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William Mougayar on blockchain cio innovation summit sept 25

Presentation to Canadian CIOs at IT World Canada CIO Summit 2016.

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William Mougayar on blockchain cio innovation summit sept 25

  1. 1. vcapv.com © William Mougayar, Virtual Capital Ventures William Mougayar ​ General Partner, Virtual Capital Ventures ​ Author, The Business Blockchain Blockchain Technology: What isYour Strategy? September 25 2016
  2. 2. vcapv.com © William Mougayar, Virtual Capital Ventures Cryptography Science  BLOCKCHAIN Software Engineering Game Theory Cryptography Science ​  The Blockchain Novelty
  3. 3. 3 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Everything Today Requires DB Synchronization via Private Networks or Trusted Parties Owns Database A Confirms A has at least $5 Bank A Owns Database B Confirms BB can receive $5 Bank B Customer AA wants to transfer $5 to person BB SWIFT Clearing House © 2016 William Mougayar Escrows Custodians Trusted Parties
  4. 4. 4 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  The Blockchain Enables P2P Transactions Initiates transfer from their wallet User AA Receives funds in wallet User BB BLOCKCHAIN © 2016 William Mougayar
  5. 5. 5 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Byzantine’s Generals Problems
  6. 6. 6 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Shared Documents Analogy VS.
  7. 7. 7 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  How to view the Blockchain Source: The Business Blockchain (Wiley, 2016) © William Mougayar
  8. 8. 8 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Many Facets to the Blockchain ①  Cryptocurrency ②  Computing Infrastructure ③  Transaction Platform ④  Decentralized Database ⑤  Distributed Accounting Ledger ⑥  Development Platform ⑦  Open Source Software ⑧  Financial Services Marketplace ⑨  Peer-to-Peer Network ⑩  Trust Services Layer
  9. 9. 9 vcapv.com © William Mougayar, Virtual Capital Ventures Blockchains, like the Web, need the Internet I N T E R N E T WORLD WIDE WEB BLOCKCHAINS Source: The Business Blockchain (Wiley, 2016) © William Mougayar
  10. 10. 10 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures I N T E R N E T WORLD WIDE WEB © 2016 William Mougayar Native Blockchain ApplicationsWeb Applications Hybrid Blockchain Web Applications PUBLIC BLOCKCHAINS PRIVATE N E T S Private Applications Hybrid Blockchain Private Applications Private Blockchain Native Apps 4 Types of Blockchain Applications PRIVATE BLOCKCHAINS 4 Types Blockchain Applications
  11. 11. 11 vcapv.com © William Mougayar, Virtual Capital Ventures ​  In the mid-2000’s FinTech Attacked the Banks, and it was called “Unbundling Banking” U.S. Europe ­  In startup fashion, most attacks aren’t head-on, start small & look harmless at first sights, therefore are ignored ­  So, the banks didn’t feel FinTech initially, because it crept up ­  Blockchain will repeat FinTech Graphs Source: CB Insights
  12. 12. Blockchain in Financial Services Consumer Facing B2B Services Back-end Processes Inter Industry Intermediaries Hundreds of Processes Billions of users Millions of businesses Dozens of Players © 2015 William Mougayar Mortgages Digital identities Wallets Exchanges Simple transfers & Payments Increasing evolution complexity & delivery timeframe IT & Business Reengineering to support all these changes Insurance Payments Trusts Escrow Clearing Networks International Transfers Trading & Capital Markets Thousands of Use Cases Securities & instruments Syndicated Loans Clearing & Settlements Assets Ownerships Bond sales Digital Receipts
  13. 13. 14 vcapv.com © William Mougayar, Virtual Capital Ventures Self Publishing E- Commerce Social Interactions IT Supremacy Internet Years ​  Defining Technology Eras Personal Communications Blockchain Promise 1994 2015 Data computation Database applications Transaction processing Business Intelligence Global operations Enabling Decentralization of Trust Value Flow without Intermediaries
  14. 14. 15 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Some Basic Concepts ① Smart Property ② Timestamping ③ Multi-signature Transactions ④ Smart Contracts ⑤ Smart Oracles ⑥ State Machines
  15. 15. 16 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Proofs as a Business / Service Source: The Business Blockchain (Wiley, 2016) © William Mougayar
  16. 16. 17 vcapv.com © William Mougayar, Virtual Capital Ventures OpenBazaar: Decentralized P2P Commerce
  17. 17. vcapv.com © William Mougayar, Virtual Capital Ventures “The buying and selling works flawlessly, I'm very impressed. I've made over twenty purchases and the total fees were less than $1.40 for all twenty purchases and sales.That's great.”
  18. 18. 19 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  And New Models Are Emerging WORK VALUETransactions Actions Tokens © 2016 William Mougayar The Relationship Between Tokens, Value and Work
  19. 19. 20 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures The New World of CryptoCurrencies (CoinMarketCap.com)
  20. 20. 21 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures Decentralization – What does it look like? ①  No intermediary delays, speed ②  Upfront/Permissionless user identification and reputation ③  Flat structures with little overhead ④  Trust built inside the network ⑤  Resiliency against attacks ⑥  No central point of failure ⑦  Governance decisions by consensus ⑧  Peer-to-peer communications Source: The Business Blockchain (Wiley, 2016) © William Mougayar
  21. 21. 22 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  List of Challenges is Long Source: The Business Blockchain (Wiley, 2016) © William Mougayar
  22. 22. 23 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures ​  Blockchain and Regulation ①  Risk is regulatory confusion ②  New regulations needed, e.g. record keeping ③  Where do you insert the blockchain? ④  Difference between blockchain and cryptographic ledgers ⑤  Risk is centralization
  23. 23. 24 vcapv.com © William Mougayar, Virtual Capital Ventures ​  Innovation Potential for Blockchain UNREGULATED ENVIRONMENTS REGULATED ENVIRONMENTS
  24. 24. 25 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures §  FSI are undertaking a variety of activities: §  Poking at startups and trying them §  Planning their own blockchain initiatives §  Many have aligned with R3, DAH or Chain as their main partners §  For most of them, the attention is on cost savings and process improvements, not pure innovation (bottom line) §  Few are thinking strategically about how they could innovate outside of the regulatory boxes ​  Some Thoughts on the FS market
  25. 25. 26 vcapv.com © William Mougayar, Virtual Capital Ventures ​  The Reality isYou Need to Take the Animal Home … ​  … to see if they will survive
  26. 26. 27 vcapv.com © William Mougayar, Virtual Capital Ventures NEW COMPANIES AND BEHAVIORS INSIDE EXISTING COMPANIES THREATENED OR TRANSFORMED JUST TECHNOLOGY How New Technology Permeates
  27. 27. 28 vcapv.com © William Mougayar, Virtual Capital Ventures Who will be the next Google of the blockchain?
  28. 28. 29 vcapv.com © William Mougayar, Virtual Capital Ventures Who will be the next Amazon of the blockchain?
  29. 29. 30 vcapv.com © William Mougayar, Virtual Capital Ventures Who will be the next ____ of the blockchain?
  30. 30. 31 vcapv.com © William Mougayar, Virtual Capital Ventures The first large bank to accept cryptocurrency?
  31. 31. 32 vcapv.com © William Mougayar, Virtual Capital Ventures Crossing $1B assets traded on blockchains?
  32. 32. 33 vcapv.com © William Mougayar, Virtual Capital Ventures The first crypto- based economy business?
  33. 33. 34 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures Some Use Cases Financial Services §  eTRS (ConsenSys, Microsoft, IPFS), Clearmatics, DCN for OTC derivatives, Cambridge Blockchain catastrophe bond counterparty validation §  CORDA / R3 Consortium §  Japan: Securities Insurance, Corporate Actions (Dividend/Stock Splits, Ownership Registry, Trade Reconciliation, Cash Payments, etc.) §  Payments Canada: Wholesale payments §  Barclays UK: Letter of credit 100K test Government §  Delaware, Singapore, Estonia, Ukraine, Russia, Georgia, UK, Sweden. Energy, Healthcare, Manufacturing, Internet of Things
  34. 34. 35 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures What to Follow §  Regulatory sandboxes (WFE, CFTC, IIROC) §  Blockchain record keeping acceptance §  Emergence of new clearing networks §  New Asset classes, New funding methods (ICO) §  Identity on the blockchain §  Documented benefits (costs, speed, risk, visibility) §  Intermediaries that re-think their roles
  35. 35. PUBLIC PRIVATE CREATING NEW BUSINESS MODELS SUPPORTING EXISTING MODELS © 2016 William Mougayar * Companies in the boxes are just an illustrative sample. Blockchain Applications Segmentation
  36. 36. 37 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures The Next Phase of the Blockchain is Driven by Business
  37. 37. 38 © William Mougayar, Virtual Capital Ventures.vcapv.com © William Mougayar, Virtual Capital Ventures Take-away – Next Steps §  What will be your blockchain strategy? §  Private blockchains activity §  Regulatory innovation §  Communicating clarity + Specific blockchain work §  Hire your own blockchain experts §  Remember the Internet
  38. 38. vcapv.com © William Mougayar, Virtual Capital Ventures Become part of the conversations.
  39. 39. vcapv.com © William Mougayar, Virtual Capital Ventures ​ William Mougayar ​ Investor . Entrepreneur ​ Blogger . Board Member ​ General Partner ​ Virtual Capital Ventures ​ william@vcapv.com ​ 1-416-648-7010 ​ http://startupmanagement.org/blog ​ http://vcapv.com ​ @wmougayar thank you

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