Presentation / testimony delivered by Mark Mueller-Eberstein of Adgetec Corporation at the Legislative Committee on Economic Development and International Relations in July 2018 on Blockchain technology and cryptocurrencies
2018 Washington State Government discussion: Blockchain - International competitiveness
2018 WA State: Blockchain presentation -
WHY WA STATE CAN UNLOCK THE ECONOMIC
POTENTIAL OF BILLIONS WITH BLOCKCHAIN
Founder and CEO of Adgetec Corporation
• SHORT: Connecting business leaders and the IT for 2 decades. Investor, keynote speaker, best-
selling author in 12 languages, Digital Transformation leader for Blockchain, Crypto currencies, IoT,
AI and cloud computing. Former leadership positions in HP and Microsoft.
• Mark Mueller-Eberstein is one of the world’s leading experts on how businesses can leverage
key technology trends, transform organizations and to drive a competitive advantage. He is
focusing for many years deeply on the potential of Blockchain including and beyond crypto
currency technologies as investment and economic structure transformer and lead the
discussions e.g. at #FIF2017 with CEOs of the largest financial institutions. Mark is an
internationally renowned business leader, entrepreneur, investor, best-selling author, and
shares his insights frequently through executive level engagements as well as broad global events
like TEDx, Inbound, Rutgers’ Business School and even Coursera.org (Business Leadership courses
for Blockchain, AI, VR/AR, IoT, Digital Transformation). Mark deeply appreciates working with
international organizations like the Shenzhen (China) based Qianhai Institute for Innovation
Research (QIIR) and APEC (Peru 2016 summit) and is a member of the “Washington State IoT
Council” advising the Governor and state legislators.
• Mark is the founder of the Adgetec Corporation’s consulting business since 2010 and guiding
many entrepreneurs in advisory positions and as their investor.
✓ Immigrant and Washington state residence since
✓ Globally active (Montreal – Davos – London -...)
✓ Motivated to help my home state
✓ Adgetec: Helping business and Government
leaders to make sense of tech and their impact
✓ Teacher at Rutgers exec program
✓ Angel and property investor
✓ Deep in Blockchain for 4 years
We have functioning,
(relatively expensive) global
financial, insurance and
commodity trading systems.
But only for the well connected
Of the 7 billion people in the world…
Mark Mueller-Eberstein & Adgetec Corporation
But only 20%
access to the
Mark Mueller-Eberstein & Adgetec Corporation
Billions are left out from the economic befits
of global trade and access to capital
• Billions of People without access to financial system
• Billions of people do not have an ID
• Billions of people do not have a record of their property
• Costly and in efficient transfers
• Property can be taken away / confiscated without records of original ownership
• Property can not be put up as collateral for investment loans
• Billions of People making their living by producing commodities
• Billions of small farmers globally, without ability to achieve real market prices or to ensure
future crops yields
• Wars are fought over commodities, but customers (including companies like Intel) want
“conflict free” materials
• Very few commodities traded on global markets
China moves from “cash
society” to “mobile payment
for more than 800 million
people” within a few years
Private innovation (WeChat
and AliPay) with government
Categories of Block Applications
Value Added Services
Source: 2015 William Mougayar
Blockchain technology as the
scaffolding of accountability,
efficiency, transparency in
all aspects of society,
governance and institutions
allows old and
to offer new
services to their
Blockchain and Equality are
the hottest 2018 WEF and
Horasis topics for leaders
Why do organizations implement blockchain
• They key areas where organization using blockchain technology are finding
value in implementations are:
• Increase efficiency, transparency and security
• Lower cost
• Increased Compliance
• Less graft
• Increased scrutiny of supply chain
• Digital identities (of people and things (“IoT”))
Blockchain has the potential to affect many business functions in the enterprise
Blockchain in the Enterprise
• Efficient, auditable and authenticated transactions
• Smart contracts can encode complex accounting rules
• ICO is a mechanism for raising funding with crowdfunding properties
• Stock exchanges (T0), on-chain token exchanges (DEX)
• Supply chain management
• Provide auditable and authenticated trail of shipments without a need to trust 3rd parties
• Tokens can represent club membership, loyalty points or benefits with complex rules
• Multiple companies can share loyalty tokens with full visibility and real time accounting
• Embedding "Crypto-anchors" into products helps combat counterfeits
• Cryptocurrencies can be accepted at point of sale transparently to the merchant
• Corporate governance
• Tokens can have stock-like properties including voting rights
For those that have experienced
PCs, Internet, Mobile, Social Media
and Cloud computing revolutions….
… Blockchain is FASTER
Working Examples are everywhere
Public Records Retail
Industrial IoT &
Healthcare Messaging Apps
Identity & DNSHedge Funds Voting
ment Rights &IP
Stock Trading Crowd Funding
Gift Cards &
with lots of different
business units, secure
IoT and logistics needs
Even Disney does
(their own, open
Examples of Blockchain in the Enterprise
Company Use Case Area
Transfer Samsung’s entire global supply network to Blockchain (in 2018:incl. 488,000tons of air cargo and one million shipping
Walmart Inc. plans to record food suppliers on the blockchain to help reduce waste, better manage contamination cases and improve
Supply chain, inventory
McDonalds Thailand is testing a blockchain based POS solution to streamline the digital payment income stream for mobile and
online food services.
JPMorgan announced in October that it would be using Quorum to build an interbank payments platform alongside Australia and
New Zealand Banking Group Ltd (ANZ.AX) and the Royal Bank of Canada (RY.TO).
VISA plans to use blockchain based technology for B2Bpayments sending transactions over Visa’s network from the bank of origin
directly to the recipient bank.
The Mastercard blockchain technology will complement the company's existing capabilities including virtual cards, Mastercard Send
and Vocalink to support all types of cross-border, B2Bpayment flows - account-based, blockchain-basedand card-based.
The UN is looking into multiple blockchain scenarios including food assistance to refugees at World Food Program, promoting
gender equality at UN Women, storing education records at UNICEF, increasing aid transfer efficiency at UNOPS and reducing
remittance Costs at UNDP.
City of Zug (Switzerland)
The city of Zug, Switzerland is looking to store residentialIDs on the blockchain, enabling access to e-services such as proof of
residency and online voting.
BP and Royal Dutch Shell
A consortium including energy companies BP and Royal Dutch Shell will develop a blockchain-baseddigital platform for energy
commodities trading expected to start by end-2018.
Coca-Cola Co (KO.N) and the U.S. State Department are launching a project using blockchain’s digital ledger technology to create a
secure registry for workers that will help fight the use of forced labor worldwide.
DHL is doing a proof of concept with Accenture on the life sciences and healthcare industry with the goal of utilizing the inherent
irrefutability within blockchain technologies to highlighting tampering, reducing the risk of drug counterfeits.
Engineers at GE Global Research are looking for ways to use blockchain to connect consumers and producers of electricity with
batteries supplied by wind and solar farms.
UPS and BNSF have joined the Blockchain in Trucking Alliance (BiTA), with the aim to “increase transparency and efficiency among
shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders."
BMW, Ford, General Motors
BMW, Ford and GM have joined the Mobility Open Blockchain Initiate (MOBI), with focus varies from payments, data tracking, and
supply management, to consumer finance and pricing, and more futuristic areas like autonomous vehicles and ride-sharing systems.
“Companies will chose
based solutions and
business models because
they work well for them
and their CUSTOMERS ”
Blockchain is “cloud services” for
The CFO slide
History of accounting?
• Single entry accounting: (trusted) person starts a list, and add in entries
that describe each asset.
• No auditability; trust in “the account” is essential
• foundation for e.g. taxation in the first cultures
• Double entry accounting (Luca Pacioli; 1494):
• You can't have an asset that comes from nowhere, nor can you have a liability that
comes from nowhere.
• Clear strategy to identify errors and to remove them (auditable)
• Enables global trade progress from renaissance until today
• Triple entry accounting (Prof. Yuji Ijiri; 1989 and Ian Grigg; 2005):
• You have three entries: the credit, the debit and the receipt (the cryptographic signed
acknowledgement of the transaction verified by the crowd.)
• The signed Receipt is the Transaction
• completely new economic models
IT innovations and how they shift value
creation and capturing
• Phase I: Value is in Hardware (IBM…)
• Electric circuits —> micro processors —> COMMODIZATION (HP, Compaq, Dell,…)
• Phase II: Value is in proprietary software (Microsoft, Novell)
• proprietary software —> open source (Internet; Linux)
• Phase III: Value is in the data (Google, Facebook, Amazon)
• —> central data —> decentralized data
• Phase IV: Value is in the governance (TBD….)
• Centralized governance to decentralized governance?
Usually not the first but the best wins in every cycle!
Based on Joel Monegro; Partner at PLACEHOLDER.vc
Yes – Blockchain Technology
is THIS fundamental
Overview of the industry in
(companies that operate,
economic activity, potential
Mining – Managing Consensus and Ledger -
Bitcoin Mining example
• Bitcoin mining is the process of checking and adding new transactions to
bitcoin’s immutable ledger—its blockchain.
• Proof-of-work: Miners must compete with one another to be the first to
find a new block. In return for performing this work, which requires massive
processing power and incurs hefty electricity costs, miners are rewarded with
a certain number of bitcoins for each block they add to the blockchain.
• Current reward: 12.5 bitcoins per block, and a new block is found roughly
every 10 minutes.
SIDENOTE / Pitch ALERT:
And yes… we (Adgetec) do
have business partners
interested in building mining
operations in WA state
(and IBM, Salesforce, SAP,…)
WHAT GOVERNMENTS BRING TOTHE
• Markets need confidence in the regulatory framework for blockchain
• Governments can signal to the market and to the public that there is confidence
in the technology
• Legislatures and regulators can remove impediments in current law regarding
• Legislatures and regulators can make laws and rules that enable blockchain
“We have regulation in
place, we just need clarity”
At Global Blockchain Expo
“You can have your team in the
USA, but not your company”
to establish a
“6 states you should probably block from your token sale”
Governments and Blockchain
Sales Tax with Blockchain?
• European Union estimates a
loss of 160+ Billion Euro per
year in sales taxes collected
by “defunct companies”
• Netherlands developing
blockchain based “real time
Blockchain core priority in digitalizing
government and business
Regulations and restrictions?
From an economist perspective: Every restriction (and
forced inefficiency) comes with a cost.
Lets be clear who carries the cost and if that is in the
best interest of an economy and society.
Mark Mueller-Eberstein & Adgetec Corporation
Everybody with a connection to the internet
can transact with everybody else.
“The first internet era was predicated
on the availability of information and
content anywhere in the world and at
Now the second era, fueled by
blockchain technology, is ushering in
what is known as the Internet of
Value, featuring a revolutionary
distributed platform poised to reshape
and advance the global business
environment and world order.”
Don Tapscotts, 2017
• Everybody can transact with Everybody and add billions of people to
• Transaction fees could become “near zero” and “immutable” within
new business, marketing, advertisement and collaboration models
• Impacts every “transaction step”; from Compliance and Supply Chain
Management to Advertisement, Marketing and Sales
Impact of blockchain on consumers, business
models, marketing and advertising:
• Many agree with e.g. Robert Reich and Muhammad Yunus:
“it's time to admit that the capitalist engine is broken--that in
its current form it inevitably leads to rampant inequality,
massive unemployment, and environmental destruction. We
need a new economic system that unleashes altruism as a
creative force just as powerful as self-interest.”
• Muhamad Yunus “Technology designed for social purpose to
begin with would be more powerful and would create its own
exponential expanding positive force”
• I believe that a blockchain powered re-envisioned economics
will recognize that humans are naturally entrepreneurs, best
served not by jobs as such but by opportunities to make their
own ventures in the marketplace.
A World of Three Zeros, 2017
• The next level of blockchain technology enabled innovations are a mix of
economics, social organization and software development.
• The emergence of “economic design patterns”:
• We see key economic constructs that appear in decentralized applications,
similar to software design patterns
• Electricity = energy over the wire.
• Telephone = communication over the wire.
• Blockchain = consensus over the wire.
Why does this
1. Eliminates the need for third party
moderator / intermediary
2. Creates on (very secure) Golden Record
3. Can eliminate back office and intermediary
4. Can be paired with other smart
technologies (think IoT, AI, SCM, ERP,…) to
enable coordinated record keeping that
would otherwise be logistically difficult or
The Blockchain revolution is here.
➢ Change will be fundamental on business,
technology, processes, structures and people
➢ Technology & customer oriented leaders are
positioned to drive and realize the vision and
image of the future
➢ Bringing Billions into the economic system is
an opportunity and our responsibility