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Blockchain_in_FINTECH

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Blockchain_in_FINTECH

  1. 1. Brief history What is blockchain ? Evolution of blockchain Industry consortia and ecosystem Blockchain - Critical Operational Improvements Blockchain in FINTECH  Satheesh Kathamuthu
  2. 2. History of blockchain Blockchain was exclusive tobitcoin Experimen taland obscure Limitedto cryptograp hic community Early days (2009-2012) “Silk Road” High volatility 50,000 tx/day Turbulence and recognition (2012-2014) Blockchain asa technology  Serious interest from regulators andbig financial firms  VCand big financial institutions investment Experimentation (2014 – present) Source: Blockchain in Capital markets by McKinsey & Company
  3. 3. What is Blockchain ?  A digital, chronologically updated, distributed and cryptographically sealed record, of all data transfer activity  Ease the transfer of value  unexpected fruit of cryptography  Built on top  Cryptography  Peer-to-peer networking  Game Theory
  4. 4. Evolution of blockchain ● "Blockchain 1.0" is currency - the deployment of cryptocurrencies in applications related to cash such as currency transfer, remittance, and digital payment systems. ● “Blockchain 2.0” is contracts - the whole slate of economic, market, and financial applications using the blockchain that are more extensive than simple cash transactions like stocks, bonds, futures, loans, mortgages, titles, smart property, and smart contracts ● "Blockchain 3.0” is blockchain applications beyond currency, finance, and markets, particularly in the areas of government, health, science, literacy, culture, and art. ● Melanie Swan, IEET
  5. 5. Industry consortia and ecosystem  Hyperledger  R3CEV  Utility Settlement Coin (USC) 1  Ethereum  IBM Blockchain in Bluemix  Microsoft Azure BaaS 1 https://www.db.com/newsroom_news/2016/medien/utility-settlement-coin-concept-on-blockchain-gathers-pace-en-11661.htm
  6. 6. Blockchain – Critical  Ripple – cross border payments  Nasdaq is working on a blockchain-powered private market exchange  JP Morgan built permissioned DLT platform on Ethereum called Quorum2  The Australian Securities Exchange (ASX) is developing a blockchain- based post-trade solution to replace its current system1  R3 CORDA is in Developer preview 1 https://www.cryptocoinsnews.com/australian-stock-exchange-confirms-upcoming-blockchain-for-settlements/ 2 https://www.jpmorgan.com/country/US/en/Quorum
  7. 7. Reconciliation - Operational improvements Typical architecture of systems involved ● One trade often leads to entries in multiple disparate systems. ● Lack of golden source of truth ● Presents a need for reconciliation between systems to arrive at an accepted/unified truth. ● In financial markets, it is estimated distributed ledgers could cut $15bn - $20bn from bank’s post-trade processing costs by the year 20221 Image Source: ttps://jackgavigan.com/2014/04/14/disruptive-bank/ 1 Santander InnoVentures, Oliver Wyman and Anthemis Group, “The Fintech 2.0 Paper: rebooting financial services”
  8. 8. Q&A Thank you.
  9. 9. References The FinTech 2.0 Paper - http://www.finextra.com/finextra- downloads/newsdocs/The%20Fintech%202%200%20Paper.PDF  Bitcoin and Cryptocurrency Technologies http://bitcoinbook.cs.princeton.edu/ Blockchain: Blueprint for a New Economy - Melanie Swan Blockchain in Capital markets by McKinsey & Company Embracing Disruption – Tapping the Potential of Distributed Ledgers to Improve the Post-Trade Landscape by DTCC

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