BlockChain Technology

Oğuzhan Çetinkaya

Influences on Finance Sector

Istanbul • 9 March 2016

What People Say about BlockChain

Nicolas Courtois Cryptographer at University College London, “The most important invention of the twenty-first century”

Oliver BussmannGroup chief information officer at UBS”The blockchain had the potential not only change the way we do payments but it will change the whole trading and settlement topic.”David Whiteing

CIO, Commonwealth Bank of Australia"It is clearly, in very clear terms, faster, cheaper and more transparent than some of the existing practices we have today"

Elmer Funke KupperChief Executive, ASX Group"Every now and then, something comes along that might just change everything. And this is one of those moments"

Goldman Sachs“The Blockchain, can change... well everything…”

What is Blockchain and How Does It Work?

DeCentralizedData is distributed.Everyone has the same dataRelying on cryptography instead of a central authorityNew way of Data/Transaction ManagementYou can just add recordYou cannot delete, once addedTo add a record, you need consensus

What BlockChain Brings?

• No need for Central Authority

• Reduce data management/security costs

• Improve Security

• Improve Privacy

• Global Transparency and Democratization

Simply, BlockChain is Technology behind the Bitcoin.But it has the potential to do a lot more.

New way of TrustOne goal of moving transactions onto the blockchain is trustless trust.Proof of Work is the original consensus protocolIt is based on puzzles which are difficult to solve, but once solved, it’s easy to verify that the solution is correct.

How Startups Use Itmake notaries and banks redundant Medici, The Blockchain Stock Exchange.)

Wills/Last WishesAnyone can choose to create a digital crypto-will with particulars of beneficiaries, terms of execution etc.

Genome DataDNA.Bits has announced plans to store genetic and medical record data using block chain technology

Digital Rights ManagementIt is a decentralized, blockchain DRM system for use by the music industry

Social MessagingAllows users to safely and securely send encrypted messages worldwide.

Anti-counterfeiting Prevent fake pharmaceuticals from entering the market.

Voting SystemsBy casting votes as transactions, we can create a blockchain which keeps track of the tallies of the votes

Other Potential Uses

MicroFinance

Vehicle Registration

Patents

Gun PermitsCopyright

Smart Property

Mediation

Shared Financial Management

Time-locked Transactions

Trusts

Wills

ProofOfExistence

Distributed Cloud Storage

What Did Financial Service Companies THINK About BlockChain?

They had No Plan for BlockChain Till 2015.

They were thinking a lot of Fintech Startup are the new competitors.

They saw Bitcoin as a threat.

They saw the Blockchain potential for:- Cost saving- New Opportunities

On the other hand Bitcoin was the biggest BlockChain laboratory.

They are now looking for opportunities, doing researchs, POC’s with BlockChain Startups.

What Financial Service Companies Are DOING About BlockChain?

It has a team called "Crypto 2.0" in London conducting research on the technology.

Announced Smart Bonds Platform based on Ethereum

It had explored an "innovation lab" to investigate the potential of the blockchain.

They have internally identified 20 to 25 use cases where this technology can be applied in InnoVentures.

Citigroup has built its own digital currency based on bitcoin and the blockchain

Bank of America has submitted 11 patent applications related to cryptocurrencies

R3 Cev BlockChain Consortium

42 banks have joined the blockchain consortium led by startup R3 CEV.

Focused on proof-of-concept experimentation and the development of standards for blockchain tech.

More Than POCPOC’s are time based, no commitment, does not show potential always.Small but end to end projects.

Invest On trial projects and be ready for failures.Create a new team.Invest on your team, educate them, do not outsource.

What SHOULD Financial Service Companies DO?

Think DifferentDhink about opportunities rather than problems

Start NewStart new projects rather than changing existing ones

If you do not have a BlockChain Strategy, you are so slow on innovation!Implementing BlockChain : %80 Business Process, %20 Technology

What is Next Future for BlockChain?

More & More Enterprises -especially Finance Service Companies- will Invest on BlockChain.

Partnerships of Enterprises will evolve into Competition.

VC Investments on BlockChain Startups will exceed 2B USD.

We will see a lot of new usecase of it.And we will see the failures also.

Bitcoin will be more widespread, and will be used for online banking also.