Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Blockchain and Competition – MULLIGAN – June 2018 OECD discussion

7,557 views

Published on

This presentation by Catherine Mulligan, Visiting Researcher, Imperial College London and Expert of the World Economic Forum for Blockchain Technologies, was made during the discussion “Blockchain and Competition” held at the 129th meeting of the OECD Competition Committee on 8 June 2018. More papers and presentations on the topic can be found out at oe.cd/2gx.

  • Be the first to comment

Blockchain and Competition – MULLIGAN – June 2018 OECD discussion

  1. 1. Imperial College Centre for Cryptocurrency Research and Engineering 1 Blockchain OECD Dr Cathy Mulligan Visiting Research Fellow Imperial College London Senior Research Associate, UCL (Computer Science) Expert and Fellow, World Economic Forum Blockchain Council @API_Economics Imperial College London
  2. 2. Imperial College Centre for Cryptocurrency Research and Engineering 2 Why care about Blockchain? It is a fundamental transformation for the manner in which we conduct business 1. It provides the opportunity to dramatically reduce cost of operations 2. Provides the opportunity to create new revenue streams 3. Can provide data integrity in an era of increasing cyber risk
  3. 3. Imperial College Centre for Cryptocurrency Research and Engineering 3
  4. 4. Imperial College Centre for Cryptocurrency Research and Engineering 4 DISTRIBUTED LEDGERS ARE PLATFORMS UPON WHICH VARIOUS APPLICATIONS CAN BE BUILT, WELL BEYOND FINANCIAL SERVICES Blockchain is much bigger than Bitcoin Source: Citi Ventures
  5. 5. Imperial College Centre for Cryptocurrency Research and Engineering 5 Today’s transactions • Separate ledgers in each institution with no oversight – high risk for human error and fraud • Paper-driven processes create delays and errors • Dependence on intermediaries to ensure trust increases transaction costs and time delays
  6. 6. Imperial College Centre for Cryptocurrency Research and Engineering 6 • Single shared ledger that provides evidence of tampering • New records cannot be added without all parties applying a consensus mechanism • Records cannot be changed without all parties seeing it • Dramatic reduction in paper-based systems and costs • Reduced potential for fraud Tomorrow’s transactions
  7. 7. Imperial College Centre for Cryptocurrency Research and Engineering 7 A Blockchain allows untrusting parties to co-create a permanent, unchangeable and transparent record of exchange and processing without relying on a central authority. N.B: The terms “blockchain” and “distributed ledger” are often used interchangeably, but they are not always the same thing! What is a Blockchain?
  8. 8. Imperial College Centre for Cryptocurrency Research and Engineering 8 DATABASES Cross Stakeholder Decentralization Distributed Ledger Technology PERMISSIONLESS, PUBLIC, SHARED SYSTEMS ETHEREUM/BITCOIN PERMISSIONED, PUBLIC, SHARED SYSTEMS MICROSOFT FRAMEWORK PERMISSIONED, PRIVATE, SHARED SYSTEMS HYPERLEDGER Types of Distributed Ledgers “Blockchain”
  9. 9. Imperial College Centre for Cryptocurrency Research and Engineering 9 1 - Consensus Removes the need for centralization for transaction validity Biggest Innovation – if your work requires something that lots of people need to agree on, blockchain might be the solution Prevents “double spend” or validation of fraudulent transactions two examples are: • Proof of work: miners compete to validate blocks by solving highly processor / RAM intensive cryptographic problems for rewards • Proof of Stake: achieves distributed consensus by network users proving their ownership of the currency
  10. 10. Imperial College Centre for Cryptocurrency Research and Engineering 10 2 - The Ledger • Often referred to as the “Blockchain”, this is a public record of all transactions stored across a distributed Peer- to-Peer (P2P) network of servers. • Verified transactions are added to “blocks” and the history provides proof of value or assets “owned”
  11. 11. Imperial College Centre for Cryptocurrency Research and Engineering 11 3 – Reward or Incentives • A medium for transaction settlement within the network that rewards miners. • Examples include “Bitcoin” – so miners are rewarded for processing transactions and providing a stable network • Rewards are crytpographically generated and the protocol rules determine issuance and destruction of the rewards • Rewards are required for public permissionless DLT such as Bitcoin to ensure network security. They are not a necessary part of all DLT
  12. 12. Imperial College Centre for Cryptocurrency Research and Engineering 12 4 – Smart Contracts • Smart Contracts are neither smart, nor contracts • They are a new way to created distributed applications that are secured by the blockchain • When a pre-determined event happens, the code gets triggered • Unlike traditional code living on a server, you do not need to ‘trust’ the owner of the server • No single point of failure
  13. 13. Imperial College Centre for Cryptocurrency Research and Engineering 13 Blockchain and the Boundaries of the Firm
  14. 14. Imperial College Centre for Cryptocurrency Research and Engineering 14 Source: Impact of Datafication on Strategic Landscapes Digital technology - transforming our world since 1960 DIGITALISATION + DATAFICATION = DISRUPTION OF ECONOMY SOCIETY, EVERYTHING WWW Mobile IoT Source Mulligan/Ericsson 2014
  15. 15. Imperial College Centre for Cryptocurrency Research and Engineering 15 Previous generations of digital technology have been about data and information and how to exchange it faster and more securely Business Mindset “Apply IT to do the same business processes faster”
  16. 16. Imperial College Centre for Cryptocurrency Research and Engineering 16 Blockchain is about the exchange of value Instant, decentralized, pseudonymous value transfer is now possible Business Mindset “Apply IT to completely redefine business processes”
  17. 17. Imperial College Centre for Cryptocurrency Research and Engineering 17 Blockchain & the boundaries of the firm • As blockchain solutions are developed, it requires communication across economic boundaries – namely it increases the exchange of information between companies • In addition, it creates the possibilities for ‘micro supply chains’ of individuals who are able to dynamically deliver goods and services on demand – without using the boundary of a firm to do so
  18. 18. Imperial College Centre for Cryptocurrency Research and Engineering 18 Example 1: Supply Chains
  19. 19. Imperial College Centre for Cryptocurrency Research and Engineering 19
  20. 20. Imperial College Centre for Cryptocurrency Research and Engineering 20 Provenance in Food Supply Chains Imperial College Centre for Cryptocurrency Research and Engineering
  21. 21. Imperial College Centre for Cryptocurrency Research and Engineering 21
  22. 22. Imperial College Centre for Cryptocurrency Research and Engineering 22 Example 2: Micro Supply Chains
  23. 23. Imperial College Centre for Cryptocurrency Research and Engineering 23 Global Supply Chain – Cut Flowers Ecuador Columbia Holland London Flower Market 72kg 712kg 878kg Florist Netherlands Bouquet tying Customer 72kg Courier Tesco Supply Chain 72kg Local Stores ?kg ?kg ?kg
  24. 24. Imperial College Centre for Cryptocurrency Research and Engineering 24
  25. 25. Imperial College Centre for Cryptocurrency Research and Engineering 25 Why…? X
  26. 26. Imperial College Centre for Cryptocurrency Research and Engineering 26 • 1 person micro enterprise, grew up in a rural area, in London to build the business • Trying to create an edible flower market • Currently has stall and is a wedding supplier • Working with chefs to create edible flower menus • Has four suppliers in: • Rural Scotland and England • Peri-urban • Companion plants • Improve quality of soil and are a traditional farming practice instead of pesticides • Selling a waste product • Organic produce Pretty Delicious
  27. 27. Imperial College Centre for Cryptocurrency Research and Engineering 27 Micro Supply Chain Issues • Co-ordination of • What have they got? • What do I need? • How quick can they get it to me? • Business Processes but at a micro level • Self-organising supply chain • How? • Keen to use technology • Want to expand the use of technology in the supply chain management processes X X X X Approximately 173 kg CO2
  28. 28. Imperial College Centre for Cryptocurrency Research and Engineering 28 End to End Lightweight Business Process Management • Demand and Supply Management at a ‘local’ (small scale) level • JiTM for connecting rural and urban suppliers • Smoothing of supply chain processes for small scale suppliers • No supplier or buyer lock-in • Free access Supplier 1 Supplier 2 Supplier 3 Pretty Delicious
  29. 29. Imperial College Centre for Cryptocurrency Research and Engineering 29 Implications • Tax? • Social Protections? • Labour Law? • What’s the best way to regulate?

×