1.
The New Industrial Revolution(s)?
---
Exploring blockchains and the future of value creation
May 2018

2.
People
• “Net generation”
• 24x7 “mobile” workforce
• Gig economy
• Learning via social media
• Sharing not owning
• Sustainability
•
Technology
• Broadband/wifi
• Smart phones
• Cloud, fog
• Internet of Things
• AI/ML/NN
• Autonomous vehicles
• Smart robotics
• VR/AR/Holography
• 3D printing/ALM
• Blockchains
Open Source
• Software
• Hardware
• Physibles
Convergence of…..
Finance
• Microlending/microfinance
• Crowdfunding/equity/P2P lending
• Cryptocurrencies/tokens
• Blockchains, smart contracts
• Mobile money and payments
• M2M/R2R payments

3.
By 2020, 20% of trade finance will incorporate
blockchain technology. (PwC)
By 2027, 10% of global GDP will be stored on
blockchains or blockchain-related technology.
(World Economic Forum)

4.
Only 9% active (n=3138)
Q: What are your
organization’s plans
in terms of the
blockchain?
https://www.gartner.com/newsroom/id/3873790
May 2018

5.
“We always overestimate the change that will
occur in the next two years and underestimate
the change that will occur in the next ten.”
- Bill Gates, The Road Ahead, 1996
Scenario
Thinking

6.
Blockchain = Combination of technologies
Arranged in a novel way:
• Distributed systems
• Peer-to-peer networks
• Hashing functions
• Public-private key cryptography
• Cryptographic signatures
• Elliptic curve cryptography

7.
What is the Blockchain?
• Decentralized and distributed public digital
ledger (P2P network)
• Records and transaction data stored across
network of computers
• Chronology and integrity of transactions
enforced by cryptography
• Permanent record unless all subsequent
blocks altered through network consensus
Removes need for trusted
third parties/intermediaries

8.
The blockchain simplified
http://mediarails.com/blockchain-technology-impact-on-affiliate-marketing/

9.
No single point of failure
Centralized Decentralized

10.
Revolutionary technologies fill a gap
Richie Etwaru, https://www.youtube.com/watch?v=k53LUZxUF50

11.
Revolutionary technologies fill a gap
2000s
Trust
Gap?
Richie Etwaru, https://www.youtube.com/watch?v=k53LUZxUF50

12.
A means
to digitalize trust?
Blockchain technology

13.
Link in the first block of Bitcoin blockchain
http://biplatform.nl/1257482/how-blockchains-will-impact-your-business.html

14.
Banking is essential,
but banks are not.
- Bill Gates

15.
https://bitcoin.org/bitcoin.pdf
“…an electronic payment system based on cryptographic proof
instead of trust, allowing any two willing parties to transact
directly with each other without the need for a trusted third party.”

16.
Institutions
EmergentCollective
VS
Central Bank
~ Long-standing financial
institutions and regulations
Bitcoin Community
~ Self-organizing community of strangers
across globe connected through Internet
Teigland, Yetis, Larsson 2013

17.
Why does Bitcoin’s value increase?
● Network effects
• Metcalfe’s law
• More users
➡ more value
➡ more users
● Subjective valuation
• Mises’ regression theorem
2 telephones
(1 possible connection)
5 telephones
(10 possible connections)
12 telephones
(66 possible connections)
(N*(N-1))/2
| www.exponential.se

18.
Currency transformation?
Three eras of currencies
1. Commodity-based
2. Politically-based
3. Math-based
- Chris Dixon
1000s of cryptocurrencies

19.
ICO - Initial Coin Offering
Fundraising mechanism based on a “cryptocurrency”
Similar to crowdfunding & IPOs
How do ICOs work?
Cryptocurrency
startup publishes
whitepaper with
details of project &
ICO.
Early backers buy
cryptocurrency (or
tokens) in exchange for
legal tender or other
cryptocurrencies.
If fund’s
requirements
met, money raised
is used to initiate/
complete new
scheme.
| www.exponential.se

20.
@sdwouters
Cryptocurrency only the first app

21.
A means
to digitalize trust?
Blockchain technology

22.
http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/

23.
FIRM FOUNDED EMPLOYEES MKT CAP
BMW 1916 125,000 $60B
UBER 2009 11,000 $48B
MARRIOTT 1927 227,000 $51B
AIRBNB 2008 5,000 $31B
WALT DISNEY 1923 195,000 $167B
FACEBOOK 2004 21,000 $512B
WALMART 1962 2,300,000 $298B
ALIBABA 1999 50,000 $469B
Adapted from Parker & Van Alstyne, with Choudary, 2016, updated January 2018
Something fundamental is changing

24.
Platform-based business models and ecosystems
Access to resources, not ownership
Demand side economies of scale
Network effects: Value rises as more use platform
Metcalfe’s Law

25.
Shifting market logics – Enabling one-off transactions
between strangers globally
Ericsson & Augur 2011

26.
• Third parties and IOT devices on
platform
– Ownership and Fraud
– Operational
– Health & safety
• Payment systems
– Functionality
– Fraud
• Data
– Cyberhacking and security breaches
– Ownership
– Integrity and ethical usage of
personal data
• Regulation & compliance
– Upstream and downstream
– National & international
Increasing
complexity
of trust

27.
Wide variety of blockchain development efforts
● Payment processing & money transfers (IBM with KlickEx and Stellar,
McDonalds with Omise )
● Efficiency in shipping/logistics (IBM with Maersk, EY with Schneider
Logistics)
● Monitoring of supply chains (IBM with Walmar,t WWF)
● Enforcing contracts and human rights in global supply chains (Coca-Cola)
● Immutable data backup (Boeing)
● Asset management in farming (EY in Australia )
● Safety/security of devices on IoT platform (Cisco)
● Food and drug safety (Merck)
● Real estate, land, auto title transfers (Swedish Land Registry)
● Verification of Digital IDs (Microsoft)
● Notarization of Open Government Data (EY with City of Vienna)
● E-government, digital voting, securing health records, grades (Estonia)

28.
“All blockchains are not created equal”
https://gendal.me/tag/bitcoin/page/2/
R3CEV

29.
Drivers
• Food fraud
• Human rights
• Contract breaches
• Sustainability issues
• Regulatory and legal
demands
• Stakeholder pressurehttps://newfoodeconomy.org/blockchain-seafood-supply-chain-traseable-sea-quest-viant-wwf/
Sea Quest Fiji

30.
Converging technologies for a locally produced,
self-sustaining, permissionless mobility ecosystem
https://localmotors.com/
3D printed Olli
by Local Motors
Solar
generated
power
Power as loyalty
discount
Neighbor A sells energy
to Neighbor B
Autonomous bus
buys energy from
community
Municipality
chargers
Neighbor A sells energy
to Neighbor B
Usage-based
insurance
Neighbor A sells energy
to Neighbor B
Automatic tolls
Ridesharing
https://www.iota.org/

31.
Blockchain-based government
https://e-estonia.com/egoverment-blockchain-guardtime/

32.
In general, blockchains enable…
https://bravenewcoin.com/news/iota-price-analysis-a-tangled-skein/

33.
Interpersonal trust – people
Institutional trust – platform
Enabling trust between strangers
1st Rev
2nd Rev
3rd Rev
Changing focus of trust
Institutional trust - brand
4th Rev Procedural trust – computer network????

34.
Transformation of economic activity
Centralized,
hierarchical
organizations
Decentralized,
self-organizing,
autonomous
organizations

35.
Decentralized “Ebay”

36.
Decentralized “Uber”
La’Zooz Arcade.City

37.
Fully self-sufficient “states”
http://www.regenvillages.com/
https://www.seasteading.org/
ReGen Villages
Seasteads

38.
http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/

39.
https://www.slideshare.net/ernstandyoung/ey-global-blockchain-summit-keynote?qid=2c0cf739-bdb4-4208-b813-0a2079b4b112&v=&b=&from_search=1
From many blockchain solutions
to a few global sector-specific solutions?

40.
IOTA – Beyond the blockchain with Tangle
• >USD 10 bln in transactions
• Partnerships with Bosch, Volkswagen, Fujitsu,
Orange, Microsoft

41.
Numerous risks
Technological
• Technology and development still early stage with no standard or
dominant design, difficult to scale
• Scarcity of skills in labor market
• Massive amounts of electricity required, threatening sustainability
• Future security, e.g., effect of quantum computing
Non-technological
• Truly immutable? E.g., Ethereum
• Criminal activity, e.g., illegal trafficking outside state control, fraud
since irreversible transactions and no third party dispute mediator,
tool for blackmail and hostage activities, e.g., via ransomware virus
• Social acceptance and future regulation

42.
“We always overestimate the change that will
occur in the next two years and underestimate
the change that will occur in the next ten.”
- Bill Gates, The Road Ahead, 1996
Scenario
Thinking

43.
The future is already here -
it’s just not very evenly
distributed.
- William Gibson
Signals from the periphery…

44.
bit.ly/bcdt2016pdf https://bit.ly/2rAWccl

45.
Robin Teigland
robin.teigland@hhs.se
www.robinteigland.com
www.slideshare.net/eteigland
@robin.teigland