Understanding the blockchain and its impact on financial services

1. THE IMPACT OF
BLOCKCHAIN
ON FINANCIAL SERVICES
B e i r u t , F e b r u a r y 2 1 , 2 0 1 8
@JuanLlanos @ConsenSys

2. © 2018 Juan Llanos
Source: Bloq

3. Source: William Mougayar

4. 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 +
browser
tokens
rewards
WOW
Ripple Protocol
EGold
B i t c o i n
P r o t o c o l
Ven
Ripple XRP
Litecoin
Linden Dollars
Entropia Universe
QQ
Online
Exchanges
Altcoin Explosion
Regulated
Exchanges
Beenz
Flooz
Colored Coins
Square Cash
Amazon Coin
E t h e r e u m
Sovereign Coin
Real Estate
Equities
Derivatives
B i t c o i n O p e n S o u r c e
P r o t o c o l S o l v e s
D o u b l e S p e n d P r o b l e m
v i a O p e n L e d g e r
S m a r t
C o n t r a c t s
© 2018 Juan Llanos

5. “A peer-to-peer network that allows for the
proof and transfer of ownership without the need of
a trusted third party.”
Goldman Sachs
“An open platform for value exchange.”
Richard Brown
“A Peer-to-Peer Electronic Cash System”
Satoshi Nakamoto
© 2018 Juan Llanos

6. AN ACCOUNTING
SYSTEM
© 2018 Juan Llanos

7. N O C E N T R A L A U T H O R I T Y
D I S T R I B U T E D C O N S E N S U S
B I T C O I N REVOLUTION
© 2018 Juan Llanos

8. © 2018 Juan Llanos

9. D I S T R I B U T E D CONSENSUS PROTOCOL
state and state changes guaranteed via...
• D I S T R I BU T E D → one trusted computer made up of many untrusted computers
• C O N S E N S U S
• Traditional → supermajority or benevolent dictator
• “Nakamoto” → forked-choice rule (compromise)
• P R O T O C O L → Mechanism to make faults expensive:
• Proof-of-Work (PoW) → Make changing the state expensive
© 2018 Juan Llanos

10. N O C E N T R A L A U T H O R I T Y
O P E N + P R O G R A M M A B L E
D I S T R I B U T E D C O N S E N S U S
N O D O U B L E - S P E N D
P2P TRANSFER WITHOUT IDENTITY
B I T C O I N REVOLUTION
T R A N S PA R E N T L E D G E R
© 2018 Juan Llanos

11. DISTRIBUTED
LEDGER
© 2018 Juan Llanos

12. © 2018 Juan Llanos
Source: Skry

13. Source: Andreas Antonopoulos

14. 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 +
browser
tokens
rewards
WOW
Ripple Protocol
EGold
B i t c o i n
P r o t o c o l
Ven
Ripple XRP
Litecoin
Linden Dollars
Entropia Universe
QQ
Online
Exchanges
Altcoin Explosion
Regulated
Exchanges
Beenz
Flooz
Colored Coins
Square Cash
Amazon Coin
E t h e r e u m
Sovereign Coin
Real Estate
Equities
Derivatives
B i t c o i n O p e n S o u r c e
P r o t o c o l S o l v e s
D o u b l e S p e n d P r o b l e m
v i a O p e n L e d g e r
S m a r t
C o n t r a c t s
E t h e r e u m
G l o b a l S u p e r
C o m p u t e r i s
B o r n
© 2018 Juan Llanos

15. D I S T R I B U T E D CONSENSUS PROTOCOLS
state and state changes guaranteed via...
• D I S T R I BU T E D → one trusted computer made up of many untrusted computers
• CONSENSUS
• Traditional → supermajority or benevolent dictator
• “Nakamoto” → forked-choice rule (compromise)
• PROTOCOLS → Mechanisms to make faults expensive:
• Proof-of-Work (PoW) → Make changing the state expensive
• Proof-of-Stake (PoS) → Use security deposits to punish nodes who propose
competing updates to the consensus
© 2018 Juan Llanos

16. © 2018 ConsenSys

17. DISTRIBUTED LEDGER+
SMART CONTRACTS
NATIVE TOKEN +
E T H E R E U M REVOLUTION
© 2018 Juan Llanos

18. SMART
CONTRACTS
© 2018 Juan Llanos

19. © 2018 Juan Llanos
“The basic idea behind smart contracts is
that many kinds of contractual clauses (such
as collateral, bonding, delineation of
property rights, etc.) can be embedded in
the hardware and software we deal with, in
such a way as to make breach of contract
expensive (if desired, sometimes
prohibitively so) for the breacher.”
Nick Szabo, 1997

20. © 2018 Juan Llanos
“Smart contracts utilize protocols and user
interfaces to facilitate all steps of the
contracting process. This gives us new ways
to formalize and secure digital relationships
which are far more functional than their
inanimate paper-based ancestors.
Smart contracts reduce mental and
computational transaction costs imposed by
either principals, third parties,
or their tools.”
Nick Szabo, 1997

21. © 2018 Juan Llanos
“A contract is essentially an automated
agent that lives on the Ethereum network,
has an Ethereum address and balance, and
can send and receive transactions.
A contract is “activated” every time
someone sends a transaction to it, at which
point it runs its code, perhaps modifying its
internal state or even sending some
transactions, and then shuts down.”
Vitalik Buterin, 2013

22. © 2018 Juan Llanos
SMART
CONTRACT
© 2018 ConsenSys

23. © 2018 ConsenSys

24. © 2018 ConsenSys

25. © 2018 Juan Llanos© 2018 ConsenSys

26. © 2018 Juan Llanos© 2018 ConsenSys

27. freedom to own
freedom to transfer
freedom to innovate
© 2018 Juan Llanos
P E R M I S S I O N L E S S I N N O V A T I O N
CORRUPTION- & CENSORSHIP-RESISTANCE

28. PARADIGMS
challenged
m o n e y
s o v e r e i g n t y
s e c u r i t y
r e g u l a t i o n
p r o p e r t y
i d e n t i t y
l a w
g o v e r n a n c e
© 2018 Juan Llanos

29. PRODUCT-FOCUSED
ACTIVITY-BASED
INDUSTRY-SPECIFIC
JURISDICTION-DEPENDENT
INTERMEDIARY-ENFORCED
© 2018 Juan Llanos

30. permissionless-/limitless-ness
borderless-/jurisdictionless-ness
(pseudo) anonymity
peer-to-peer
(in)flexibility
radical transparency/translucence
probabilistic finality
DECENTRALIZED PARADIGM
© 2018 Juan Llanos

31. PRIVATE vs OPEN
BLOCKCHAINS
© 2018 Juan Llanos

32. © 2018 Juan Llanos

33. Quorum is an enterprise-
focused version of
Ethereum ideal for any
application requiring high
speed and high throughput
processing of private
transactions within a
permissioned group of
known participants.
© 2018 ConsenSys

34. + Permissioning
+ Privacy
+ Performance
+ Configurable Consensus
+ Settlement Finality
© 2018 ConsenSys

35. © 2018 ConsenSys

36. CRYPTO
TOKENS
© 2018 Juan Llanos

37. DISTRIBUTED LEDGER+
SMART CONTRACTS
NATIVE TOKEN +
E T H E R E U M REVOLUTION
© 2018 Juan Llanos
+
ERC20 TOKENS

38. USE CASES
USE CASES
USE CASES
© 2018 Juan Llanos

39. © 2018 ConsenSys

40. PAYMENTS
IDENTITY
ASSET CUSTODY
© 2018 Juan Llanos

41. PAYMENTS
PAYMENTS
PAYMENTS
© 2018 Juan Llanos

42. © 2018 ConsenSys

43. © 2018 ConsenSys

44. © 2018 ConsenSys

45. IDENTITY
IDENTITY
IDENTITY
© 2018 Juan Llanos

46. © 2018 ConsenSys

47. © 2018 ConsenSys

48. © 2018 ConsenSys

49. KYC for loans/cards
instant onboarding
© 2018 Juan Llanos

50. ASSET CUSTODY
ASSET CUSTODY
ASSET CUSTODY
© 2018 Juan Llanos

51. C R Y P T O T O K E N S
key management
© 2018 Juan Llanos

52. CAPITAL MARKETS
CAPITAL MARKETS
CAPITAL MARKETS
© 2018 Juan Llanos

53. © 2018 ConsenSys

54. INSURANCE
INSURANCE
INSURANCE
© 2018 Juan Llanos

55. © 2018 ConsenSys

56. OTHER APPLICATIONS
OTHER APPLICATIONS
OTHER APPLICATIONS
© 2018 Juan Llanos

57. © 2018 Juan Llanos

58. © 2018 ConsenSys

59. © 2018 ConsenSys

60. WHY BLOCKCHAIN
WHY BLOCKCHAIN
WHY BLOCKCHAIN
© 2018 Juan Llanos

61. © 2018 ConsenSys

62. © 2018 Juan Llanos
Source: Bloq

63. © 2018 ConsenSys

64. SINGAPORE
© 2017 Juan Llanos

65. THINK OCEAN
NOT LAKE
© 2018 Juan Llanos

66. @JuanLlanos @ConsenSys