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Brief history What is blockchain ? Evolution of blockchain Industry consortia and ecosystem Blockchain - Critical Operational Improvements Blockchain in FINTECH Satheesh Kathamuthu

Blockchain_in_FINTECH

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Page 1: Blockchain_in_FINTECH

Brief historyWhat is blockchain ?Evolution of blockchainIndustry consortia and ecosystemBlockchain - CriticalOperational Improvements

Blockchain in FINTECH Satheesh Kathamuthu

Page 2: Blockchain_in_FINTECH

History of blockchain

Blockchain

was

exclusive to bitcoin

Experim

ental and obscure

Limited to

cryptographic com

munity

Early days (2009-2012)

“Silk

Road”

High

volatility50,000

tx/dayTurbulence and

recognition (2012-2014)

Blockchain

as a technology S

erious interest from

regulators and big financial firm

s V

C and

big financial institutions investm

ent

Experimentation (2014 – present)

Source: Blockchain in Capital markets by McKinsey & Company

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What is Blockchain ?

A digital, chronologically updated, distributed and cryptographically sealed record, of all data transfer activity

Ease the transfer of valueunexpected fruit of

cryptographyBuilt on top

Cryptography Peer-to-peer networking Game Theory

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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

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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

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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

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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”

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Q&A

Thank you.

Page 9: Blockchain_in_FINTECH

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 SwanBlockchain in Capital markets by McKinsey & CompanyEmbracing Disruption – Tapping the Potential of Distributed Ledgers t

o Improve the Post-Trade Landscape by DTCC