The document provides an overview of distributed ledger technology (DLT), highlighting its evolution from Bitcoin to modern applications and discussing the limitations of traditional public blockchains for industry use. It outlines various use cases for DLT in sectors such as finance and healthcare, emphasizing the potential for significant cost savings and improved operational efficiency. Additionally, the document addresses the process and considerations for conducting initial coin offerings (ICOs) in the context of digital assets.

1. September 2017
Distributed Ledger Technology
101
DLT Journey - From Bitcoin to Today

2. In the beginning
Proof-of-work
Cryptocurrency
Mining
Blockchain

3. Answering the hard
questions
Interoperability
Identity
Scalability
Privacy / Security
Upgradability
Evolution from blockchains to Distributed Ledgers
Altcoin Rush
Meta Protocols,
Colored Coins, and
Tokenization
Corda
prototype
“M0”
2009 TODAY
Bitcoin
Release
R3 platform
experimentation
Hyperledger
Project
Linux Open Source
2015
R3 Consortium
begins
Corda open
sourced
Corda V1

4. The dirty secret of the industry is that public “blockchain” technology doesn’t work for industry:
▪ Proof of Work isn’t sustainable / burns tons of electricity
▪ Blockchains are typically controlled by organizations from one country
▪ Probabilistic settlement finality only (forking)
▪ State-of-the-art smart contracts are 3x more buggy1 than average software and programming
them is hard:
- Remember. They will have to support billions of dollars of value!
- DAO attack is case in point (Ethereum)
▪ Doesn’t satisfy financial services non-functional requirements
- Privacy, scalability, etc.
We have to fix all of the above to make this useful for Financial Services.
1. http://vessenes.com/ethereum-contracts-are-going-to-be-candy-for-hackers/
“Blockchain” – The Dirty Secret

5. Why? What problem are we trying to solve?
Source: www.bitsonblocks.net
Bitcoin and Cryptocurrencies The blockchain bifurcation Industry Workflow Tools
Purpose
A purely p2p version of electronic cash
[which] would allow online payments to be
sent directly from one party to another
without going through a financial
institution.
Maintain and improve on successful
competitive position by keeping customers
happy, increasing revenues, reducing costs,
becoming more efficient.
Problem statement
How do we use technology to create a
financially inclusive system that anyone
can participate in?
How do we use technology to add
shareholder value
Solution Open, decentralised payment networks Private data/sharing networks
Innovation Disruptive Efficiency

6. Blockchain
without
bitcoin
Disintermediation
Immutable distributed ledger
Underlying
technology of
bitcoin
Peer to peer
Blockchain agnostic
Blockchain as an
adjective
Blockchain as a service
DLT
Decentralized
Blockchain buzzword bingo

7. Ledgers
Distributed Ledgers
Blockchains
Cryptocurrencies
A guide to terminology: Hierarchies
Public
Permissioned
Private
Permissioned
Other frequently used terms:
• Permissioned / Private
• Permissionless / Public
There are nuances and major
differences between these
categories

8. Distributed ledgers
▪ Records of agreement(consensus),
▪ with a secure (cryptographic)
audit trail,
▪ maintained and validated by
several separate computers
(network nodes).
Consensus
Agreement mechanisms
evaluate information
provided by participants to
ensure consent among all
relevant parties in an entry
Visibility
▪ When a transaction is added to the ledger, the network is almost-instantly
privy to this new version
▪ Distributed ledgers leave behind a cryptographically assured audit trail and
timestamp
▪ All parties in the network keep a copy of their view of the ledger
How it works?

9. The Significant Evolutionary Step of DLT.

10. Goal: I know that what I see is what you see…

11. Use Cases Leveraging DLT
11
Regulators
• Cross Border Payments
• Anti-Money Laundering /
Know Your Client
• Derivatives Clearing
• Repo Clearing
• Trade Reconciliations
• FX Settlement
• Loan Settlement
• Collateral Management
• Client Onboarding
• Intracompany Settlement
• Normalize Reference Data
• Timestamping
• Account Portability
• Broker Fraud Identification
• Securities Agreements as
Smart Contracts
• Crowdfunding
• Virtual Identity
• Credit Scoring
• Cross Border Remittance
• Vault/Escrow Services
• Customer Deposit Cost
• Peer-to-Peer Lending
• Anti-Money Laundering /
Know Your Client
• Compliance Reporting
• Risk Visualization
• Basel III Compliance
• Client Fund Transparency
• Trade Reporting
Financial Institutions IndividualsOperations
Four of the high-
potential FI use
cases could
alone generate
$60-80bn in cost
savings
Source: McKinsey 2016 Findings From Research Into Distributed Ledger Technology

12. Healthcare: a sample of the marketplace
• PokitDok has built DokChain, a distributed network of transaction processors
operating on financial and clinical data across the healthcare industry.
• Tierion has tried to do something similar with Philips and clinical data.
• The Hyperledger Healthcare Work Group identifies opportunities for open source
software development projects to host on Hyperledger-related platforms within its
100+ member consortium
• Hashed Health has a consortium which forms working groups to develop networks
focused on specific healthcare uses and provides services such as network product
management, development, regulatory guidance and technology support. Change
Healthcare (from Nashville) is a member.
• The GemOS enterprise platform for healthcare allows all stakeholders secure access
to shareable data with the right permissions. The platform is in compliance with
HIPAA, streamlining communication along the continuum of care.

13. Note: it is strongly recommended you consult with securities and
payments attorneys before doing any type of ICO

14. Digital assets, coins, and ICOs
• High level: the ledger tracks the balances for a native coin (i.e., bitcoin)
• The ledger can also track other coin balances
• Initial Coin Offering
• Creating a new coin on top of an existing blockchain is "easy and free"
(probably not “free” after hiring legal specialists)
• Can offer the new coin for sale in exchange for other coins such as
bitcoin
• A potential way to raise funding because existing coins such as bitcoin
are exchangeable for USD

15. Strawman: how to raise funds with an ICO
• Assemble a team and promote it on a website
• Publish a white paper describing the use case for the new coin
• Hire legal and accounting firms to help set up proper entities
• Publish the fund-raising timeline
• Market the website and new coin
• Sell initial coins in a pre-sale to select investors
• (Optional) Build prototype
• Hold public sale of coins, possible in several stages, and hope to raise
millions in Bitcoin, Ethereum, Litecoin

16. Large ICOs in 2017
• EOS ~$500m
• Filecoin $257m
• Tezos $232m
• Bancor $153m
• Status $90m

17. Questions or comments?
Contact:
danny@blockseer.com
tim@postoaklabs.com
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