How Blockchain Technology Can Remodel the World of …Prof. Dr. Philipp Sandner Blockchain Center...
Transcript of How Blockchain Technology Can Remodel the World of …Prof. Dr. Philipp Sandner Blockchain Center...
Prof. Dr. Philipp Sandner
Blockchain Center
Frankfurt School of Finance & Management
E-Mail: [email protected]
Internet: www.fs-blockchain.de
How Blockchain Technology Can Remodel the World of
Business
Which problem does
blockchain technology
solve?
3 © Prof. Dr. Philipp Sandner
Blockchain technology provides a layer for the "Internet of
Value" in addition to the existing "Internet of Information"
Internet
Information
Blockchain
Value
Information
The Internet allows sending information: documents, PDFs, emails. Yet, value cannot
be transferred via the internet.
Blockchain technology now allows the electronic transmission of "value": e.g. money, stocks,
rights on assets. This is much more than displaying the bank account in online banking.
4 © Prof. Dr. Philipp Sandner
Dear Wolfgang,
Money
Wolfgang
5 © Prof. Dr. Philipp Sandner
Dear Wolfgang,
please find attached $200.
Best, Philipp
Money
Wolfgang
6 © Prof. Dr. Philipp Sandner
Attachment
200,00 USD
Click to download
Dear Wolfgang,
please find attached $200.
Best, Philipp
Money
Wolfgang
7 © Prof. Dr. Philipp Sandner
Attachment
20 gram gold
Click to download
Dear Wolfgang,
please find attached 20 gram of gold.
Best, Philipp
Money
Wolfgang
8 © Prof. Dr. Philipp Sandner
Sample transaction on Ethereum
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Payment process between two parties
Alex Sophie
Bank Bank Correspondent
bank
Correspondent
bank
A payment requires multiple stages:
this costs time and can induce errors
Ledger Ledger Ledger Ledger
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The core of blockchain technology
Alex Sophie
The core of blockchain is that
all transactions of a specific asset
are recorded in one common distributed database
Ledger
The ownership for a property will thereby
be transferred from an old owner to a new owner
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Blockchain technology has enabled platforms in which
platform control is decentralized
Source: Mattila et al. (2016)
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Blockchain technology has enabled platforms in which
platform control is decentralized
Source: Mattila et al. (2016)
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Blockchain technology has enabled platforms in which
platform control is decentralized
Source: Mattila et al. (2016)
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I. Decentralizing Trust
A blockchain can be used to shift “trust” from a
central party hosting shared data to the protocol
orchestrating the information consensus.
II. Validation and Security
A blockchain can be used to share chronologically
ordered data in a way that every party can validate
the full history of shared data without the risk of
being tricked.
III. Privacy / Anonymity
The ability to share information while
cryptographically controlling its visibility and
association to the user.
Characteristics of a Blockchain
Blockchain is a protocol
for distributed ledgers
that enables the
decentralized, secure,
direct, digital transfer
of values and assets.
How can blockchain
technology be applied?
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Core of the blockchain technology
Alex Sophie
Direct transfer between participants
without intermediaries
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Core of the blockchain technology
Alex Sophie
Sender can be human being or machine
Direct transfer between participants
without intermediaries – not necessarily money
18 © Prof. Dr. Philipp Sandner
Core of the blockchain technology
Alex Sophie
Sender can be human being or machine
Recipient can be human being or machine
Direct transfer between participants
without intermediaries – not necessarily money
19 © Prof. Dr. Philipp Sandner
Core of the blockchain technology
Alex Sophie
Sender can be human being or machine
Recipient can be human being or machine
Value in general can be transferred
Direct transfer between participants
without intermediaries – not necessarily money
20 © Prof. Dr. Philipp Sandner
Core of the blockchain technology
Alex Sophie
Sender can be human being or machine
Recipient can be human being or machine
Value in general can be transferred
Transaction can be direct or based on conditions
Direct transfer between participants
without intermediaries – not necessarily money
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• Information imbalance and information symmetry
• Process optimization and smart contracts
• Digital assets: micro payments
• Digital assets: developing countries
• Digital assets: copyright-related use cases
When can blockchain use make sense?
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• Information imbalance and information symmetry
• Process optimization and smart contracts
• Digital assets: micro payments
• Digital assets: developing countries
• Digital assets: copyright-related use cases
• Replacement of payment infrastructure
When can blockchain use make sense?
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How do organizations adopt blockchain technology?
Use case
development Proof of concepts Live products
Adoption depends on
• Company strategy
• Industry
• Company size
• Regulatory context and infrastructure
Who is innovating?
• Large companies in any industry
• Startups internationally
• Crypto currencies
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What are existing companies doing?
Use case
development Proof of concepts Live products
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Blockchain technology has been about information synchronization and immediate
transactions. It moves to the direction of platforms and ecosystems.
Four steps of innovation
Safe information
Transfer of assets
Smart contracts
DAOs
DAO: Decentralized Autonomous Organizations
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Currently, around 700 crypto currencies exist
Source: www.coinmarketcap.com
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In June 2017, three crypto currencies have a market
capitalization that would let them rank in DAX30
Projects
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Our projects: IoT Summer Camp
Connect Ethereum to real IoT products! Summer camp in Frankfurt; from August 28 to September 1, 2017
Example: Ethereum Charging Station
Example: Ethereum Light Bulb
Ethereum System-on-Chip with Onboard-Crypto Functions
Example: RFID Toll Station
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Blockchain applications in developing countries
Application Evaluation
Barriers Problems
Property registries support
investments in housing,
reduce household sizes and
improve education
- First time
registration
- Infrastructure
- Housing
- Investments
- Education
Secure legal identity
documents reduce deception
and is prerequisite for an
inclusion of all people
- Promotion
- Identity
verification
- Trust
- Inclusion
- Data
Budget tracking fights
corruption, improves
governance and serves as an
information system
- Conflict of
interest
- Corruption
- Governance
- Information
Shared microcredit ledger of
banks reduces financial
friction and information
asymmetries
- Cooperation
- Legal
uncertainties
- Friction
- Asymmetries
Peer-to-peer bank services
create independence of
foreign capital, intermediaries
and hence stability
- Education
level
- Usability
- Dependence
- Speculation
Crypto currencies can be
used as local and international
payment solutions and
inflation protection
- Illiquid
exchanges
- Infrastructure
- Economic
exchange
- Inflation
Potential impact Implementation feasibility Expected adoption
We
ak in
sti
tuti
on
s
Fin
an
cia
l in
clu
sio
n
Source: Schmidt (2017), Solving Development Challenges in Underdeveloped Countries: An Analysis of Blockchain-Based Applications
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Blockchain architecture
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Solar power in developing countries
Investor (e.g. from Europe)
Solar panel operator (e.g. in Africa)
Consumers
Delivery of
electricity
Investment
Payment
Return
Currently, only large investments are possible
Current investment model
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Solar power in developing countries
Investor (e.g. from Europe)
Solar panel operator (e.g. in Africa)
Consumers
Delivery of
electricity
Investment
Payment
Return
Investor (e.g. from Europe)
Solar panel operator (e.g. in Africa)
Consumers
Delivery of
electricity
Investment
Blockchain:
smart
contract
for distribution
of revenues;
„real-time“
return
Currently, only large investments are possible
Current investment model
Transparence and micro payments
allow less risk and smaller scale
Blockchain-based model
Which future
developments can be
expected?
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Blockchain technology is often expected to follow the
Gartner hype cycle
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But: It might be that application in industries follow the
Gartner hype cycle, not “the blockchain technology”
Financial services are by far the most advanced industry
in terms of Blockchain exploration
Source: Leadvise (2017)
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Technology to improve specific applications and processes
Examples: register for property, register for art, carsharing system, supply chains
Technology to replace infrastructure
Examples: payment system, clearing and settlement
Blockchain technology as institutional technology
Enabling technology for a decentralized world
Assumption: with increasing complexity the costs of centralized organizations increase
Levels of applying blockchain technology
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Blockchain technology can drive „convergence“ such that
finance meets everything
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• Intermediaries need to adjust their business model
• Blockchain technology is about efficiency (processes, automation) and new business
models (integration, micro payments, developing countries)
• Organizations should learn how to understand, apply and implement this technology
• Innovation is happening with large companies, startups and virtual currencies
• Cross-sector approaches required
Key learnings
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What do we do?
Workshops, trainings, research projects,
Ethereum prototypes, startups
For whom?
Banking, insurance, energy, mobility, Industrie
4.0, internet of things
Upcoming
Workshop: Insurance and Blockchain (July 2017)
Workshop: Connecting IoT Hardware to
Ethereum (August 2017)
Ethereum Developer Course (September 2017)
Hyperledger Developer Course (September 2017)
Workshop: Energy and Blockchain (October 2017)
Contact
Prof. Dr. Philipp Sandner
[email protected] [email protected]
www.fs-blockchain.de
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