APEC leadership May 2016 presentation in Arequipa, Peru. Blockchain and Financial Services: Everything could be different

1. Blockchain and Financial Services
Everything could be different
THE IMPACT OF TECHNOLOGY ON SERVICES DELIVERY
Mark Mueller-Eberstein
Rutgers University
The Innovation Economy Institute
CEO of Adgetec Corporation
@MarkMeberstein
WeChat: MarkMEberstein

2. ©Mark Mueller-Eberstein & Adgetec Corporation
“Every inefficiency in a system will be
removed (by technology) sooner or
later.”
2
Mark Mueller-Eberstein

3. Organizations that benefit from inefficiencies will
see their business models disappear when
customers have the option to get
“better (experience)” for “cheaper.”
3
Ecommerce: Amazon; Alibaba,…
Cellphones vs. land lines / phone booth
Calls & emails vs. WeChat or WhatsApp
On premise computing vs. cloud computing
Trying to call a taxi or requesting an “Uber”
Owning a car or paying for transportation (incl. car sharing…)
Cars & trucks with drivers vs. driverless vehicles
…
….
Financial Services Industry?

4. Mark Mueller-Eberstein & Adgetec Corporation
What differentiates
Winners from Losers?
Low IT Capability Maturity HIGH IT Capability Maturity

5. Mark Mueller-Eberstein & Adgetec Corporation
“Top Companies in 2007”
Low IT Capability Maturity HIGH IT Capability Maturity

6. Mark Mueller-Eberstein & Adgetec Corporation
“….. And where they are in 2015”
Low IT Capability Maturity HIGH IT Capability Maturity

7. Opportunity for Everybody !
 Organizations size doesn’t really matter (anymore)
 Geographical location is less relevant
 Access and Connectivity are key enablers
 Agile and creative people will seize the opportunities (if
allowed and enabled)
 People need to be able to challenge and voice even
stupid ideas for discussion
 Often new players take on (and out) the established
incumbents
7

8. ©Mark Mueller-Eberstein & Adgetec Corporation
It’s the
F A S T
who eat the
SLOW

9. ©Mark Mueller-Eberstein & Adgetec Corporation
The trick is being open to changing your mind, and more
importantly, knowing when to do so.
George Bernard Shaw
“Those who cannot
change their minds
cannot change
anything."
©Mark Mueller-Eberstein & Adgetec Corporation

10. At least $1.7 trillion in “inefficiencies”
up for grabs…
11
The Economist, 2014

11. ©Mark Mueller-Eberstein & Adgetec Corporation
And that is only the banking system…
Think any kind of transaction and
related services…
12

12. … for example….
 Records of estates
 Records of shares
 Any financial transaction
 Voting
 Domain control (DNS)
 Central Trust (“Escrow”) for any kind of deals
 Messaging (“signed and unchangeable”)
 IP management
 …
13

13. The more you learn, the more opportunity you will
see.
Nobody knew in early 1990s what the Internet was
or would lead to.
Milton Friedman: “Eventually, there will be a digital
value system beyond the nation state.”
14

14. Blockchain
 Blockchain is like the Internet
(it changed everything)
 The implications for traditional financial services
are massive
 The end of banks?
 The end of central banks?
 Big implications for regulators.
16

15. ©Mark Mueller-Eberstein & Adgetec Corporation
The “technical stuff”…
17

16. ©Mark Mueller-Eberstein & Adgetec Corporation
Networking….
18
Old school
computing and
business
Changed computing and business
over the last 20 years

17. ©Mark Mueller-Eberstein & Adgetec Corporation
Peer-to-Peer (P2P)
19

18. Peer-to-Peer (P2P) Networking is
everywhere
P2P
(structured &
Unstructured)
File Sharing
• Napster
• BitTorrent
Media
• Spotify
• Popcorntime
• PPLive (TV)
Marketplaces
• BitCoin
• “Sharing
Economy”
Cryptography
Storage &
Search
• Minerva Project
Communication
• Skype
• Google Talk
• I M
Mobile
• WeChat
• WhatsApp
• Line
Messaging as
Payment
E-Commerce
• E-Bay
• AirBnB
• Uber
Defense
• DARPA
High
Performance
Computing
• Grid Computing
• HIVE
• SETI@home
Analytics
techniques
exchange
• Chinook

19. Many commercial or government
services are basically “databases” that
are centrally owned and managed.

20. Transactions are recorded in a
“Ledger”
22

21. Central Control = Central Point of Failure
23

22. Blockchain technology allows a distributed ledger
vs. a centrally managed ledger.
All transactions within a block are recorded and
visible. And can never be changed.
Blockchain with out a “token” is just a database
24

23. Blockchain – in 2 minutes
25

24. Benefits of Blockchain secured
distributed leger vs. central ledger
 Information can be put on block chain and can
never be changed
 Worldwide ledger: IP, land titles, art,...
 Full transparency for every transaction
 "Record every information forever"
26

25. Bitcoin vs. Blockchain
 Bitcoin is (currently the best know) usage of blockchain
technology
 One of many digital currencies using blockchain technology
 Many more uses for blockchain technology other than
“currency”
 Why digital currency is used?
No need to use exchange (e.g. banks) for people who
know/use Bitcoin
Direct exchange between individuals is possible
27

26. Bitcoin basics
 Insider: "It feels like when we first developed the Internet"
 It is a way to transfer value in the Internet
 Bitcoin can not be copied. First "scarce" digital asset.
 Bitcoin protocol (blockchain) is final piece of Internet puzzle
 Very early and experimental stage
 As longer as Bitcoin exists, the stronger it gets
 60% of all Bitcoin mining done in China (up from 40% 8 months
ago)
 New block created every ten minutes
28

27. ©Mark Mueller-Eberstein & Adgetec Corporation
How “real” is Bitcoin?
29
... Most virtual believe might be "love"
Virtual goods are as real as people believe in them...
There is very little “real money”. Most are “0s””1s” on
some bank’s database

28. ©Mark Mueller-Eberstein & Adgetec Corporation
How “real” is blockchain?
30
 Goldman-Sachs invest $500+ Million
 Microsoft declares “blockchain” as one of the
key “must win” workloads for their Azure
platform and business (and announced
collaboration with many US banks)
 Some governments invest into developing their
own “local” blockchains

29. ©Mark Mueller-Eberstein & Adgetec Corporation
Understanding
change
©Mark Mueller-Eberstein & Adgetec
Corporation

30. ©Mark Mueller-Eberstein & Adgetec Corporation
is scary
Change

31. ©Mark Mueller-Eberstein & Adgetec Corporation
have emotions
People

32. ©Mark Mueller-Eberstein & Adgetec Corporation
Is constant
Uncertainty

33. Endings Exploration New Beginnings
Reconciliation Reorientation Recommitment
Denial
Anxiety
Shock
Fear
Anger
Frustration
Confusion
Stress
Creativity
Approach-Avoidance
Skepticism
Acceptance
Impatience
Hope
Energy
Enthusiasm
Productivity
Morale
Theory of Transition
Schlossberg; 1981 & 1995

34. 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.
37

35. ©Mark Mueller-Eberstein & Adgetec Corporation
Your Opportunity!
1.Change will be fundamental on business,
technology, processes, structures and
people.
2.Technology leaders are positioned to drive
and realize the vision and image of the
future.

36. ©Mark Mueller-Eberstein & Adgetec Corporation
“IT TAKES TEAMWORK DO MAKE THE
DREAM WORK!”
John C. Maxwell; Walt Disney; Martin Luther King Jr.; Captain Kirk;…

37. ©Mark Mueller-Eberstein & Adgetec Corporation
NOW …
“MAKE IT SO!”

38. THANK YOU!
 MarkME@adgetec.com
 Twitter: MarkMEberstein
 US +1 855.423.4383
Mark Mueller-Eberstein
The Innovation Economy Research Institute
CEO of Adgetec Corporation
Bestselling Author
WeChat: MarkMEberstein