until 2030
Intuitive User Interface
Blockchain SYSTEM INFRASTRUCTURE
Unique digital ID
on the Blockchain Reputation system Assets digitalized via
smart contracts
Base technology
Key components
Multiplier for technology adoption
Payments
Credit
Custody
Investment
management
Decentralized banking services

Slide
Real-life DAO: Diamond Coin
Secure collateral
(Diamonds)
Digital currency
(Coins)
+ =
Diamond Coin

Slide
Rationale for Diamond Coin
More profit for producers
Cheaper prices for Diamond buyers
Disintermediation
of Diamond Value Chain
Liquidity
for Diamond Owners
Diversification
of currency portfolio
Less reliance on dealer network
Reduced bid-ask spreads, smaller “cost” of liquidity
Faster and cheaper transactions
Lower dependency on Central Bank currencies

Slide
In the US, the monetary base has increased over 400% since 2008

Slide
In CH, the monetary base has multiplied more than 10-fold

Slide
Commodity prices have crashed since the start of QE

Slide
Relative to financial assets, they are at an ALL-TIME low

Slide
The Economic Activity starts to look shaky…

Slide
Diamond Coin Value Chain
System design/setup
• Compliance with legal/ regulation
• System governance
• Asset model
Provenance & certification
Transport
Storage
Tracking
Insurance
Digital/financial value chain
Coin issuance
Collateral margin management
User experience
Physical value chain

Slide
Role of Diamond Coin DAO
System design/setup
• Compliance with legal/ regulation
• System governance
• Asset model
Provenance & certification
Transport
Storage
Tracking
Insurance
Digital/financial value chain
Coin issuance
Collateral margin management
User experience
Physical value chain
IN RED: DAO functions

Slide
Reflections about System Governance
27, 31/10/2016
Align long-term incentives
of Stakeholders and
Shareholders
Protect system from
external pressure
No unilateral changes by
system admin must be
allowed
Both token holders and
administrator need to be part of
decision process, and economic
upside
Protect system from
internal collusion
Checks and balances in DAO
required

Slide
Conclusions
- DAOs won’t replace companies
- DAOs can help making companies more efficient, and more credible
- Big disruption is a different one: The nature of companies will change
 Shift away from centralized companies to decentralized production
 Removal of “Man in the middle” /Disintermediation
 Organizational Economies of Scale of companies will disappear
- For the financial industry, this implies tectonical shifts in how it is organized
- The lower the organizational complexity required to provide a service, the bigger the
disruptive potential of the Blockchain
- Decision makers need to develop visions how to embrace the Blockchain Technology

Questions? Interested in additional information?
Contact us: www.dmcoin.net
info@dmcoin.net
Dr. Mathias Bucher – Diamond Coin
Geneva - September 30, 2016

Slide
Appendix

Slide
Management of the Physical Chain
32, 31/10/2016
Provenance Certification Transport Storage
Tracking
Insurance

Slide
Legal / regulatory pitfalls
33, 31/10/2016
Disclaimer: the below is no legal advice, consult your lawyer ;-)
Digital currencies/ Dapp tokens are less likely to be treated as securities if:
Token is purchased for use-value
rather than profit expectation
Token is purchased after
application/ system is already up-
and-running
Token value is dependent on the
purchaser’s own effort and/or
the efforts of a large number of
unaffiliated others
Avoid “Initial Coin Offering”
Avoid “Profit Sharing”
Avoid becoming a
“Centralized Authority”

REGIERUNG
FÜRSTENTUM LIECHTENSTEIN
Innovationstag Digital Banking 2016
Innovations-Clubs, LVC und
Regulierungslabor in der Praxis

Übersicht
• Impuls Liechtenstein / Rollen im Innovationsprozess
• Innovations-Clubs
• Liechtenstein Venture Cooperative LVC
• Regulierungslabor
• SEED X Liechtenstein
2

Innovation – Erfolgsfaktoren
4
Innovation
Kenntnis von (Kunden-)Bedürfnissen
Kreativität
Know-how
Unternehmergeist
Finanzierung

Innovations-Clubs
• Verbesserung der Rahmenbedingungen, damit
neue Wertschöpfung entsteht?
• Wie erhalten wir wirklich neue Ideen?
5
Innovationsprozess am Finanzplatz

Innovations-Clubs - Funktionsweise
6

Innovations-Clubs - Beispiele
• Digital Onboarding
• Englisch-Übersetzung der wichtigen Gesetze
• Abbau von Hindernissen im Marktzugang
• Doppelbesteuerungsabkommen
7

Innovations-Clubs - Status
• Rund 30 Innovations-Clubs
sind registriert
• Sehr unterschiedliche
Themenbereiche
• Projektstatus
• 17% erfolgreich abgeschlossen
• 4% nicht weitergeführt
• 74% in Arbeit
8

Innovations-Clubs - Fazit
Erkenntnisse:
• Bottom-up Ansatz bewährt sich: Viele neue Ideen
• Ressourcensituation Innovations-Clubs
• Ressourcenaufwand seitens Regierung / Verwaltung
Fazit:
• IC sind Bestandteil des Innovationsprozesses am Finanzplatz
• Faktor für Standortattraktivität
9

Liechtenstein Venture Cooperative LVC
10
LVC
(Fairer und rechtssicherer
Umgang mit Ideen,
Arbeitsleistung
und Finanzierung)
Investoren
Finanzierung
Kommerzielle
Unternehmung
(AG, GmbH, etc.)
Erfolgreiche Innovation
Markteintritt

LVC: Komponenten
11
Liechtenstein Venture Cooperative LVC
Rechtsform:
Kleine
Genossenschaft
Kostenlose
Vorlagen
für Gründungs-
dokumente
LVC-
Code of Conduct
Referenz für faire
Beteiligung

LVC Code of Conduct
Modell für faire Beteiligungen
12
Schutz des
«Innovators»
Berücksichtigung
der Risiken
der frühen Phasen
Schutz der
Investitionen
der späteren Phasen
50% + 100 MGP
Basisanteil
Risiko-
multiplikatoren
pro Phase
«participating
liquidation
preference»
Referenzmodell / freiwillig
Vorlage Gründungsdokumente
LVC Beitragsrechner

Auszahlungsprofil
13
Verkaufserlös

Erfolgsabhängige Anteile am
Unternehmen
14

Use case 1: Bankangestellter
15
LVC

Use case 1: Vorteile LVC
• Höhere Rechtssicherheit für alle Beteiligten
• Höhere Umsetzungschancen durch Kooperation
• Viele kleine Leistungen ergeben auch Fortschritte
• Geringer Gründungsaufwand
• Skalierbarkeit
• Flexibilität
16

Use case 2: Joint Innovation
17
LVC

Use case 2: Vorteile der LVC
• Geringe Kosten für Strukturierung der Zusammenarbeit
• Flexible Gestaltungsmöglichkeiten (Anteile, Nutzungsrechte)
• Kapselung des geistigen Eigentums
• Skalierbarkeit
• Flexibilität
18

Use case 3: Kanal für radikale
Innovation
19
LVC

Use case 3: Vorteile der LVC
• Offener Kanal für «disruptive» Ideen
• Motivation der Mitarbeiter (inkl. Partizipation)
• Flexible Gestaltungsmöglichkeiten (Nutzung Know-how,
Infrastruktur als Investment)
• Flexibilität in der Verwertung
20

LVC: Erfahrungen
Erfahrungen:
• Gründungsdokumente über 150 mal verteilt oder geladen
• Resonanz sehr positiv, grosse Erleichterung für Gründer
• Unbekanntes Vehikel für Investoren
• Code of Conduct wird meistens verwendet und ermutigt
Erfinder, ihre Idee zu teilen
21

LVC: Fazit
Fazit:
• Erleichtert die Entwicklung einer Idee
• Motiviert Personen mit Ideen, diese zu teilen und zu
entwickeln
Zukunft:
• Erweiterung des Anwendungsfelds der LVC für die
Markteintrittsphase
• Verstärkte Information von internationalen Investoren
22

Regulierungslabor
• Expertengruppe in der FMA für innovative Geschäftsmodelle
und Fin-Tech
• Aktive Begleitung im Bewilligungsverfahren
• Fachliche Diskussion über Regulierungstrends
• Impulse für Verbesserung der Rahmenbedingungen
23

Regulierungslabor: Möglichkeiten
24
Bewilligungspflichtig?
Passender
Regulierungsrahmen?
JA
Berührt
Grundinteressen?
NEIN
Ordentliche
Bewilligung
JA
Innovations-Club
Impuls für Anpassung der
Rahmenbedingungen
NEIN
Monitoring
JA
Kein
Monitoring
NEIN

Regulierungslabor: Erfahrungen
• Sehr positive Resonanz
• Prozess bewährt sich
• Gute Plattform zur Grundlagendiskussion
• Wird in der Fin-Tech Szene wahrgenommen
• Faktor der Standortattraktivität für Fin-Tech
25

SEED X Liechtenstein
• Seed Accelerator
• Finanzierung und Coaching in der Seed-Phase
• Investment Management durch VC - Experten
26

Nutzungsmöglichkeiten SEED X
• Aufbau eines neuen Geschäftsmodells durch Mitarbeiter
• Innovationskanal für Banken (professionelles Coaching, Co-
Finanzierung)
27

Einladung
Nutzen Sie die Möglichkeiten,
• zur Unterstützung Ihres Innovationsprozesses
• zur Verbesserung der Rahmenbedingungen
• zur Steigerung der wirtschaftlichen Stärke und Attraktivität
unseres Finanzplatzes
28

FYP (Forecast Your Pension)
Prognose und Planung der eigenen Pension
Universität Liechtenstein
Innovationstag Digital Banking Liechtenstein
2016
Prof. Dr. Michael Hanke
Ass. Prof. Dr. Martin Angerer
27.10.2016

Agenda
• Motivation
• Was macht Vorsorge so komplex?
• Das „FYP“-Tool
• Ausblick
1

Die Bevölkerung wird älter
2

Motivation
• Altersarmut wird eine der grössten Herausforderungen
in den kommenden Jahrzehnten
– Nach eurostat sind 11,4% der Männer und 15,6% der
Frauen in der EU altersarmutgefährdet
• Die „Financial Literacy“ im Bereich Pensionsvorsorge ist
gering
– Dies gilt für die Bevölkerung aber auch für Berater!
• Es besteht eine Vermeidungshaltung dem Thema
gegenüber
– Mit Hilfe eines Tools überbrückt man Berührungsängste
– Tabuthemen wie Ehegattentod können selbständig
analysiert werden
3

Agenda
• Motivation
• Ausblick
4

Was macht Vorsorge so komplex?
• Entwicklungen der Wirtschaft und des eigenen
Vorsorgeinvestments
– Inflation, Rendite, Zahlungsausfälle
• Persönliche wirtschaftliche Risiken
– Teilweiser oder kompletter Arbeitsplatzverlust,
unvorhergesehene Sonderbelastungen
• Langlebigkeitsrisiko
• Persönliche gesundheitliche Risiken
– Krankheit, Erwerbsunfähigkeit
• Steuerliche Risiken
– Veränderungen im Steuersystem
• Institutionelle Risiken
– Veränderungen in (nicht-)staatlichen Vorsorgesystemen
5

Wichtige Grundlagen
• Der Zinseszinseffekt
– Inflation
– Der Einfluss von Anlagezeiträumen
• Risikobehafteter Anlageerfolg
• Diversifikation
• Langlebigkeit
6

Zinseszinseffekt
7
Darstellung aus Vorlesungsskriptumvon J. Kalser

Risiko: Unterschätzen der Inflation
8
Fr.-
Fr.100'000.00
Fr.200'000.00
Fr.300'000.00
Fr.400'000.00
Fr.500'000.00
Fr.600'000.00
Fr.700'000.00
Fr.800'000.00
30 25 20 15 10 5 0
Preisentwicklungen für verschiedene Inflationsniveaus 30 Jahre vor
Pensionsantritt
7%
5%
3%
1%
Jahre bis
Pensions-
antritt
Anfangskosten:
CHF 100.000
Der Zinseszinseffekt wirkt umso stärker,
je höher die Inflationsraten und je länger der Zeitraum.

Freiwillige Vorsorge passiert oft zu spät
9
Fr.10'000.00
Fr.15'000.00
Fr.20'000.00
Fr.25'000.00
Fr.30'000.00
Fr.35'000.00
Fr.40'000.00
Fr.45'000.00
50 45 40 35 30 25 20 15 10 5 0
Anlage von CHF 10.000 bis zum Pensionsantritt
Anlage für 50 Jahre
Jahre vor
Pensionsantritt
Zinssatz
3%

Der Anlageerfolg ist risikobehaftet
10
Erwartete Rendite 1%, Risiko 0,03 Erwartete Rendite 2%, Risiko 0,08

Diversifikation in der Vorsorge
• Aufteilen von laufenden und einmaligen
Sparbeiträgen auf unterschiedliche Anlageformen!
– z.B. Ansparen in der 2. Säule oder Investieren und
Versichern in der 3. Säule (bspw. mit Versicherungen,
Aktien, Anleihen, Fonds, Immobilien).
• Nutzen von Handlungsfreiräumen in der zweiten
und dritten Säule, um die Vorsorge an die
individuelle Situation anzupassen.
• Diversifikation sollte sich dabei nicht auf Produkte
beschränken, sondern verschiedene Institutionen
oder Finanzdienstleister einschliessen.
11

Langlebigkeitsrisiko
12
Ist das finanzielle Risiko aufgrund einer langen Lebenszeit
• Kritisch in den Vorsorgebereichen die nicht (oder nur teilweise)
inflationsangepasst sind und/oder eine endliche Laufzeit haben
• Ausgaben können im Alter teilweise weit schneller wachsen als
die Inflation
• Erhöhter finanzieller Aufwand aufgrund medizinischer
Bedürfnisse
• Höhere Kosten im Wohnbereich (Adaptierung von
Wohnraum, Heimkosten, etc.)
• Kann über zusätzliche (Versicherungs-)Produkte abgedeckt
werden.

Andere Risiken
• Persönliche wirtschaftliche Risiken
– Teilweiser oder kompletter Arbeitsplatzverlust,
unvorhergesehene Sonderbelastungen
– Absicherbar über Arbeitslosenversicherung u.ä.
• Persönliche gesundheitliche Risiken
– Krankheit, Berufs- und Erwerbsunfähigkeit
– Über Versicherungen absicherbar, bspw.
Berufsunfähigkeitsversicherung, ist aber kostenintensiv
• Steuerliche Risiken
– Veränderungen im Steuersystem
– Kaum absicherbares Risiko
• Institutionelle Risiken
– Veränderungen in staatlichen Vorsorgesystemen
– Kaum absicherbares Risiko, bedingt über Diversifikation
reduzierbar
13

Agenda
• Motivation
• Ausblick
14

Was können gute bestehende Pensionsrechner?
• Berechnen der Pension aus staatlichen
Systemen
• Berechnen einfacher Vorsorgeprodukte
• Darstellung nominaler und realer Werte
• Adjustierung von vorzeitiger oder späterer
Pensionierung
• Miteinbezug von Gehaltssteigerungen
• Errechnen einer Pensionslücke
Für Liechtenstein ist nicht einmal ein „guter“
Rechner vorhanden!
15

Was bestehende Rechner nicht können…
… und das FYP Tool schon kann
• Blickwinkel „Vorsorgeeinheit Familie“ einnehmen
• Kombination der drei Vorsorgesäulen (staatlich,
betrieblich, privat)
• Integration der privaten Säule
• User-basierte Änderungen an den Annahmen (bspw.
Gehaltssteigerung)
• Einbezug von Steuern
• Einbezug von (teilweisem) Kapitalbezug
• Prognose von Werten x Jahre nach dem Pensionsantritt
16

Was bestehende Rechner nicht können…
… und das FYP Tool schon bald kann
• Einbezug geplanter Erwerbsunterbrüche
• Prognose von Werten x Jahre nach dem Pensionsantritt
• Einbezug von Ehegattentod
• Einbezug von zu erhaltendem Erbvermögen
• Individualisierter Lebensstil (Konsumausgaben)
• Integration ökonomischer Modelle zur Schätzung
makroökonomischer Variablen (bspw. Inflation)
17

Einflussfaktoren
18
• Inflation
• Steuern
• Alter
• Geschlecht
• Einkommen
• Konsum
• Ehe
• Schwangerschaft
• Ersparnisse
• Arbeitgeber
• Familie
• Pensionsantritt
• Inflationsanpassung
• Alter
• Risikoneigung
• Wohnort
• Dienstgeber
• Beschäftigungsgrad
• Zinsen
• AHV
• Versicherung
• Vorsorgeplan
• Immobilien
• Einmaleinlagen
• Lebenserwartung
• Einkaufsbetrag
• Beitragsjahre
• Arbeitslosigkeit
• Jahreseinkommen
• Weihnachtsgeld
• uvm.

Benötigte Daten
Individuelle Daten müssen selbst ausgefüllt
werden
• Allgemeine Daten
• Informationen über den aktuellen Versicherungsstand
bei
– AHV
– Betriebliche Vorsorge
– Diese Daten können über eine Anfrage leicht erhoben
werden
• Private Vorsorge
• Einkommensverhältnisse
• Vermögensverhältnisse
19

Profimodus
Verändern der Berechnungsannahmen
• Inflation
• Inflationsanpassungen
• Gehaltswachstum
• Anlageerfolg der zweiten Säule
• Rendite der dritten Säule
• Umwandlungsfaktoren
• Erwerbsunterbrüche
20

Ausgangssituation: 33 Jahre alt, 15% Vorsorge, 25 Jahre 3. Säule
21
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
Heutige
Ausgaben
Ausgaben
Pensionsantritt
Vorsorge Ausgaben 15
Jahre nach PA
Vorsorge
Übersicht Ausgaben und Vorsorge
Verfügbares Eigenkapital
Säule 3
Säule 2
ALV - NBU - KK
Säule 1
Sonstiges
Unterhaltung
Kommunikation
Transport
Gesundheit
Hausrat
Wohnen/Energie
Bekleidung/Schuhe
Restaurant/Hotel
Alkohol/Tabak
Essen/Trinken
Steuer

100% Vorsorge, 25 Jahre 3. Säule
22
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
Heutige
Ausgaben
Ausgaben
Pensionsantritt
Jahre nach PA
Vorsorge
Säule 3
Säule 2
ALV - NBU - KK
Säule 1
Sonstiges
Unterhaltung
Kommunikation
Transport
Gesundheit
Hausrat
Wohnen/Energie
Bekleidung/Schuhe
Restaurant/Hotel
Alkohol/Tabak
Essen/Trinken
Steuer

Ausgangssituation
23
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
Heutige
Ausgaben
Ausgaben
Pensionsantritt
Jahre nach PA
Vorsorge
Säule 3
Säule 2
ALV - NBU - KK
Säule 1
Sonstiges
Unterhaltung
Kommunikation
Transport
Gesundheit
Hausrat
Wohnen/Energie
Bekleidung/Schuhe
Restaurant/Hotel
Alkohol/Tabak
Essen/Trinken
Steuer

Arbeiten bis 66 (statt 64)
24
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
Heutige
Ausgaben
Ausgaben
Pensionsantritt
Jahre nach PA
Vorsorge
Säule 3
Säule 2
ALV - NBU - KK
Säule 1
Sonstiges
Unterhaltung
Kommunikation
Transport
Gesundheit
Hausrat
Wohnen/Energie
Bekleidung/Schuhe
Restaurant/Hotel
Alkohol/Tabak
Essen/Trinken
Steuer

15% Vorsorge, 14 Jahre 3. Säule
25
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
Heutige
Ausgaben
Ausgaben
Pensionsantritt
Jahre nach PA
Vorsorge
Säule 3
Säule 2
ALV - NBU - KK
Säule 1
Sonstiges
Unterhaltung
Kommunikation
Transport
Gesundheit
Hausrat
Wohnen/Energie
Bekleidung/Schuhe
Restaurant/Hotel
Alkohol/Tabak
Essen/Trinken
Steuer

Agenda
• Motivation
• Ausblick
26

Ausblick
27
Implementierung
Ergänzende
Leistungen
(Hinterlassenen –
und Invaliditäts-
leistungen)
Warnroutinen für
ungedeckte
Risiken
Integration von
Vorsorge-
produkten
Manuelle
Planungs-
möglichkeiten
Automatisierte
Beratung

Vielen Dank für Ihre Aufmerksamkeit!
28
Prof. Dr. Michael Hanke Ass. Prof. Dr. Martin Angerer
Projekt „Altersvorsorge in Liechtenstein“ EU-Projekt „Pensions in Europe“

Innovationstag Digital Banking Liechtenstein 2016

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