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© 2016 William Mougayar, [email protected]
UNDERSTANDING THE POTENTIAL IMPACT OF BLOCKCHAIN ON INVESTMENT INNOVATION
WILLIAM MOUGAYAR AUTHOR, THE BUSINESS BLOCKCHAIN
CRYPTOGRAPHY SCIENCE
GAME THEORY
SOFTWARE ENGINEERING
SOFTWARE ENGINEERING
CRYPTOGRAPHY SCIENCE
GAME THEORY
© 2016 William Mougayar, [email protected]
EVERYTHING TODAY REQUIRES A DATABASE SYNCHRONIZATION
Owns Database A Confirms A has at least $5
Bank A
Owns Database B Confirms BB can receive $5
Bank B
Customer AA wants to transfer $5 to person BB
SWIFT
Clearing House
© 2016 William Mougayar
Escrows Custodians
Trusted Parties
© 2016 William Mougayar, [email protected]
3 DIMENSIONS FOR VIEWING THE BLOCKCHAIN
▸ Back-end database that maintains a Distributed Ledger.
▸ Exchange Network for moving value between peers.
▸ Transaction Validation mechanism, not requiring intermediary assistance.
TECHNICAL
BUSINESS
LEGAL
© 2016 William Mougayar, [email protected]
MANY FACETS TO THE BLOCKCHAIN 1. Cryptocurrency 2. Computing Infrastructure 3. Transaction Platform 4. Decentralized Database 5. Distributed Accounting Ledger 6. Development Platform 7. Open Source Software 8. Financial Services Marketplace 9. Peer-to-Peer Network/Marketplace 10. Trust Services Layer
BLOCKCHAINS, LIKE THE WEB, NEED THE INTERNET
I N T E R N E T
WORLD WIDE WEB BLOCKCHAINS
© 2016 William Mougayar, [email protected]
‣ In startup fashion, most attacks aren’t head-on, start small & look harmless at first sights, therefore are ignored ‣ So, the banks didn’t feel
FinTech initially, because it crept up
FINTECH HISTORY MIGHT REPEAT
ITSELF
© 2016 William Mougayar, [email protected]
DEFINING TECHNOLOGY ERAS
Self Publishing
E-Commerce
Social Interactions
IT Supremacy Internet Years
Personal Communications
Blockchain Promise
1994 2015
Data computation
Database applications
Transaction processing
Business Intelligence
Global operations
Enabling
Decentralization of
Trust
Value Flow without
Intermediaries
© 2016 William Mougayar, [email protected]
SOME KEY CONCEPTS TO GRASP 1. Smart Property
2. Timestamping
3. Multi-signature Transactions
4. Smart Contracts
5. Smart Oracles
6. State Machines
© 2016 William Mougayar, [email protected]
“THE BUYING AND SELLING WORKS FLAWLESSLY, I'M VERY IMPRESSED. I'VE MADE OVER TWENTY PURCHASES AND THE TOTAL FEES WERE LESS THAN $1.40 FOR ALL TWENTY PURCHASES AND SALES. THAT'S GREAT.”
OpenBazaar User
© 2016 William Mougayar, [email protected]
BLOCKCHAIN AND REGULATION
‣ Risk is regulatory confusion ‣ New regulations needed, e.g. record keeping
‣ Where do you insert the blockchain?
‣ Difference between blockchain and cryptographic
ledgers ‣ Risk is centralization
© 2016 William Mougayar, [email protected]
INNOVATION POTENTIAL FOR BLOCKCHAIN
UNREGULATED ENVIRONMENTS
REGULATED ENVIRONMENTS
Who will be the next Google of the blockchain?
Who will be the next Amazon of the blockchain?
Who will be the next ____ of
the blockchain?
The first large bank to accept cryptocurrency?
Crossing $1B assets traded on
blockchains?
© 2016 William Mougayar, [email protected]
FINANCIAL SERVICES INTERESTING USE CASES ARE EMERGING
‣ eTRS (ConsenSys, Microsoft, IPFS), Clearmatics, DCN for OTC derivatives, Cambridge Blockchain
catastrophe bond counterparty validation
‣ CORDA / R3 Consortium
‣ Japan: Securities Insurance, Corporate Actions (Dividend/Stock Splits, Ownership Registry, Trade
Reconciliation, Cash Payments, etc.)
‣ Payments Canada: Wholesale payments
‣ Barclays UK: Letter of credit 100K test
GOVERNMENT ‣ Delaware, Singapore, Estonia, Ukraine, Georgia, Ghana, UK, Sweden.
ENERGY, HEALTHCARE, MANUFACTURING, INTERNET OF THINGS.
© 2016 William Mougayar, [email protected]
WHAT WE NEED TO SEE
‣ Regulatory sandboxes (WFE, CFTC, IIROC, FRB)
‣ Blockchain record keeping acceptance
‣ Emergence of new clearing networks
‣ Identity on the blockchain
‣ Documented benefits (costs, speed, risk, visibility)
‣ Intermediaries that re-think their roles
© 2016 William Mougayar, [email protected]
RECOMMENDATIONS FOR INVESTORS AND FUND MANAGERS
‣ Re-examine, Re-think your roles
‣ New Asset classes, New funding methods (ICO)
‣ Private Blockchains activity
‣ Regulatory innovation
‣ Communicating clarity + Specific blockchain work
‣ Regulators as a node on the network, not a gatekeeper at the center
‣ Talk to your internal blockchain experts
THANK YOU WILLIAM MOUGAYAR AUTHOR, THE BUSINESS BLOCKCHAIN [email protected] 416-648-7010 @WMOUGAYAR (C) 2016, ALL RIGHTS RESERVED.
