The every day question that comes to me. "Is this a hammer in search of a nail?" #Blockchain has evolved and is in use with real-world use cases. Every week I speak to three to five assorted banks and enterprises about practical applications that I'm helping them implement. The separation from #bitcoin has allowed for growth and investment in this latest edge technology.

1. Confidential Information 0
“Bitcoin the currency, I think, is
going to go nowhere … the
blockchain is a technology
which we’ve been studying
and yes it’s real.” —Jamie
Dimon on CNBC

2. Confidential Information
Business Of Blockchain
Setting the Record Straight
May 2017

3. Confidential Information
What is a blockchain?
2
Publically recorded events (ledger entries) recorded
chronologically and verified by multiple third parties

4. Confidential Information
What’s in a Blockchain Ledger?
3
1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. Annual Checkup
5/12/2018
1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. Annual Checkup
5/12/2018
1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. Annual Checkup
5/12/2018
• Rows of information, just
like a database
• Validation and verification
is based on mistrust
• Public audit trails, (we’ll
talk about private ones
later)
• Record keeping by many
third parties often
unknown

5. Confidential Information
Why Separate Blockchain from Bitcoin
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Trust

6. Confidential Information
Blockchain Evolution – FinTech Emerges
• 1.0 – Currencies
– Hardwired to crypto fund transfers. Uni-tasker
• Consensus based
– 2.0 – Contracts
• Recorded agreements across transactional processes. Multi-tasker
– 3.0 – Organizing Activity
• Assets are owned and may transact with one another.
• Smart homes, distributed devices in remote areas (E.g., farms)
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7. Confidential Information
Platform as a Service
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8. Confidential Information
Platforms = Wealth: Amazon Web Services
7
• Detached from Retail
business in 2006
• AWS Q1 2016
– $604 MM
• AWS Q1 2017
– $890 MM
• Operating Margin
– 24%+
https://www.recode.net/2017/4/27/15451726/amazon-q1-2017-earnings-profits-net-income-cash-flow-chart

9. Confidential Information
What’s happening today?
8
Average
investment is
$1,000,000
15% of banks plan
to put blockchain
in production in
2017
$500MM VC
Money in 2016
IBM Devoting
1,000 FTEs and
$200MM
Estonia has
developed an e-
Residency program
Total 2016
investment was
$1.4 B

10. Confidential Information
Why separate the blockchain from Bitcoin
• Common vocabulary
– The blockchain – The underlying
ledger solution for Bitcoins
– A blockchain – The technology
solutions that solve distributed
record keeping
– Distributed Ledger Transactions
(DLT) – Consensus based
transactions
– Proof of Work
– Proof of Stake
9Byzantine General Scenario

11. Confidential Information
Proof of Work
10
• Transactions or “messages” are part of the
encryption input
• Approximately six times per hour transactions
are committed to the ledger
• Cryptographic standard SHA-256
– Mathematically “hides” the incoming message
– One way encryption
• First miner who ”solves” the equation gets
paid
• Nonce (Number used once)
• Proof-of-Work
– Paying for accounting
• Electrical energy intensive

12. Confidential Information
Digest Results from SHA-256
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fox =
776cb326ab0cd5f0a974c1b9606044d8485201f2db19cf8e3749bdee5f36e200
fxo =
fbf7443c4238ad48b4d28226ff7dcca5e5ab467b2c37b960ebc860703d925f52
The quick brown fox jumped over the lazy dog =
7d38b5cd25a2baf85ad3bb5b9311383e671a8a142eb302b324d4a5fba8748c69

13. Confidential Information
Proof of Stake
• Requires a series of
Validators
• Requires much less
electrical energy
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14. Confidential Information
Blockchain Projects and Technologies
• Open Source and Open Source projects
• Hyperledger – Hyperledger.org
– Open source projects supported by the Linux Foundation
• Fabric – IBM supplied technology for distributed ledgers
• Iroha (ee-roh-ha) - Soramitsu, NTT Data, Colu
• Sawtooth Lake – Intel
• Ethereum – Ethereum.org
– Distributed scripting language which is “coin-operated”
– Smart contracts between individual entities
• Enterprise Ethereum (Entethalliance.org)
– Business consortium based project. Technologies that acknowledge the need for regulatory compliance
• Eris (now Monax) Monax.com
– Pre-built blockchain solutions
– Examples Asset Managements, Claim Management
• Ripple (Ripple.com)
– Basic settlement process between banks
• Quorum (https://www.jpmorgan.com/country/US/EN/Quorum)
– Open Source from JPMorgan Chase to validate transactions amongst trust third parties
• R3 (R3cev.com)
– Company based consortium developing a blockchain technology (Corda) for permissions and privacy. Ledgers are selectively
transferred 13

15. Confidential Information
Is This a Hammer In Search of a Nail?
• Inter-Company Transfers (manual hand-offs)
– Insurance
– Property and title transfers
– Anything with government as a third party
• Verifiable Record Management
– Formally physical assets now digital (stocks, currency, prescriptions,
vehicles)
• Identity Management
– Identity and “certificates of trust” for mobile economy companies such
as AirBnB and Uber
• Smart Contracts
– It’s the new Software as a Service
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16. Confidential Information
Private vs. Public Blockchains
• Public Blockchain
– Many third parties validate ledger entries
– No single “owner”
– Harder for the black hats to take over
– Policy changes are by consensus unlike companies (e.g., Facebook)
• Private blockchains
– Faster to close or clear transactions
– Single owner – Bad scenarios for trust
– Good for small autonomous networks
• Internet of Things
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17. Confidential Information
Company Profile: Overstock.com
• Founded: February 2002
• Nasdaq: OSTK.O ~$15
• Revenue: $1.754B
• Overstock.com, Inc., is an online retailer and incubator of blockchain
technology
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• Wholly owned by Overstock
• Incubate technologies in six
areas
– Voting
– Land
– Underlying Technologies
– Cap Markets
– Identity
– Banking

18. Confidential Information
Lawrence I Lerner
• Bridging the gap between the Business and Technology
– 25 years executive leadership (PricewaterhouseCoopers, Cognizant)
– 15 startup companies – lead and funded
– Every day technology product launched Motorola, Discover Card, The
New York Times, Safeway Stores, in-store coupons
– Public and Private board roles
• lawrence@lawreneilerner.com
• Direct: +1.630.248.0663 (Seattle Based)
• Twitter: RevInnovator
• LinkedIn: https://www.linkedin.com/in/lawrencelerner/
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20. Confidential Information
Bitcoin- Just Three Things
1. The value of a bitcoin is
volatile
- Like stocks
2. Bitcoin transactions are not
reversible
- Like cash
3. There are no bitcoins
– There are only bitcoin
transactions
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