1.
Blockchain:
Banking, Business and Beyond
Blockchain:
Banking, Business and
Beyond
BLOCKCHAIN:
Banking, Business, &
Beyond
Michael Novak
Digital Transformation Partners
21 March 2017
Michael Novak
Digital Transformation Partners
21 March 2017

2.
Blockchain:
The Short Version…
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3.
Today’s Agenda
Why Blockchain? Why now?
Smart Contracts
Blockchain in Business
Finance
Supply Chain
Healthcare
Government
Blockchain and Beyond
Blockchain:
Banking, Business & Beyond
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4.
Why Blockchain?
Why Now?

5.
Blockchain In The News
Is the glue that binds IoT
Could fight
voter fraud
Can disrupt Healthcare
5 ways
Has potential to
revolutionize supply chains
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6.
Blockchain In The News
"[Blockchain] is a very
important, new technology
that could have implications
for the way in which
transactions are handled
throughout the financial
system.
Janet Yellin
US Federal Reserve
Chairwoman
“Bitcoin represents not only
the future of payments but
also the future of
governance”
Dee Hock
Founder Visa
“Stay away from [Bitcoin]. It's
a mirage, basically.”
Warren Buffet
CEO Berkshire Hathaway
“When folks really start to
step back and think about
business processes as a
decentralized sport, as a
team sport, it completely
changes the possibilities of
how you do a KYC and AML.”
Jerry Cuomo
IBM Fellow, VP of Blockchain
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7.
Before 2005
Closed, centralized
networks
Present Time
Open IoT networks,
centralized cloud
Present Time
Open IoT networks,
centralized cloud
Why Blockchain? Why Now?
2025 and beyond
Open IoT networks,
distributed cloud
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8.
Why Blockchain? Why Now?
Trust - A foundation of commerce and government
6,000 years ago - Gold was universal record of account
15th century - Double entry accounting invented
LedgerLedger
LedgerLedger
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9.
Why Blockchain? Why Now?
2008 - Bitcoin academic paper published
– Authored by “Satoshi Nakamoto” (a pseudonym)
– Theorized that online transactions easier and cheaper if
parties could transact without external overseers
– First digital asset
• No backing or "intrinsic value“
• No centralized soverign issuer or controller
– Solved digital “double-spend” issue
2009 - Bitcoin genesis block created
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10.
Blockchain Definition
“A type of distributed ledger in which value exchange transactions (in
Bitcoin or other token) are sequentially grouped into blocks. Each block
is chained to the previous block and immutably recorded across a
peer-to-peer network, using cryptographic trust and assurance
mechanisms.“
Gartner
“An incorruptible digital ledger of economic transactions that can be
programmed to record …virtually everything of value.”
Don & Alex Tapscott, “Blockchain Revolution” (2016)
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11.
Blockchain Definition
• A concept
• A transactional database
• A decentralized public ledger
• A technology protocol (e.g. TCP/IP, HTTP)
• Application Areas:
– Exchange for assets: physical, intellectual, and digital
• A registry of all things
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12.
Decentralized Payment Network
Bitcoin Miners secure network while
processing, validating all transactions
Kate never discloses sensitive financial
info in transaction. Merchant doesn't
store or secure payment detailsPayment propagated thru network, validated by
Miners. Becomes immutable and permanent
record on public blockchain ledger
2
Transaction Example - Bitcoin
Kate initiates payment
1
Merchant: No chargebacks.
Payments are direct.
Bitcoins received and
transaction detected by
merchant
3
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13.
Bitcoin vs. Money
Prepared by BTCS.com
** = New traits made possible by blockchain 13

14.
Bitcoin Tether GameCredits Stratis
Ethereum Zcash Stellar Lumens Siacoin
Dash Iconomi ShadowCash SingularDTV
Ripple Factom Lisk Storjcoin X
Litecoin Dogecoin Decred Emercoin
Monero Waves Bytecoin Counterparty
Ethereum Classic Steem Peercoin Bitcrystals
NEM DigixDAO BitShares First Blood
MaidSafeCoin Golem Komodo Byteball
Augur Ardor Nxt Xaurum
Cryptocurrency Ecosystem
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600+ more…
© 2017 CoinMarketCap

15.
Do You Need Blockchain?
Use Public Blockchain Use Hybrid Blockchain Use Private Blockchain
Do not need Blockchain
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16.
Smart Contracts:
Automata as Authority

17.
Smart Contracts Defined
1996 – Smart Contracts academic paper published
– Authored by Nick Szabo (not a pseudonym)
“A set of promises, specified in digital form, including protocols
within which the parties perform on these promises.”
– May include contractual clauses to secure relationships over
public networks and make contract breaches expensive or
prohibited:
• Collateral
• Bonding
• Delineation of property rights
• Others
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18.
Smart Contract Advantages
PwC Blockchain and smart contract automation 18

19.
Smart Contract Use Cases
Simple To Complex
PwC Blockchain and smart contract automation 19

20.
Blockchain in Business
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21.
Smart Contract Use Cases
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Digital Identity Records Securities
Trade Finance Derivatives
Financial Data
Recording
Mortgages Land Title Recording Supply Chain
Auto Insurance Clinical Trials Cancer Research

22.
Blockchain
Changing Many Industries
BlockchainBlockchain
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Prepared by BTCS.com

23.
Blockchain Use Case:
Digital Identity
Enable individuals to own and control digital identity: reputation, data
and digital assets
Current Challenges Smart Contract Benefits
• KYC / AML expensive and time
consuming processes
• Individuals own and control personal
data
• Verified by various counterparties
• Limited control over data leakage
• Reliance on trusted 3rd parties
• Counterparties do not hold sensitive
data
• High liability to safeguard user
data
• Single point-of-failure
• Increased compliance, resiliency and
interoperability
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24.
Blockchain Use Case:
Financial Data Recording
Enable uniform financial data across organizations, improved financial
reporting and reduced auditing and assurance costs
Current Challenges Smart Contract Benefits
• Accounting systems prone to
fraud, errors
• Improved transactional data integrity,
transparency - increased market
stability
• Capital intensive processes;
duplicate maintenance of
infrastructure
• Reduced expenditures
• Accounting systems cost-sharing
across multiple organizations
• Significant human capital/
middleware; systems do not
always interoperate
• Improved insight into parties’ capital
due to increased financial
accessibility
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25.
Blockchain Use Case:
Supply Chains
Full spectrum visibility as products move from farm/factory, transported,
stored, and incorporated into finished products
Current Challenges Smart Contract Benefits
• Data capture silos
• No motivation to share
information with relevant parties
• Simplification of complex multi-party
systems delivery
• Captured data must be similar
format to extract values
• Achieve granular-level inventory
tracking and delivery assurance
• Incompatibilities in data
• Blind spots in tracking goods due
to supply chain silos
• Improved financing, insurance terms
and reduced risk
• Determine origin, ownership, and
processes components might have
undergone
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26.
Blockchain Use Case:
Healthcare
Governs medical record access, providing means for auditability and
data sharing
Current Challenges Smart Contract Benefits
• EHRs never designed to manage
multi-institutional, life time
medical records
• Restores comprehensive patient
agency over healthcare information
empowering citizens to make
informed decisions
• Providers, not patients in charge
of patient record stewardship
• Records available for longitudinal
studies with less overhead than
traditional research trials
• HIPAA Privacy Rule inhibits
prompt record maintenance
• Health IT may charge above
market prices for data exchange
interfaces
• Providing patients with
comprehensive record review, care,
auditability and data sharing
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27.
Blockchain Use Case:
Government
Estonia: E-Resident Program
– Anyone in the world can apply to become an “e-resident”
– Digital ID card to securely sign digital documents
– Healthcare initiative puts citizens in control of own data
Sweden: Real Estate Transactions
– All parties - banks, government, brokers, buyers and sellers able to
track progress of agreement
– Enables instantaneous confirmation of valid transactions with the
utmost levels of security and integrity
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28.
Blockchain Use Case:
Government
United States Federal Government
– Office of the Comptroller of the Currency (OCC) released its “responsible
innovation framework”, a policy focused on blockchain startups
Arizona
– HB 2417: any "record or contract" secured by a blockchain would be "considered
to be in an electronic format and to be an electronic record“.
New Hampshire
– HB 436: exempt virtual currency users from having to register as money service
businesses, and create a formal definition for "virtual currency“.
Delaware
– Moving state archival records to an open distributed ledger
– Allowing private companies that incorporate in the state to keep track of all equity
issued and shareholder rights
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29.
Blockchain and Beyond

30.
30
Blockchain and Beyond

31.
Blockchain ICO
Initial Coin Offering (ICO) - Crowdfunding (“crowdsale”)
applied to cryptocurrency
• Cryptocurrency as themed funding mechanism
• Crypto-tokens sold to target audience in exchange for Bitcoins or fiat
currency
• Company raises capital to fund product development
• Subscribers own crypto-token shares
https://cointelegraph.com/explained/ico-explained
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32.
Blockchain ICO - 2016
32Prepared by BTCS.com

33.
Decentralized Applications
( DAPP )
Project Name Activity Centralized Equivalent
• OpenBazaar Buy/sell items locally Craigslist
• LaZooz On-demand ride service Uber, Lyft
• Twister Social networking, peer-to-peer microblogging Twitter, Facebook
• Gems Social networking, private token-based social
messaging
Twitter, SMS apps
• Bitmessage Secure messaging (individual or broadcast) SMS services
• Storj File storage Dropbox, Google
Drive
• Onename
• BitID
• Bithandle
Digital identity verification VeriFone, Verisign,
Facebook
www.amazon.com/Bitcoin-Blueprint-New-World-Currency/dp/1491920491 33

34.
Decentralized Borderless
Voluntary Nation ( DBVN )
Bitnation NGO
– Powered by Ethereum blockchain
– Holocratic Governance structure allows citizens to create own “Holons”, and invest
or donate into Holons, Projects, and different parts of Bitnation infrastructure -
depending on their interests
• Example:
– Offers victims of crisis an blockchain-based emergency digital ID and a bitcoin
visa card to receive funds from family in absence of a bank account
– ID form generates a QR code which can be used with a cellphone to apply for a
Bitcoin Visa Card - accepted throughout Europe and the UK without a bank
account
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35.
Blockchain and IoT
Blockchain potential: Economic, large-scale resource allocation and
coordination mechanisms
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36.
Blockchain and Beyond
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Venture Capital Landscape (2017Q1)

37.
Blockchain and Beyond
Consortiums
– Finance Services largest focus area (currently)
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38.
Consortium Examples
Blockchain and Beyond
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39.
Summary:
Blockchain Strengths
Decentralized No central authority. All nodes have entire blockchain
providing redundancy
Consensus New transactions are added only after participant nodes
agree that they are valid
Authentication Cryptography and digital signatures prove participants
identity
Immutability Data that exists earlier in a blockchain cannot be
altered
Uniqueness Transactions are time-stamped, making it possible to
audit and verify information
Programmable Smart contract instructions embedded within blocks
allow actions to be carried out when conditions are met
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40.
Summary:
Blockchain Challenges
No customer
protection after
verification
Both parties must agree to reverse transactions
Scalability, Size Bitcoin handles 7 tps. VISA network handles 2k/tps, peak of
10k/tps
Blockchain size 126GB, Bitcoin nodes 17k (March 2017)
51% issue If mining pool operator has 51% of network, they would
always have “longest blockchain”; decides all new bitcoin
destinations.
Govt. Regulation Customary tracking, auditing points to trace consumption of
goods and services needs to change.
Regulators (e.g., SEC for public offerings) need to accept,
approve blockchain’s use for securitization such as entering,
verifying, and protecting data methods
Immaturity Technology still evolving rapidly
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41.
Blockchain Summary
• A concept
• A transactional database
• A decentralized public ledger
• A technology protocol (e.g. TCP/IP, HTTP)
• Application Areas:
– Exchange for assets: physical, intellectual, and digital
• A registry of all things
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All of the Above…and More

42.
Thank You
www.meetup.com/DC-Emerging-Technologies-DC-EMT-IoT-AI-3D-Printing/
Michael Novak
Partner
Digital Transformation Partners
Email: iotmnovak@gmail.com
Twitter: @MisterNova

43.
Appendix
Blockchain
• “Blockchain Revolution” (2016) by Don & Alex Tapscott
• "Blockchain - Blueprint for a New Economy" (2015) By
Melanie Swan, Founder, Institute for Blockchain Studies
www.blockchainstudies.org
• BTCS.com - http://www.btcs.com/index.php
• The Blockchain is Still Waiting for its Web, Here is a
Blueprint for Getting us There By William Mougayar
http://startupmanagement.org/2017/01/16/the-blockchain-
is-still-waiting-for-its-web-here-is-a-blueprint-for-getting-us-
there/
• Blockchain State of Blockchain Consortia By William
Mougayar https://www.slideshare.net/wmougayar/state-of-
blockchain-consortia-by-william-mougayar-december-2016
• Autonomous Research -
http://www.autonomous.com/fintech/d9335db1-bf1a-4ab2-
8d1d-a36cb747a6ae
• IBM Blockchain - https://www.ibm.com/blockchain/
• Microsoft Blockchain - https://azure.microsoft.com/en-
us/solutions/blockchain/
• SAP Blockchain - https://news.sap.com/marketing-
blockchain-fair-price-for-customer-data/
• Investopedia -
http://www.investopedia.com/terms/b/blockchain.asp
Bitcoin
• Bitstocks What is Bitcoin -
https://www.bitstocks.com/success/success-what-is-bitcoin
• CoinMarketCap - https://coinmarketcap.com/
• Initial Coin Offering (ICO) -
https://cointelegraph.com/explained/ico-explained
• Bitcoin.com - https://www.bitcoin.com/
• Ethereum - https://www.ethereum.org/
• Investopedia -
http://www.investopedia.com/terms/b/bitcoin.asp
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