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FaceTime Kortrijk 2018 - blockchain
Koen Vingerhoets discusses blockchain technology, emphasizing its distinction from bitcoin and outlining its applications in enhancing trust and transparency in transactions. He draws parallels to historical ledgers, highlighting the importance of distributed smart contracts and a shared source of truth in blockchain. The document outlines the potential of blockchain to revolutionize trade finance through improved identification, invoicing, and real-time settlement, while acknowledging challenges in implementation and strategy.
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FaceTime Kortrijk 2018 - blockchain
- 1. Koen Vingerhoets –@IthronKoen on
- 2. • Master inLaw (2000, UA) • Experienced in IT (I dream in code) • KBC since 2011 (Lean coach, Cultural Change, Insurance) • Blockchain since 2014, officially since 2016 • Gadgets • Garamond font • Lord of the Rings • Intelligence • Humor • Garlic • Books from Thea Beckman • Inefficiency • Lists • Irony 7) Inconsistency
- 3. 3 Blockchain, not bitcoin Preliminaryremarks • Bitcoin is “A”, not “THE” blockchain; • My focus is on Blockchain, not bitcoin; • No 10 minutes wait / transaction; • No crazy electricity use; • Anonymous as far as needed; • No cryptocurrency needed; • I don’t know which crypto you should buy; Explaining blockchain without mentioning bitcoin is impossible.
- 4. On the menu Alesson from history : ledgers A really short blockchain introduction Slightly longer blockchain explanation Blockchain in practice Closing thoughts
- 5. 5 VOC – HollandsGouden Eeuw VOC & De Groote Compagnie • Verenigde Oost-Indische Compagnie : the world’s first joint-stock limited liability company with freely transferable shares (1602) • Owners were registered in a ledger, every transfer was signed by “De Heeren XVII” • The shareholders partipicated in the profit. • Groote Compagnie organized trades (1609) • “Naked short sales” : promise to sell shares in the future at a predefined price At the dawn of the financial world… human nature surfaces already.
- 6. 6 VOC – HollandsGouden Eeuw When the trusted third party turns out to be not so trustworthy… De Groote Compagnie • Barent Lampe, head accountant VOC • Hans Bouwer, trader Heeren XVII
- 7. On the menu Alesson from history : ledgers A really short blockchain introduction Slightly longer blockchain explanation Blockchain in practice Closing thoughts
- 8. 2008 – “SatoshiNakamoto” writes…
- 9. Bitcoin = uniquetransfer of value
- 10. Blockchain persists allthe unique transfers
- 11. How the technologybehind bitcoin could change the world
- 12. The truth intempore non suspecto
- 13. On the menu Alesson from history : ledgers A really short blockchain introduction Slightly longer blockchain explanation Blockchain in practice Closing thoughts
- 15. Understanding distributed ledgers Nomen est omen : blockchain A transaction is - Declaration of an incident - Pictures of the accident - Signed contract - A proof of payment - An offer from car repair - Steps in the RDR wizard - …
- 16. vs 1. Every hashis unique 2. Infinitly reproducable 3. One way traffic Understanding distributed ledgers Encryption vs hashing When you know a hash is NOT unique
- 18. Understanding distributed ledgers Encryption vs hashing
- 19. Understanding distributed ledgers Encryption vs hashing
- 20. Understanding distributed ledgers Encryption vs hashing
- 22. Blockchain : abusiness definition The blockchain is, from a business point of view, A shared platform On which parties who don’t know or trust each other Are able to collaborate with respect for privacy Without relying on a possibly corrupt administrator.
- 23. 23 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 24. Transparency: public <>private and permissionless <> permissioned Public Private BTC 1984 ? KBC Permissionless Permissioned
- 25. 25 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 26. Nicki -> KoenIN0,8 BTC Wim -> KoenIN 0,6 BTC Koen -> ThomasOUT 1 BTC Wim -> KoenREST 0,4 BTC Koen receives two payments - 0,8 BTC from Nicki - 0,6 BTC from Wim Koen transfers 1 BTC to Thomas - 0,8 BTC + 0,2 BTC - 0,4 BTC is unspent transaction • (A defined number of) assets are stored on the blockchain • Each asset is identified • Assets are divided • Assets are transferred (not copied) => Clear view on who owns what when. Ownership : how value is stored
- 27. 27 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 28. Traceability : thesequence is the defence
- 29. 29 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 30. Trusted party & Singlepoint of failure Distributed : (de)centralized & distributed One central point of authority
- 31. 31 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 32. Trust : consensusas a service BTC : 7trx/s 0,24% power
- 33. 33 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts
- 34. 34 Smart contracts Not smart,not a contract… but it’s code and it runs on the blockchain. Definition A smart contract is an agreement whose execution is both automated and enforceable. • The actual “transaction” among parties is expressed through and independently executed by computer code, no party can block it or otherwise tamper with. • It constitutes legally binding rights and obligations of the involved parties.
- 35. 35 Smart contracts Just code,a workflow or an entire contract? Is code law or not? What could it be now?
- 36. 36 Our approach :6 key elements Combined and used with other parties, they create a single shared source of truth. TrustOwnership Transparency Traceability Distributed Smart contracts In collaboration with others, Blockchain is… … the single shared source of truth.
- 37. On the menu Alesson from history : ledgers A really short blockchain introduction Slightly longer blockchain explanation Blockchain in practice Closing thoughts
- 38. 38 VOC – HollandsGouden Eeuw How would blockchain improve this? TrustOwnership Transparency Traceability Distributed Smart contracts In collaboration with others, Blockchain is… … the single shared source of truth.
- 39. KBC Trade Finance|we.trade
- 40. we.trade : thepurpose 40 A marketplace where SMEs can easily trade with more trust
- 41. Internal 41 Our History Blockchain broughtus together in 2017 • Built a consortium out of 9 banks across Europe • Designed a solution benefiting our members and our clients • Established a Joint Venture around a cutting-edge technology • Developed a concept to allow other banks to participate • Put in place an effective governance
- 42. Internal 42 Issues in InternationalOpen Trade A Catch 22 – The risk of advanced payment and shipment Trust Financing Today, access of companies to international trade is limited and involves high risk This hampers expansion and puts a cap on international trade Companies face a trade-off between bearing the risk, purchasing complex/expensive coverage or turning down business opportunities
- 43. Internal 43 How it works Buyerinitiates purchase order with 60 days payment terms1 Buyer requests bank to provide Bank Payment Undertaking (BPU) 2 Supplier ships order and sends invoice through the platform 3 Buyer confirms the receipt of goods4 Supplier asks his bank to provide invoice financing arrangement for next 60 days (optional) 5 Buyer’s bank debits buyer account and initiates payment of invoice on due date, either… − to supplier’s bank, if invoice has been financed or − to supplier’s account 6 6 2 1 4 3 5 Buyer Supplier Buyer’s bank Supplier’s bank How we ensure trust in trade
- 44. Internal 44 Identification of unknowncounterparts (all clients on we.trade are KYC’d) Invoice Financing: Additional working capital without leveraging credit lines Bank Payment Undertaking (BPU): Counterparty risk transferred to bank Track and trace for over 426 couriers Event based automatic payment triggers through smart contracts Real time settlement enabled by one platform for all parties Key Benefits for Customers A digital one stop shop accessible by all parties
- 45. Internal Our Vision 45 A marketplacewhere companies can trade with more trust we.trade is a trade platform that… ...allows corporate customers quick, easy and paperless transactions for trade finance …automates fulfillment of end-to-end settlement with full KYC ...that seamlessly connects the entire trade ecosystem Go beyond Europe (2018+) Expand & Reach Scale (2018) Brand launch (Oct 2017) Joint Venture formation (End 2017) Go Live (Q1 2018) we.trade ecosystem Banks Insurers Logistics
- 46. Internal But why blockchain? Theproof of the pudding… TrustOwnership Transparency Traceability Distributed Smart contracts Blockchain is… … the single shared source of truth.
- 47. On the menu Alesson from history : ledgers A really short blockchain introduction Slightly longer blockchain explanation Blockchain in practice Closing thoughts
- 48. It’s not theHoly Grail Blockchain will not solve everything: • Organisational problems • Slow processes or data quality issues • Fraudulent purposes and lawsuits • … Some technical challenges remain: • Scalability & # transactions per unit of time • Network size • Latency (Time until transaction confirmed) • … 48 Blockchain is not always a solution. Replacing a database with another seldom fixes an issue, blockchain supports a new approach.
- 49. Key challenges • Blockchainstrategy is about collaboration. • Not just IT, involve business (risk appetite) • Unpredictable regulator & Government. • Financial signals (ROI) are problematic. • Radical uncertainty is the norm. 50 Still in the fuzzy front end ? Some critical challenges remain, on business side.
- 50. 51 Your IT willfigure it out Collaboration is a basic element of IT, not of the business IT has collaboration in its DNA • Open source projects • Hackathons • CoderDojo • Mailings lists • CodeProject, I dream in code,… • Tech blogs • …
- 51. 52 Business : closedworkshops Collaboration is a basic element of IT, not of the business The challenge is on business side • From EGOsystem to ECOsystem • Knowledge Management is a job • Competitive advantage • Regulations • Mindset
- 52. We Do you selltrust & data? Blockchain is trust & data.
- 53. 54 We believe blockchain willbe the fabric of trust in the business world of tomorrow.
- 54. Koen.Vingerhoets@kbc.be Twitter : @IthronKoen TrustOwnership Transparency Traceability Distributed Smartcontracts Blockchain is… … the single shared source of truth.