Talk for Digital Leaders Feb 2018 - intro to smart contracts and their significance in the development of practical blockchain and DLT applications.

1. LET THE BLOCKCHAIN TAKE THE
STRAIN
HOW SMART CONTRACTS CAN STREAMLINE BUSINESS PROCESSES
@KateBauchere

2. SMART CONTRACTS AND YOUR BUSINESS
• What are Smart Contracts?
• Why are Smart Contracts a game changer?
• What’s the catch?
• Who’s implementing blockchain successfully?
• Where do you go from here?
@KateBauchere

3. WHAT ARE SMART CONTRACTS?
• Software defining the language of transactions
• Immutable facilitators of a change of state
• Encoded business rules
• “Trustless” intermediaries
• Not legal contracts, but may cause a contractual relationship to
arise.
@KateBauchere

4. IN SIMPLER TERMS…
@KateBauchere

5. WHY ARE SMART CONTRACTS A GAME
CHANGER?
Not the first software to encode business rules, but they
facilitate:
• Minimum intervention from multiple stakeholders
• Trust in the process, not trust in individuals (“trustless”
processing)
• Improved protection of the underlying data
• Difficulty, if not impossibility, of forging records
@KateBauchere

6. WHAT’S THE CATCH?
• Immutability works both ways - you can’t change them even if
you want to
• Developers are not infallible – check, check and check again
• Do you really know what’s encoded in the contract?
• How clearly can you define your business processes?
• The regulators need to be on board
@KateBauchere

7. CAUTIONARY TALES IN THE ICO SPACE
DAO HACK
A high-profile Initial Coin Offering
was hacked through a vulnerability
in its smart contract. Organisers
could only watch as $60m worth
of Ether was drained.
INITIAL COIN
OFFERINGS
It is estimated that around 10% of
all funds invested in ICOs have
been lost to smart contract
exploits, errors in code, and
deliberate rules favouring
organisers.
TRANSACTION FEE TRAP
An investor tried to buy $500k
AirSwap tokens, but the
transaction failed due to a smart
contract error. He lost $70,000 in
transaction fees for the failed
purchase.
@KateBauchere

8. WHO’S DOING IT ALREADY?
• The most advanced systems are supported by states or large
NGOs
• Estonia has taken the plunge with its e-Estonia identity register
and is considering a national cryptocurrency ‘estcoin’.
• United Nations has recently formed a blockchain coalition on
climate change
• Repetitive processing and potential for disintermediation is the
key: securities exchanges, property transactions, export
finance, progression through the health system, supply chain
@KateBauchere

9. HIGH-PROFILE TRIALS AND
IMPLEMENTATIONS
AUSTRALIAN SECURITIES
EXCHANGE
Dec 17: announced adoption of
blockchain to record
shareholdings and manage
clearing and settlement of equity
transactions.
UN WORLD FOOD
PROGRAMME
May 17: started distribution of
Ethereum-based food vouchers to
Syrian refugees in Jordan. $1.4m
already provided to 10,500
refugees, currently scaling.
SWEDISH LAND
REGISTRY -
LANTMÄTERIET
Mar 17: After several phases of
testing, launched a concept
blockchain for managing, securing
and verifying property
transactions.
@KateBauchere

10. WHERE DO YOU GO FROM HERE?
• Define your business processes clearly, step by step. What are
the different changes of state that need to be recorded?
• Blockchains can be a costly solution. Are you sure you need
one?
• Don’t rush the development or testing of a smart contract.
• Transactions on a public blockchain cost money: make your
contracts efficient.
• Use third party auditors and seek legal advice.
@KateBauchere

11. A FEW PEOPLE TO FOLLOW
• Hartej Sawnhey @Hartej_ & Yo Sub Kwon @jchysk – founders of
Hosho @hoshogroup - Smart Contract auditing
• Emin Gün Sirer @el33th4xor – Smart Contract security, Professor
at Cornell University researching smart contracts.
• Joshua Ashley Klayman Kuzar @josh_blockchain – Blockchain and
finance deal lawyer
• Sam Radocchia @iamSamsterdam – cofounder @chronicledinc
Smart Supply Chain Solutions
@KateBauchere