THE DISTRIBUTIONOF TRUST

ESTABLISHING SECUREDIGITAL IDENTITIESTHE KEY TO AWEALTH OF NEWOPPORTUNITIES

POWER TO THEPEOPLECHANGING THE WAYENERGY IS PRICEDAND DISTRIBUTED

BANKINGONBLOCKCHAINFINANCIAL SERVICESWILL NEVERBE THE SAME

THE TOKENECONOMYAN INTERVIEWWITH MIT’S JOHNHENRY CLIPPINGER

Blockchain is ushering in a new world economy based on direct peer-to-peer trusted exchanges, bypassing centralauthorities such as banks, energy companies, pension funds and stock markets.

Supplément gratuit au n°22554 du quotidien « Les Echos » du 19 Octobre.Ne peut être vendu séparément

#2 – October 2017 – Autonomy Paris Special EditionDistributed at Autonomy Paris and in Les Echos #22554

DRIVINGURBANMOBILITYENABLING AN ERAOF SHARED USEAND MULTIMODALTRANSPORT

LETTER FROM THE EDITOR

If we are honest with ourselves those of us who are oldenough to recall the birth of the Internet will admit to having felt a certainamount of skepticismwhenwe read about how going digital was going tochange everything.In the media business we hired a few young people to post stories on theWeb. Anybody worth their salt focused on what was really important tothe core business: the paper newspapers and magazines that today arerapidly shrinking and even disappearing.So it is easy for me to understand the reaction of a top executive at a bigbank or utility who finds it incredulous that a complicated technology themajority of people do not understand and some anarchistic kids couldcome out of nowhere and turn the transactional price of energy to zero,invent a new currency and – as was the case last June for one Californiaentrepreneur – raise $35 million in less than three seconds from totalstrangers.The change ahead may be bigger than anything we have known.It looks set to modify the role and status of governments and companiesand turn the notion of ownership and leadership on its head.That said, we are at the top of the blockchain hype cycle.My advice? Don’tfollow in the footsteps of TimeWarner and sell yourself to the blockchainequivalent of AOL.But don’t be too dismissive either. You don’t want to be the Jamie Dimonof your industry. Dimon, the CEO JPMorgan Chase, threatened to fire anytrader “stupid” enough to trade in Bitcon.I think IMF head Christine Lagarde got it right when she advised centralbankers to take the time to learn about this new technology and be open.Keep your sang froid. Pay close attention to this shift – which heralds notjust technological but cultural and poltical change. And keep reading TheInnovator!

ByJenniferL.SchenkerEditor-in-Chief, The Innovator

NEWS

—O1THE DISTRIBUTIONOF TRUSTCOVERSTORY

ANINTERVIEWWITHJOHNHENRYCLIPPINGER,MITMEDIALABBLOCKCHAINANDAIWILLBLOCKCHAINHELPDEMOCRATIZEANDIMPROVEAI?

—O2DIGITAL IDENTITYAND PUBLIC POLICYDIGITALIDENTITY—CONTROLLINGOURIDENTITIES—HELPINGHAND—WILLBLOCKCHAINALLOWEMERGINGMARKETSTO

LEAPFROGAHEAD?PUBLIC POLICY—THE NETHERLANDS IS BECOMING A

BLOCKCHAIN NATION—TOP25STARTUPSATSTARTUPFESTEUROPE2017—FIRSTMOVERADVANTAGE—THE BLOCKCHAIN OF THINGS

—O3TRADING ON THEBLOCKCHAINSUPPLYCHAINCHAINREACTIONFINANCIALSERVICES—BANKINGONBLOCKCHAIN—TAKINGSTOCK—REINVENTINGPENSIONS

—O4REINVENTING ENERGYISITTIMEFORASWYTCH?POWEREDBYBLOCKCHAIN

—O5THE NEW URBAN MOBILITYMOVINGONANINTERVIEWWITHDOMINIKSCHIENER,IOTA

P.04

P.06

P.12

P.14

P.16P.19P.20

P.22

P.26P.28P.29

P.30

P.33P.34P.35

P.36P.40

P.42P.48

TABLEOF CONTENTS

— P.03

P.04 — THE INNOVATOR

NEWS

54%NewWaystoGo

SmoothRide

With all the buzz around urban mobility during theAutonomy event in Paris come several initiatives that aim tomakedriving easier and smarter. The French electric utility companyEngie has announced a new electric car-sharing service, Co-move,that is accessible via an online platform. Users can book a car viatheir smartphoneor computer, thenuseanaccessbadge todisconnecta car from a charging terminal and off they go.Meanwhile, ESPRIT has been testing small electric cars that canbe connected, Lego-like, and charged either separately or together.They are meant to be used instead of traditional cars, but also asan easy complement to public transportation in urban and suburbanzones. TheGerman insurance companyAllianzwill soon announcethat it is expanding a form of car insurance that tracks customers’driving. The offer is already available via a special box installed insemi-autonomous cars, but will now be accessible to drivers of allcars though a mobile phone app. Those with good records will beoffered a 30% discount on their rates

Smoove, which is taking over the management of the Vélib fleet in Paris, will have bikesavailable for testing at Autonomy. CycleEurope is presenting a new electric cargo bike there. Thecompany already operates the La Poste bike fleet of the French postal service (the biggest worldwidewith 31,000 e-bikes). Ofo, which owns 10 million bikes in China and is expanding in Europe, willalso be showing off its latest innovations.

The ESPRIT Electric car

Of global new car sales will be electricvehicles by 2040, according to theBloomberg Electric Vehicle Outlook 2017,up from 35% in their 2016 forecast

To get technology news in context every week, subscribe to our newsletter : http://innovator.news

PortableTransport

AlsoatAutonomy, anewe-scooter calledUjet will be shown for the first time (the officiallaunch will be early next year). The scooter ispoweredbyaremovablebattery thatcanbechargedfromany regular socket, and features a light framethat can be folded to fit in your office or the trunkof your car.

01000010DATA

20% off on your VIP Pass with the code INNOVATOR20 until 13 October 2017www.autonomy.paris

19-21 October 2017Paris, Grande Halle de la Villette

The world stagefor the urbanmobility disruptionKeynotes • Roundtables • MeetupsExpo • Startup district • City workshopsTest tracks • Live demo • Pitch sessions

P.06 — THE INNOVATOR

—O1THE DISTRIBUTIONOF TRUST

THEDISTRIBUTIONOFTRUSTBlockchain is making transactions easier,less expensive and more reliable.But eliminating trusted third parties won’t be simple.By Jennifer L. Schenker

— P.07

COVER STORY

Cryptocurrency may or may not represent the future ofmoney. But blockchain, the technology underpinning it, may spell theend of capitalism as we know it. How can something as mundane-sounding as a distributed record of transactions that is maintained by anetwork of computers on the Internet and secured through advancedcryptography have such an outsized impact?With decentralization technology, the owner of an asset has directcontrol via a password, which is directly linked to the asset. No one cantouch it without your consent and no one can stop you when you wantto transfer the asset.“Placing trust in a network rather than a single entity like a government,a bank, or a multinational company, means that the types of assets thatcan be stored are limitless: intellectual property, identity information,land titles, financial assets, genetic information, social graphs, andsupply chain information, to name only a few,” says Bruce Pon, thefounder and CEO of Ascribe.io, a product of BigchainDB, a Berlin-basedstartup that is using the blockchain to provide a trackable, verifiable

record of ownership between artists and their work. Bypassing centralauthorities such as banks, energy providers and other types of largecorporations, stock markets and even governments, is a change with bigconsequences not just for business models but power structures. A largepart of our economy is based around these intermediaries of trust, butin this new era of distributed trust we won’t need them or the armies ofaccountants and controllers that handle reconciliation processes.Historically, trust has been added to products or transactions as theyflowed through a value chain for physical goods or services. Physical,or electronic, records trail every object to prove its origin, destination,quantity and history. Producing, tracking and verifying all thisinformation requires time and manual effort on the part of banks,accountants, lawyers, auditors and quality inspectors. Importantinformation is often inaccessible or lost, sometimes intentionally. Andof course these intermediaries take a cut of the action, each and every

P.08— THE INNOVATOR

time a transaction is made. When combined with cryptographicallysecure machine identities, blockchain is expected to create reliable,immutable records to make it easier and less expensive for suppliers andcustomers to transact with one another in a direct, verifiable way.The same interoperable transaction layer permits people who don’tknow each other to dynamically start exchanging financial and physicalvalues on the fly and be confident they won’t be cheated. And it permitsmachines to transact with each other in an automated way. Already theblockchain is being used for the trading of currencies, diamonds, medical

marijuana and guns. Central banks, hospitals, shipping companies andports, insurance companies, auto makers, charities, government andpublic record services are testing the technology as are musicians andartists. You can even now apply for e-residency in the South Pacificisland of Vanuatu on the blockchain and pay the fee in Bitcoin, a kindof cryptocurrency.While blockchain and its use cases are evolving very fast, the technologyhas a number of limitations, including scalability and computingresource requirements. Still, some believe the digital ledger technology

COVER STORY

TOTAL FUNDING AND ROUNDSGLOBALLY SINCE 2012

2012 2013 2014 2015 2016

$ 150m

$ 300m

$ 450m 100

$ 600m

$ 750m

$ 900m 200

GLOBAL FUNDINGTOTAL NUMBER OF ROUNDS

Total amount in global funding in US dollars and rounds in the blockchain industrysince 2012 - Credit: funderbeam Blockchain Industry Report 2017

Recordartist ImogenHeaphasworkedwithblockchain-basedplatformformusicUjotodeliver tracksdirectly tofans,acceptingpayments incryptocurrency.

refugees in camps and to establish digital identities for everyone on theplanet, including the 1.1 billion people who don’t have any kind ofgovernment papers. (See the stories on pages 16 and 19.)«The blockchain is the only technology that employs transparency andindependence in a manageable and sustainable way,” says MarloesPomp, blockchain ambassador for the Dutch government, which istrialing some 25 different uses for blockchain. (See the story on page22.).“Until now technology has mostly helped businesses to achieve morefor less. It never had a big impact on how people protect and exercisetheir rights and values,” says Pomp. “Suddenly, blockchain technologyopens the opportunity for creating a new class of systems that are fueledby the principles of independence, truth and transparency of operation.”That’s why, she says, “blockchain is here to stay and will change the waypeople and businesses interact.»In a post-capitalist economy, knowledge rather than capital or labor isthe foundation of wealth, and traditional drivers such as supply anddemand and the need for profits are supplemented by more collaborative,communal models that prioritize social good alongside shareholderprofits, notes blockchain expert Carsten Stoecker, a senior manager atthe Machine Economy Innovation Program at the German energycompany Innogy.Take the case of the SingularityNET, a new blockchain-based exchangethat will allow its users to create, combine and monetize artificialintelligence at scale. (See the story on page 14.). One of the reasons itis being launched is that the founders say they do not want the futureof artificial intelligence to rest in the hands of companies that are drivenonly by profits. The founders have agreed that they will use a portionof the evolved form of the AI the network generates to solve some ofthe world’s most pressing problems, a challenge they believe companiesreporting to traditional shareholders are less likely to tackle.As with other blockchain-based exchanges, participation in SingularityNETrequires people to buy network-specific crypto-tokens and use these tobuy services. This enforces a system in which the people who use theexchange are the people who own it.Others working in the blockchain sector agree that this concept couldbe used to bring about positive change. “We have no incentive to solvebig problems because there is zero price put on things like clean air,”

is a vast improvement over the double entry accounting first inventedin Italy about 500 years ago, helping give rise to capitalism.Think of blockchain as a triple-entry system, a ledger that records everysingle transaction, to give us an accounting of everything happening inour world, creating - at least in theory - a common shared truth. If it isas secure and transparent as advertised it will eliminate fraud andcorruption, changing the way corporates and governments are run.“There is a reason Florence, Milan and Vienna grew to be so wealthy,it was because they were masters at double entry accounting,” saysAscribe.io CEO Pon. “Whichever jurisdiction or company mastersblockchain and extracts value will be able to jump leaps and boundsahead of competitors,” he adds.

New Business Models andRevenue StreamsThere are huge productivity gains to be reaped from the efficiencies thatblockchain will bring: between $90 billion and $110 billion just fromglobal payments and trade finance, says Oliver T. Bussmann, a blockchainexpert and former CIO at UBS. (See the story on page 30)But blockchain could have an even greater impact on other sectors. Theresearch firm CBInsights estimates that there are some 30 sectors thatwill be massively disrupted by blockchain. They include insurance,healthcare, energy management, transportation, real estate, stocktrading, government and public records and supply chain management.Dole, Nestlé, Tyson Foods, Unilever and Walmart are among companiesexploring blockchain’s use in food safety and tracability. Energycompanies are testing it to see if same the digital ledger technology thatthreatens to put it out of business will help them adapt and survive. (Seethe stories on pages 36 and 40.)

Power To The PeopleBut blockchain is not just about efficiencies and new business modelsand new revenue streams – it is about the distribution of power,including the ability of people to exert their rights and values, ownership,and leadership. Blockchain is being tapped to help the stateless and thevoiceless. The United Nations is using it to deliver money for food to

“Whichever jurisdictionorcompanymastersblockchainandextractsvaluewillbeableto jumpleapsandboundsaheadofcompetitors”Bruce Pon, CEO of Ascribe.io

— P.09

P.10— THE INNOVATOR

says Pon, Ascribe.io’s CEO. “ But what if we could tokenize new ideas?What happens if we could open source the Bill & Melinda GatesFoundation? Everybody could buy tokens? Why not tokenize explorationto Mars? Governments have budget constraints but what if we couldmarshal resources by getting supporters to put their money into tokens?This is a really hopeful and powerful vision. We all feel helpless in theface of the misuse of funds but we have the possibility to create propergovernance through blockchain and tokenism.”

The Token EconomyIn this new token economy the people starting blockchain ventures don’tneed to go to venture capitalists or raise money on the stock marketanymore. They just organize Initial Coin Offerings (ICOs), an unregulatedmeans of crowdsourcing funds.More than a billion dollars in funding has been raised this way in 2017.In fact, one report estimates that more than $1 billion was raised in ICOsin the third quarter alone.The Bancor Foundation made headlines in June when it raised $153million worth of Ether (the coin of the cryptocurrency Ethereum) in justthree hours. The same month the former Mozilla CEO Brendan Eich,raised $35 million in an ICO — and did it in less than 30 seconds,.“Think of all the value that is currently captured by centralizedauthorities — from the banking industry to music rights holder networksto the court system,” Nathana Sharma, Program Director for FacultyAffairs at Singularity University, writes in a blog post. “If that value can

“Decentralizedtokencurrenciesarequestioningnotionsthathavebeenattheveryheartofthemanagementsystemthathasbeenaroundsincecorporationshaveexisted.”Philippe Dewost, Vinci Group

BLOCKCHAINSTARTUPSTOWATCH

BIGCHAINDBGERMANYWHAT IT DOES : A scalable blockchaindatabase, BigchainDB can be appliedto a wide range of use casesindustries, helping them decentralizetheir data.

www.bigchaindb.com

BITFURYTHE NETHERLANDSWHATIT DOES: The BitFury groupstarted as a bitcoin mining company,but now offers a variety of hardwareand software products that helpcompanies and governments useblockchain technology.

www.bitfury.com

Credit : funderbeam Blockchain Industry Report 2017

INDUSTRY CORRELATIONSNUMBER OF CRYPTOCURRENCY STARTUPS ASSOCIATEDWITH OTHER INDUSTRIES

409FINANCIAL SERVICES

SOFTWAREDEVELOPMENT

PEOPLE ANDSOCIETY

SECURITYMONITORING

BIG DATA & AI

CONSULTING

ECOMMERCE

MOBILEPLATFORMS

3

3

4

4

7

5

11104BUSINESSANDINDUSTRY

to established, recognized personas who are widely accepted andrespected by society. Think about the leader or leadership behind Bitcoin.Despite much speculation and detective work, the people behind it arestill unknown. “So now we have a faceless leadership,” notes Dewost.The inventor of Ethereum, who was born in Russia and grew up inCanada, was 19 when he invented Ethereum, a flavor of blockchain whichis now being used to build smart contracts. So now, there is this kid whocame from nowhere and is leading a whole community of developersacross the world, and he is doing it virtually.This brings up questions about how leadership is nurtured and formed incooperation with others. The second impact of blockchain that currentleaders need to think about is permissions, says Dewost. No one askedpermission to write the first white paper explaining Bitcoin. No one askedpermission to start mining them. And, he says, when blockchain startupslaunch ICOs they don’t have to ask the permission of regulators or courts.They don’t need lawyers. They just launch it.Dewost says “This is where the blockchain revolution is – young peoplewho are extremely far from traditional education, leadership and controls,using cryptocurrencies to launch ICOs.”J.L.S

be shared among participants in the dominant blockchain, then howmuch might the tokens that underlie the dominant blockchain be worth?

Expect ResistanceFor that reason and others don’t expect the transition to be an easy one.While blockchain looks poised to distribute power away from centralizedauthorities, such powerful institutions do not let go of their influenceeasily, Marc-David Seidel, RBC Financial Group Professor ofEntrepreneurship and Associate Professor at the University of BritishColumbia, notes in a blog post.“I view this as one of the most interesting cultural and political challengesof this century,” says the blockchain expert Philippe Dewost, who recentlytook on a job as chief of Leonard, the innovation structure at Vinci Group,a French concessions and construction company. “The reason is thefollowing: decentralized token currencies are questioning notions thathave been at the very heart of the management system that has beenaround since corporations have existed.” One of those notions is who getsto be a leader? Until now leadership in many companies has been related

— P.11

COVER STORY

CHAINUNITED STATESWHATIT DOES: Chain createspartnership to build, use and operateblockchain networks for financialservices. The company authored theChain Protocol, the open-sourcenetwork behind the Chain Coreplatform.

https://chain.com

BLOCKCHAINLUXEMBOURGWHAT IT DOES : The world’s largestproduction blockchain platform,Blockchain develops products thathelp people use and understand thetechnology, including the most widelyused wallet for digital currency.

www.blockchain.com

CIRCLEUNITED STATESWHAT IT DOES : Using the blockchain,AI and other technology, Circle aimsto make sending money to a friend aseasy as sending a text. There areno fees, and the transaction is instantand safe.

www.circle.com

COINBASEUNITED STATESWHATIT DOES: Coinbase is an onlineplatform for buying, selling, transferringand storing digital. At press time,more than $20 billion had beenexchanged through the platform.

www.coinbase.com

In September Frenchinsurance company AXAhas launched Fizzy,a new service that relies onblockchain technology toautomatically compensatepassengers whentheir flight is delayed.

COVER STORY

P.12— THE INNOVATOR

AnInterviewWith JohnHenryClippinger,Research scientistMIT Media Lab

“Weareseeingthebeginningsofanewinternationalfinancialsystem.”

demand- backed asset like a com-modity or a unit of exchange. Etheris an example of a token you can useto purchase certain services. Smartcontracts run on Ether so you couldalso use these tokens to keep trackof and use your frequent flyer miles.To extend this further, a token canbe like a virtual good: companieslike (the Chinese conglomerate)Tencent create their own digital cur-rencies which are used in the gameworld to buy virtual goods. This hasproven to be extremely successfulwith lots of people buying or ex-changing tokens. Imagine applyingthis to the business model ofFacebook or Google. They have veryiffy data that can’t be properly veri-fied. There could be a lot of value ifthe person who owns the datawould agree to trade that knowingthat he can benefit from that finan-cially. The notion of self-sovereignID and data is now accepted, andcompanies that don’t comply will bevulnerable to heavy penalty. Tokenscan be used to create a common pro-tocol on how to handle permissionsto use data so companies don’t runafoul of liability laws.In a July ruling the Securities andExchange Commission (SEC)found that the tokens in aprominent Initial Coin Offering(ICO) were in fact securities —meaning the transactionsviolated federal investment laws.What are the key differencesbetween tokens and stockcertificates?— J.C.:When the SEC issued an opi-nion on the DAO (decentralized au-tonomous organization) blow-upthey correctly censored them be-cause really they were selling secu-rities. However if one is careful it

of capitalism as we know it.— J.C.: In 1842 after (U.S. pre-sident) Andrew Jackson shut downthe banks, people produced theirown copper coins, called hard-timestokens. It was a bottom-up protest.There is a similar logic with bitcoin.During the 2008 banking crisispeople could not trust fiat and theauthorities that have oversight.There is a real distrust in the conven-tional mechanism so that is whytoken sales, to a certain segment,are seen as a safe haven.What exactly is a token?— J.C.:The concept of a digital tokenis not obvious. It is a unit for ex-change of value between two ormore parties, but it is more than atransaction. It is a unit of value thatbinds a relationship. Digital tokenscan take the form of smart contracts

and be quite complex. They can takedifferent forms under differentconditions. They can be a commo-dity, a currency, a security, or all ofthose things. That is why there issome confusion and issues abouthow to regulate them. Tokens canalso be an expression of trust. Atoken could be a credential that Iuse to assert something about my-self. It can be used for digital iden-tity. It can be certification of certainattributes such as age or place of re-sidence or a credential proving thatyou earned a diploma. Tokens canget you access to different kinds ofservices. They assert different formsof trust and value and can be dyna-mically updated.What is the difference between abitcoin and a token?— J.C.: Bitcoin is a kind of token – a

John Henry Clippinger,a research scientist at theMITMediaLab Human Dynamics Group, isconducting research on trustframeworks for protecting and sha-ring information. He is the author ofA Crowd of One: The Future ofIndividual Identity. He is also foun-der and former co-director of TheLaw Lab at the Berkman Center forInternet & Society at HarvardUniversity and the founder and for-mer CEO of four software compa-nies. Clippinger regularly consultswith companies, foundations and go-vernment agencies on technology,policy and business strategy.

Which tokens are the new, newthing? Some say they herald thebeginning of a new kind ofeconomy and maybe even the end

— P.13— P.13

which allows people to buy part ofa Lamborghini and have access pri-vileges at all times. This is indicativeof where things are going. It’s amembership model like timesharebut much lighter and easier to do.What is an initial coin offering (ICO)and why are we seeing so manyright now?— J.C.: ICOs are token generationevents. There is sloppiness in howpeople talk about utilization tokensversus speculation tokens. An exa-mple of a utilization token is whenyou join a community and create akilowatt of sustainable energy and itgenerates a token.How will this change in the waythat companies are gettingfunded impact stock markets,venture capital and the globaleconomy in general?— J.C.: We have a monetary systemand fiat system that is quite ancientand not digital and does not reapthe benefits of what digital tech andcryptography can do. The rate of in-novation and change is only accele-rating so it is just a matter of timebefore we shift to a highly decentra-lized and digital systemwith crypto-graphic proofs and other kinds ofmechanisms to verify transactionsand services. You are seeing thatalready in the rapid uptake of cryp-to currencies in different jurisdic-tions around the world: Singapore,Switzerland, Luxembourg, UK,Russia. There is lots of activity inChina but the government there is awildcard in this. We are seeing thebeginnings of a new international fi-nancial system. Right now there arelots of issues around the technologyand it is in an early phase but in myexperience I have never seen suchrapid speed of innovation.

can be treated as an asset token. Ifit is a rewards programwith no pas-sive income derived or voting sharesthen it is really not a security. Whenyou increase the supply of a curren-cy you have to offset that by creatingdebt because you can’t print money.With digital currencies it is not ne-cessarily the case. If you issue tokenswith specific value propositionsaround different sectors you don’thave to offset that with debt. Thereare examples of this in the sharingeconomy. If you look at next-genera-tion mobility services and autono-mous vehicles, it is very unlikely thevehicles will be privately owned.Therewill be a huge congestion pro-blem but if you can have access andthat can be guaranteed then that isbetter than owning your own car.There is a token called Lambo coin

Every week something changes.Decentralization is starting to takeplace. If you can avoid and controlthe inflation and bubble manipula-tion then you are creating a muchmore accurate, more transparentsystem than you have currently be-cause you can have analytics and ar-tificial intelligence looking at everypattern in hyper real-time speed.One of the key benefits of tokensis to align incentives amongparticipants of the ecosystem.So far only startups havelaunched tokens. Is it possible totokenize existing large enter-prises? How would that work andwhat would be the benefit?— J.C.: Don’t incur debt. Don’t giveup equity and make customerstoken holders. There will be a lot ofnew options for public financing.Underwriting will be dramaticallydifferent.What should corporates do toprepare for the changes ahead?— J.C.: Tokens are a very powerfulway of distributing control. Howmany companies will make the shiftto a token-based economy? Big com-panies coming from China likeTencent and Alibaba understand it.The old industrial companies willfight it. They may win some battlesbut they won’t be able to competebecause of the way they are orga-nized. The net of this is not an easymessage. Corporations like to thinkabout change being incremental andthey don’t like it when I tell themthat in this case it won’t be.J.L.S.

“Rightnowthereare lotsof issuesaroundthetechnologyandit isinanearlyphasebut inmyexperienceIhaveneverseensuch rapidspeedof innovation.”

P.14 — THE INNOVATOR

WillBlockchainHelpDemocratizeAndImproveAI?— SingularityNET, a new artificial intelligence exchange being built onblockchain technology, is aiming to compete with Silicon Valley giants toprovide corporates with better AI, usher in an age of super intelligence,and also set aside time and resources to apply the improved technologyfor the global good.

Companies are poised to spend billions of dollars on AItechnology thatwill affect thework force and the growth of economies. Buttoday it is difficult for corporate buyers to have an overview of the best AIagents available and connectwith the startups or individual developers thatbuilt them. Nor is there a way for AI agents and tools to swarm together tofulfill a request by sharing relevant skills and information.That iswhy SingularityNET says it is creating a blockchain-based exchangethat will allow its users to create, combine andmonetize AI at scale.Rather than limit AI’s development and direction to a handful of techcompaniesor government researchers, the exchange’s goal is todemocratizethe process, allowing anyone who has developed a good AI service to selldirectly to customerswhoareSingularityNetusers, in exchange fornetwork-specific crypto-tokens.The exchange will also permit individuals to be in control of their personaldatawhile sharing andmonetizing the generalized learningwithAI agents,which in turnwill collaboratewith each other on projects, helpingAI to getsmarterover time. If the founders’betpaysoff, theyhopetheopenAIexchangewill help speed what is called The Singularity, a time when humans andcomputers essentially fuse, hence the name SingularityNET.Blockchain technology is beingused for the core plumbingof the exchange’sarchitecture because it creates a powerful framework for differentAI agentsto interoperate for tasks such as flexibly configurable data security.Transactionsonablockchainarecollectivelyprocessedbyanetworkofnodes.The distributed structure is designed to ensure that no single party controlsthenetwork.Theblockchainacts as a tool for regulating communicationandexchanging value, allowing different AI agents to interact with each otherthroughself-enforcing setsof software rules called smart contracts.The smart

contracts allow the AI agents to exchange work, agree on the value of theexchange andpay each other automatically in digital crypto-tokens. In thisdecentralized open market any node is able to create smart contracts torequest tasks, creating a resilient, self-organizing economy, says SimoneGiacomelli, aSingularityNETco-founderandablockchain specialist at Italy’sVulpemVentures.Giacomelli and his SingularityNET co-founders—Ben Goertzel, a globallyrecognizedAI researcher andDavidHanson, founder ofHansonRobotics, acompany behind a series of realistic humanoid robots — have agreed thatthe exchangewill use a portion of the evolved form of the AI it generates tosolve some of the world’s most pressing problems, a mission they believecompanies reporting to traditional shareholders are less likely to tackle.

Meeting Corporate DemandThe foundersareconvinced thatSingularityNETwill prove tobea formidablecompetitor tocurrentcorporatecloud-AIproviders like IBMBluemix,AmazonWeb Services,Microsoft Azure andGoogle Cloud.“SingularityNET has the potential to profit tremendously from the nowuniversal corporateneed foronlineAI services, to leverage theusagepatternsof customers to drive the emergence of general intelligence, and to directthe profit thus generated to apply AI for global good,” says Goertzel.“Nocompany,nomatterhowlargeorsmart, canprovideasmuchAIclevernessas an energized, decentralized community ofAI developers in every countryaround the world,” he adds. There is already a lot of open-source AI codeaccessible todevelopers in code-sharing andpublishing services likeGithub,

COVER STORY SingularityNET’s founders, from left to right:Simone Giacomelli of Vulpem Ventures, the HansonRobotics founder David Hanson, and the globallyrecognized AI researcher Ben Goertzel,Hanson Robotics’ Chief Science Officer, with Sophia,a humanoid robot.

but it is not easily accessible to clients outside the technologyworld. PuttingAI code in theSingularityNETwillmake it available to any customer.What’smore, it will make it possible for different AI agents to connect with eachother in complexmulti-AInetworks to formtheir ownemergent intelligence,he says.SingularityNET is encouraging consumers to volunteer to sell their data onthe exchange to enrich the AI. Thanks to the underlying blockchaininfrastructure, if the transaction generates a positive benefit to a companythe source of the benefit will be automatically attributed, tracked andrewarded, providing a way for users to own, control and profit from theirown data. Hanson says he believes the change will motivate consumers toprovide more data. That, in turn, is expected to lead to more profits forcompanies, because thedata providedwill be richer and therewill be larger

data sets. What’s more, because consumers will have control of their dataand its usagewill be transparent, the founders expect that compliancewithdata privacy lawswill no longer be an issue. “The end result ismore peoplewill beable tobenefit fromAI servicesandbetterandbetterAIwill becreatedfaster,” says Goertzel. The decentralized network (https://singularitynet.io) is expected to launch inNovember inapreliminary formandbeavailablefor use by customers inmid 2018.At the time of the official launch supporters will have the opportunity toparticipate in thenetworkbybecomingearlymembers.Thetargetedaudiencefor the launch will be any type of future user of the service interested inowningSingularityNETnetwork-specific crypto-tokens in order to buy andsell on the openmarketplace. The opportunity for earlymembers is that asthe AI gets smarter the networkwill becomemore valuable to its users andthemarketplace – and the tokens invested in it –will increase in value.In keepingwith its coremission, apercentageof the exchange’sAI resourceswillgotowardwhatGoertzel refers toas“benefittasks” thataredemocraticallydecidedonbythecommunity for thegreatergood, suchasusingtheemergentAI to analyze bio-medical data or to help educate children in developingcountries. SingularlityNET is seeking corporate partners as well asgovernmental regulators to help it develop the community.“As we endeavor to bring this dream to reality, we will be navigating atechnological, business, economic, political and regulatory landscape thatis both more complex and more rapidly shifting than anything humanityhas ever seen.” saysGoertzel. “CreatingSingularityNET is going be ahell ofa ride–andabig success in this endeavorwill, I believe, significantly increasethe odds of a positive Singularity.”J.L.S

“SingularityNEThasthepotentialtoprofittremendouslyfromthenowuniversalcorporateneedforonlineAIservices.”

— P.15

P.16 — THE INNOVATOR

—O2DIGITAL IDENTITY ANDPUBLIC POLICY

Some 1.1 billion people have no means of identification.They can’t vote, go to school or receive government services. Digital IDis also key to doing business. You also have to have to have an establishedidentity to do business.But how do you implement digital ID in such a way that privacy is builtin? The way forward is rife with challenges but blockchain technology– an immutable ledger that allows third parties to validate that an at-tribute has not been changed or misrepresented, is being seriously consi-dered as a way of developing, safeguarding and storing digital IDs. Oneof the United Nations’ Sustainable Development Goals is aiming to pro-vide every person on the planet with a solid and tamper-proof digitalidentity based on common, interoperable standards by 2030.As a first step, the United Nations is seeking to develop scalable iden-tity systems by 2020.

An Opportunity for Developing CountriesVendors such as Switzerland’s WISeKey, Microsoft and Accenture are allworking on technology solutions to try and meet that need. Solving thedigital identity issue could answer some of the developing world’s big-gest problems, including financial exclusion.

Digital identity services are also key to a whole array of new types ofbusiness and government services in the developed world. And they mi-ght help banks to morph into brokers of digital data.The World Economic Forum argues in an August 2016 report that finan-cial institutions are well positioned to drive digital identity systems,since they already have well-developed ways to verify user informationfor commercial and regulatory purposes.There is a strong business case for banks to move into such services, thereport says. Doing so would allow banks to offer extended financial ad-visory services and things like behavior-based insurance. Banks couldalso offer “identity-as-a-service” to businesses that can’t or don’t wish tostore their clients’ personal data. Other options include offering iden-tity management as a separate, fee-based service or anticipating theneed for capital, pre-empting requests for financing from small businessesand providing real-time credit.Creating such services would enable banks them to create new revenuestreams, helping to make up for disruptions that blockchain is causingin other parts of their business.

Standardization IssuesThere is a need for identity to be international but establishing a stan-dard will be very challenging, says Jesse McWaters, the project lead ofDisruptive Innovation in Financial Services at theWorld Economic Forum.“Identity is at some level it is extraordinarily cultural – in some instancesyou are talking about centralized government programs and in othercases there is a lack of trust in government or the ability of the govern-ment to coordinate , so in these instances a federated or distributedapproach to a digital identity might be used, says McWaters.The question of you how operate and how you protect ID are separatequestions, he says. It depends on what rails the service is running on.Even if blockchain is used as the technology underpinning digital iden-tity the level of control over those systems is different, says McWaters.Three different types of systems are built around digital ledger techno-logy. One is in Estonia, where almost all public service are digitalizedand accessed through secure digital identities that are provided to eve-ry citizen and resident.Another can be found in Canada. There, a federated system involvinga number of large financial institutions, operates a service in coopera-tion with government.When it was first announced in 2016 the Canadian project was hailedas the largest privacy-by-design consumer digital identity service initia-tive to date and among the first widespread commercial uses of blockchaindistributed ledger technology by financial services institutions.The Canadian program is being built on top of the secure digital ID thatbanks have already established nationwide with the help of SecureKey,a start-up specialized in secure identity and authentication. In addition

DIGITAL IDENTITY

— P.17

ControllingOur Identities— Will blockchain give people more say over who cansee and use their data?

P.18 — THE INNOVATOR

curity number. The entity to which they send that information retainsit. The data is out there in silos and that creates both risks in terms ofdata loss and forces all sorts of companies that might not want to be inthat position to store that information. It also creates businesses thatare able to harvest that data for commercial purpose that do not neces-sarily benefit the owner of the data. “The opportunity we have arounddigital identity is to turn that on its head,” says McWaters, “ to put usersmore in control of their identity attributes and prove things to peoplewhile transferring as little information as possible.”A lot of the focus on blockchain places all of the importance on how itcould enable secure digital identity. “A more valuable way of re-archi-tecting identity is to better serve consumers and offer them more priva-cy so when they hear the word digital identity it no longer means gi-ving massive amounts of data – to someone else.”J.L.S.

to blockchain technology SecureKey uses biometrics to ensure the iden-tity of the person logging in.When fully launched blockchain technology will be used to allow thesecure exchange of any type of personal data. The permission-based sys-tem would allow, for example, a bank to release all of the digital docu-ments needed for someone to be approved to rent an apartment. Bankswould charge a fee to the business requesting the information.The ser-vice aims to make it much easier and safer for consumers to do businessonline with private and public sector service providers and to conductpeer-to-peer transactions with other individualsSecureKey, which has partnered with IBM, is now testing its technolo-gy in other markets.

A Safer Way to ExchangeThe third model is being proposed by a group called Sovrin, a private-sec-tor, international non-profit that was established to “govern the world’sfirst self-sovereign identity network”. Self-sovereign identity is the conceptthat people and businesses can store their own identity data on theirown devices, and provide it efficiently to those who need to validate it,without relying on a central repository of identity data.“What is more important than the underlying technology is the expe-rience that enables the user,” he adds. Today there is a conception ofidentity that is not necessarily best for users, says McWaters. Whenpeople want their identities to be confirmed they have to transfer awhole bunch of information such as name, date of birth and social se-

The United Nations is aiming on providing every person on the planetwith a solid and tamper-proof digital identity based on common, interoperablestandards by 2030.

— P.19

Some10,000refugeesin Jordan’s Azraq camp are now ableto pay for their food by meansof entitlements recorded on theblockchain.Blockchain is a way of organizingdata through a distributed ledger.This can speed up transactionswhilelowering the risk of fraud or datamismanagement. The ledger recordstransactions in a securemanner thatcannot be changed. It allows anytwo parties to transact directly, andremoves the need for third-partyintermediaries such as banks.Robert Opp, Director of Innovationand ChangeManagement at the UNWorldFoodProgram, sayshedecidedto test digital ledger technology afterspeaking with the finance divisionoverseeing the WFP’s cash transferprograms.The United Nation’s World FoodProgramhas a $6 billion budget. Itsjob is to give around 100 millionpeople in 80 countries a year somesort of assistance. In addition to

deliveringfood, theUNagencydeliversin-kind emergency relief in placeswhere there are functioning foodmarkets. Cash assistance is loadedon a card, mobile phone or digitalvoucher.

A Scan of their EyeInstead of CashInthecaseof theWFPthecashamountdistributed is almost $1 billion.TheWFPwas transferringhuge sumsofmoneyaround theglobe topartnerbanks, along with a list of thoseeligible for assistance.The banks would transfer the fundsonto cards or vouchers that thosereceiving assistance could use to payretailers. The banks would handlethe reconciliation.Now, “blockchain is replacing thepiece that banks would do,” saysOpp. Using the blockchain theWTFcanavoidbankfeesthatrangebetween1% and 3% and the necessity of

transferring a list of names to a thirdparty.And, insteadof10,000paymentsto the bank on behalf of specificindividuals, the organization nowdeals with only 200 settlements toretailers, he says. After a trial inPakistan earlier this yearWFP rolledthe service out to around 10,000people in a refugee camp in Jordan.Theblockchainservice isnowrampingup to serve hundreds of thousandsof people.Because there is yet no globallyrecognized digital ID (See the storypage 16.), the WFP’s system relieson biometric registration data fromtheUnitedNationsHighCommissionerfor Refugees (UNHCR) and usesbiometrictechnologyforauthentication

purposes. Refugees purchase foodfrom local supermarkets in the campby using a scan of their eye insteadof cash, vouchers or e-cards. Thepilot aims to create a platform thatthewider humanitarian communitycould use. Depending on the resultsof thepilot,WFPwill lookatexpandingthe use of blockchain technology toareas such as digital identitymanagement and supply-chainoperations.Mobile technology, biometrics andsolutions such as blockchain, havethe potential to transform the livesof people in need across the worldand address the roots of hunger, saysOpp. The WFP has opened aninnovation accelerator inMunich towork on developing new tools andapproaches to eliminate hunger by2030.“New business models are neededtoaddress theproblemsof thepoorestpeople in the world and blockchaincan be an enabler,” Opp said.J.L.S.

HelpingHand— Blockchain’s distributed network of trust is helpingstep up the fight against hunger

People in refugee camps are nowable to pay for their food by meansof entitlements recorded on theblockchain.

DIGITAL IDENTITY

P.20 — THE INNOVATOR

The digital ledger technology could help solve some of thedeveloping world’s biggest problems, including the recording of births anddeaths, financial exclusionand inaccuracies and fraud inproperty registration.More than a billion people do not have a recognized means of identifyingthemselves, leaving themwithoutaccess tohealthcare, education, governmentassistance and financial services.The Swiss technology firm WISeKey’s CertifyID is a digital identity dualfactor authentication that sits on top of a blockchain, an immutable ledgerthat allows third parties to validate that an original digital identity orattribute certifications have not been changed or misrepresented. Thisand similar new technologies could help the United Nations achieve itsgoal of helping everyone in the world have a secure digital identity by theyear 2020, paving the way for a better life both for citizens of emergingmarket countries and refugees. (See the related story on pages 16 to 18.)In June the government of Andhra Pradesh, the seventh largest state inIndia, announced it had teamed with WISeKey to explore the use ofblockchain to secure government-recorded data, including the provisioningand security of citizens’ identity. It is also considering ways of applyingthe technology to the local transportation sector.WISeKey, which specializes in cybersecurity, blockchain and the Interentof Things (IoT), is also building a blockchain/IoT Center of Excellence inKigali in partnershipwith theRwandan government. The center is deployinga “Trusted Blockchain as a Service” platform to enable the creation of ablockchain ecosystem in Rwanda. The project is part of the broader SmartAfrica initiative with 17 countries participating, representing a market ofabout 360 million people.

Removing Constraints On OpportunitiesFor GrowthBlockchainwon’t just address digital ID. It could also help address problems

caused by political instability, because unlike fiat currencies, blockchain-based cryptocurrencies do not depend on governments or the credit of thestate to guarantee their value and are immune to local inflation caused bywar or political crises.Blockchain technology also provides ameans of exchanging capital in placeswhere traditional banks are not present and could help provide fast andcost-efficient access to investment capital. That’s not all. The technologycould potentially release some of the estimated $20 trillionworth of trappedland capital around the world. Due to the lack of trust in and corruption ofland records, many banks in emerging markets refuse to accept land ascollateral for loans.Two startups—BenBen,whichwas chosen to participate in a Barclays bankaccelerator programandnowcounts BarclaysGhana as a client; and anothercalled Bitland — are working on solving that issue by using blockchain asa way to allow governments to convert physical land titles into secure,transparent and easily accessible digital records. Both startups have globalambitions but decided to first focus on Ghana. The country’s paper-basedland registry records are unenforceable by the court system so banks therewon’t accept land as collateral, leaving millions without the possibility ofleveraging their property to get loans and break out of the cycle of poverty.

Supply Chain IntegrationBlockchaincouldalsobeacatalyst forbetter tradeandsupply-chain integration,benefiting small-scale farmers. An estimated 125 million people make aliving growing coffee in countries such as Ethiopia, Ivory Coast, Uganda,Rwanda, Tanzania, Colombia andBrazil.Most are small-scale farmerswhosefamilies live on $2 a day or less. Bext360, aU.S. startup using a combinationof blockchain,machine vision and artificial intelligence to improve the globalsupply chain for agricultural products, wants to make it easier for thesefarmers to get a fair price, and get paid instantly.

DIGITAL IDENTITY

WillBlockchainAllowEmergingMarketsToLeapfrogAhead?— Developing countries are planning to leverageblockchain to improve their citizens’ well-being andturbocharge their national economies.

People celebrating during a parade in AndhraPradesh, India. The government there has teamedwith WISeKey to explore the use of blockchain tosecure data.

to surpass Delaware and create a global corporate hub. Delaware launchedan initiative in 2016 to review its state laws and start working towardimplementing blockchain-based share ownership andblockchain transactionfinality for share transfers. Rwanda,whichhasbeenaggressivelymodernizingits corporate and investment laws to facilitate foreign investment, couldtake the concept further.“As blockchain technology and IT infrastructure more broadly bring theworld’s entrepreneurs closer together there is a unique opportunity for aforward-thinking jurisdiction to create a legal-technical framework for onlinecorporations,”writes Cameron-Huff. “Amore trusted, transparent corporateregistry could be created based on digital ledger technology,” he argues.Corporate voting could be handled on a blockchain and shares could bedistributed to the public through the Rwanda Stock Exchange or a newventure exchange created for blockchain-based companies.The Rwandan Stock Exchange or some other Kigali-based exchange couldbecome the listing venue for foreign technology companies, allowing themto easily issue shares that could be freely traded, without incurring thehundreds of thousands of dollars in legal expenses that are necessary inCanada and in the U.S. Not all corporations would want to opt for this, butmany could benefit froma blockchain-based system that offers easier accessto capital andamore transparent publicmarketwithout onerous regulations,according to Cameron-Huff. The offer could be especially attractive to newtechnology organizations based around smart contracts likeTheDAO(digitaldecentralized autonomous organizations), he notes.Blockchain registrationwould help avoid concerns about shares not existingor the number of shares issued. The shares could be evenmore transparentthan those in Canada or the U.S. “If the market is more transparent, moreliquid, cheaper, and easier due to blockchain-based systems why wouldn’tcompanies from around the world set up in Rwanda?” writes Cameron-Huff. “ Perhaps this will be a next step for globalization.” And a boon to theRwandian economy as well.J.L.S

The company has built a patented kioskmachine that usesmachine learningand AI to evaluate the coffee beans and divide them into grades based onquality. Coffee farmers access a mobile app linked to the machine to viewoffers from potential buyers. Once a farmer accepts an offer, he or shereceives immediate payment for the coffee beans. The distributed ledger atthe heart of the blockchain ensures payment and keeps a complete recordof every transaction.Developing countries leapfrogged landlines and jumped directly to mobileconnectivity, allowing suppliers and buyers to shift to digital paymentsprocessingwithout legacy technology companiesblockingprogress. Similarily,because there are fewer legacy cross-border systems for trade, Bext360 saysitsmobile access allows it to implement blockchain technology directly intothe supply chain for traditional supply-chain optimization, product payment,and the financing of capital equipment needed to increase the value ofcommodities in the country of origin, bringingmore equity to local businessesand communities in emerging economies.

Strengthening National EconomiesBlockchain’s immutable ledger and transparencywould expose and preventcorrupt government practices, which are rampant in many parts of thedevelopingworld, slowing or even preventing the uptake of the technology.But there are some powerful incentives for governments to consider. Digitalledger technology could help create new revenue streams from services thatareeither improvedorenabledbytheblockchain, suchascompanyregistrations,energy sharing and automatic payment clearing. If one pundit is right, itmight even help Rwanda become the new Delaware. The American stateof Delaware handles registrations for more than 50 percent of companiesin the U.S. and more than 60 percent of the Fortune 500.The Canadian technology lawyer Addison Cameron-Huff notes in a blogpost that there’s an opportunity for Rwanda to use blockchain technology

— P.21

P.22 — THE INNOVATOR

The Netherlands’ blockchain hackathonwhich claims to bethe world’s largest—doesn’t just attract geeks and entrepreneurs behindhot newstartups. Attendees includePrinceConstantijn vanOranje, amemberof theDutch royal family, city officials and executives from large corporates.That’s because the country is on its way to becoming a blockchain nation.Some 25 different Dutch government agencies have launched blockchaintrialsandDutchbanks, energycompanies,pension funds, insurancecompaniesand the Port of Rotterdam are all testing the digital ledger technology.In addition, on September 28, during the StartUpFest Europe conferencein the Netherlands, the Dutch government was given legal certification fora digital ledger solution in the healthcare sector that will allow blockchainto be used for communications between the country’s health institutions,including hospitals and government agencies.“Blockchain has a lot of promise and people are really keen to explorewhat the opportunities are,” says the prince, who in his role and co-founderand chairman of StartupFest Europe, acts as the country’s special envoyfor startups. The blockchain activity –which includes startups, government,universities and corporates – is part of a larger effort to turn theNetherlands,which for centuries has been at the heart of global trade, into aworld-classtechnology hub.While theNetherlands is home to high profile tech venturesin a variety of sectors such as Adyen, which has achieved unicorn status(a valuation of $1 billion or more) by providing businesses with a singlesolution to accept payments anywhere in theworld and theHardtHyperloopproject, which won Elon Musk’s SpaceX hyperloop pod competition.Blockchain initiatives are multiplying and growing in importance.Blockchain is expected to improve services and themanagementofproductionprocesses as well as reduce costs, fraud and cyber risks. Its use could boostthe country’s vital economic sectors which include the chemical industry,ports, agro-food, the manufacturing industry, the financial sector and the

energy sector. “There are a strong set of initiatives here in theNetherlands,”says Rene Penning de Vries, a member of the Dutch Blockchain Coalition,a joint venture between industry, government and academia initiated bythe country’s Ministry of Economic Affairs under the label Dutch DigitalDelta. “My team is organizing cooperation between public and privatepartners because there are some fundamental issues that need to be solvedbefore services are introduced into the market at scale.”

Digital Identity Is KeyChief among them isdigital identity. Blockchain solutions for the identificationof persons, legal entities and objects are at the top of the agenda. “We havea number of banks on board, insurance companies and utilities andwe havethe Dutch regulatory authority on board and we all feel that identity is thekey for all of these blockchain applications,” says Penning de Vries. “Sowhere are we? We are at the stage of defining prototypes, defining whatwe really want in terms of identity management.”Working on identification processes requires a focus on both interoperabilityand standardizationand requires thewill toworkacross government agenciesand industries. “One of the most important aspects is to figure out how towork together with different government organizations and share datawhile respecting privacy,” says Marloes Pomp, project leader of the Dutchgovernment blockchain projects. “Between government services we canbuild excellent services and share data and sometimes money. We thinkblockchain can help us do that in a better way.” One of the items on theagenda for 2017 is creating clarity about the relationshipwith all governmentorganizations and the speed of rollout for those that are considering usingblockchain to create identities that can be used in government registers

PUBLIC POLICY

TheNetherlandsIsBecomingaBlockchainNation— Digital ledger technology is expected to bolsterthe country’s vital economic sectors

such as the State Service for Identity Data (RIVG), Dutch Chamber ofCommerce as well as the basic registrations of the police and the Ministryof Security and Justice.That’s not all. At least seven cities are testing different ways of using digitalledger technology. For example, the Dutch city of Groningen has launcheda trial – using technology developed by a local startup called Dutchchain– allowing government payments to 20,000 citizenswith aminimum incometo be paid in smart digital vouchers instead of euros. Academia is alsoplaying a strong role. The Netherlands is home to Delft University ofTechnology,whichhostsoneofEurope’s largest researchgroupsonblockchaintechnology. Its work combines running code with novel approaches tobroaden and strengthen the cybercurrency field, says Johan Pouwelse,head of the university’s blockchain lab. The university is taking part in anew blockchain consortium focused on logistics involving the Port ofRotterdam, operator of Europe’s largest shipping port. The Netherlands-basedeffort includes support fromanumberof local and regional institutions,includingRoyal FloraHolland, amajor floral auction house, theNetherlandsOrganization for Applied Scientific Research and Dutch bank ABM Amro,among others. ABM Amro has also teamed with IBM on a blockchain trialfor real estate transactions to record and exchange information using anapplication called Torch. The bank is also exploring how blockchainmight

solve issues in financial auditing and compliance and in Financial Recoveryand Restructuring (FRR).

Banking On BlockchainABN Amro and RaboBank are among multiple banks who have joined aproject designed by SWIFT, the world’s largest financial messaging system,designed to determine if blockchain technology can help banks reconciletheir internationalnostroaccounts in real time. LikeABMAmroandRabobankmost largeDutch banks have intensified their blockchain initiatives in 2016–17 and are evolving from the paper-based exploratory phase to mobilizingproofs-of-concept across different business lines, according to consultingfirm Accenture.In 2016, ING, another Dutch bank, worked on blockchain projects withpartners inside and outside the bank, including consortiums such as R3,the Dutch Central bank, the Dutch Payments Association and the EuropeanBanking Forum. The bank also partneredwith Société Générale and tradinghouse Mercuria to test a live oil trade using blockchain.Inall, INGhasworkedon27proofs-of-concept in sixbusiness areas: payments,tradefinance andworking capital solutions, financialmarkets, bank treasury,lending and compliance and identity, according to Accenture. Tangible keyperformance indicators (KPIs)wereused to validate the results and suitabilityof these proofs-of-concept, according to an article written by AccentureNetherlands consultants. For instance, the proof of concept on blockchain’sapplication to trade finance showed considerable gains in an otherwisepaper-based process, resulting in potential cost savings of 10%–15% and

— P.23

A scene from the Netherlands’ blockchain hackathon,which attracts not only entrepreneurs but city officials and executives fromlarge corporations.

DUTCHBLOCKCHAINSTARTUPSTOWATCH

DUTCHCHAINTHENETHERLANDS

WHAT IT DOES : Programmable moneysoftware solution on the blockchainthat allows a sender to program thedestination into the transaction,ensuring a payment is spent for aspecific purpose. It is testing thetechnology in the city of Groningen.

www.dutchchain.com

administrating healthcare payments will be lowered by 10 times or more,predicts vanMegchelen, because once a patient signals that he has used hisdigital wallet to pay for healthcare the insurance company is notified anda payment can be issued immediately. And finally, since transactions on theblockchain are immutable, if someone wants to try and change the datathey would have to break into six different data bases, making it is nearlyimpossible to hack, he says.

Transforming The Energy SectorOther trials in theNetherlands involve the energy sector. For example, IBM,

revenue uptake of 15%. For its part, SNS Bank moved out of traditionalbanking areas to test the use of blockchain in addressing inefficiencies inthe healthcare system, according to Accenture.Several other trials applying blockchain to the healthcare sector are ongoingand on September 28th Pels Rijcken, an independent law firmwhich oftenworks with the Dutch government and other public entities, delivered thefirst legal certificate for a blockchain solution in the healthcare sector toErik Gerritsen, Secretary General of the Dutch Ministry of Health, Welfareand Sport, during Blockchain Summit, a StartUpFest Europe event in theHague.

Streamlining Healthcare“Thefirst operational and legally certifiedblockchainapplicationhas arrived,”says serial Dutch entrepreneur Jeroen vanMegchelen, CEO and co-founderof Ledger Leopard, a recently launched startup which built a blockchainapplication called Mijn Zorg Log for Zorginstituut, the Dutch governmentagency in chargeof communicationsbetween the country’s health institutions.A commercial blockchain service involving a Dutch healthcare institution,a private insurance company and Ledger Leopard will be launched beforethe end of the year, vanMegchelen said in an interviewwith The Innovator.Applying blockchain to the healthcare sector brings four key advantages,he says. The permission-based structure of blockchain technology putsindividuals in charge of their own data, allowing them to control whichinformation will be released to a doctor or insurance company. Secondly,the blockchain connects healthcare data,which today is very scattered, ontoone digital highway, making it far more efficient. Thirdly, the cost of

P.24 — THE INNOVATOR

The launch of the Dutch blockchain hackathon included Prince ConstantijnvonOrange,amemberof theDutchroyal familyandthecountry’scurrentstartupenvoy.

NESTEGGTHENETHERLANDS

WHAT IT DOES : Uses the blockchainto offer fractional ownership in thesustainable infrastructure thatpowers a person’s future, such aspower from windmills and rides inautonomous cars, giving people analternative to traditional pensions.

nestegg.eu

LEDGER LEOPARDTHENETHERLANDSWHATITDOES: Offers an API library fordevelopers and is building blockchainapplications for big corporates andgovernment agencies that don’t wantto develop the technology themselves.It adds blockchain as a softwareapplication that integrates with existingtechnology, including mobile networks.

www.zebra-med.com

TenneT and Sonnen areworking on a trial in theNetherlands andGermanythat explores the use of a permissioned blockchain network to integrateflexible capacity supplied by electric cars and household batteries into theelectrical grid. (See the story page 40.)And in preparation for a time when it will be possible for everybody – andeverything –- to trade in energy, Dutch utility Enexis Groep is experimentingwith the use of blockchain to create new platforms and economic models.In the long-term machines (such as autonomous/self-driving cars) areexpected to interactwithothermachines (suchas solarpanels)onablockchaininfrastructure. Thismeans an electric carmight obtain solar energy directlyfrom a solar panel, making the fuel for the car free of charge. In May theinnovation lab of German untility Innogy,launched a working blockchainproduct that tests that model. Together with Innogy and ElaadNL, EnexisGroep plans to roll out this blockchain solution in theNetherlands on a pilotbasis during the first quarter of 2018.Startups present at the September 28th Blockchain Summit in the Hagueare playing a role in other public and private initiatives, such as the futureof pensions, says Rutger van Zuidam, CEO of the startup Dutchchain, theorganizer of both the the September 28 Blockchain Summit in The Hague.And the Netherlands’ annual blockchain hackathon, which attracts around500 hackers from over 12 countries.Dutchchain is behind the smart voucher trial in Groningen, a northern cityof 200,000 people about 30minutes from theGerman border. Nick Stevens,the city’s chief digital officer, says the trial is going well but is just a start.“My perspective on the trial is not about the end result, it is about learninghow to think about blockchain and whether it will help us to do thingsbetter and differently,” says Stevens. “We need to determine whether it isprimarily for operational efficiency or if it can alsomake for happier citizens.”The digital voucher trial is “low risk”, says Stevens. “If it goes wrong it isnot the end of the world but when you talk about digital ID, if that goeswrong that has significant consequences. (The trial) is about learning howthe technology does and does not work and how do we start upping therisks to do the big things.” Other countries are also embracing digital ledgertechnology, notes Stevens. “ If we reallywant to become a blockchain nationand lead the way we will have to be daring and bring the technology in assomething fundamental and not something that in ten years time will beseen as an amendment.”J.L.S

GlobalAmbitions— The Netherlands isn’t just trying to makea name for itself in blockchain.It wants to be a global technology hub.

— P.25

PUBLIC POLICY

Amsterdam is home to Booking.com and TomTom, two startupslaunched in the 1990s that wenton to become global tech stars. Itis also the headquarters of thepayments firm Adyen, one ofEurope’sunicorns,youngcompanieswith a market cap of a billiondollarsormore.ButLondon,Paris,StockholmandBerlinhave tendedtogetmostof thebuzzandventurecapital.That is starting to change thanksto efforts by StartUpDelta, anorganization formed in 2014 toconnect and promote the Dutchstartup economy as one singlehub. Neelie Kroes, a former EUcommissioner in charge ofcompetitionandthenofoverseeingthe EU’s digital agenda, wasStartUpDelta’s envoy for startupsforthefirst18months. StartUpFestEurope, a technology conferencethat comprises multiple eventsaround the Netherlands, waslaunched under her leadership.The Apple CEO Tim Cook was aspeaker last year. Deep Nishar,SoftBank’smanagingdirector,spokeat this year’s conference, whichtook place September 25-28and attracted around 15,000entrepreneurs, investors and bigcorporations.Prince Constantijn Van Oranje, amemberof theDutch royal family,is the country’s current startup

envoy.Theprinceleadsdelegationsof Dutch startups to events suchas theConsumerElectronicsShowinLasVegasandoverseesapackedaction plan.Underhisleadershipallgovernmentministriesnowhaveastartupofficertasked with ensuring that youngcompanieshaveapointof contact.Anentrepreneurialmaster’sdegreeprogram is being tested at auniversityandapolytechnicschoolthat allows students to combinebiomedical courseswith a year ofentrepreneurial studies. The goalis to encourage the country’s besttechnologistsandscientists to starttheirowncompanies. AndStartupCanvas, a tool launched duringStartUp Fest Europe, helps Dutchstartups improve their pitchesandfunding strategies.“Ministries are really talking tostartups, corporates are meetingwithstartups, investorsandstartupsare finding ways to connect, wearechangingtheeducationalsystemto make it more entrepreneurialandwehaveanactionplantofocusonthebiggestchallenges–-gainingaccess to the world and access tonetworks for our startups andconnecting all the dots in theNetherlands into a single hub,”says Anne-Wil Lucas, a programmanager at StartUpDelta. “If wework togetherwewill havemoreimpact on the world.”

P.26 — THE INNOVATOR

TOP 25STARTUPSAT STARTUPFESTEUROPE 2017StartupFest Europe, a conference that took place in the NetherlandsSeptember 25–28, gathered startups, corporates and investors from aroundthe globe. The Innovator selected a group of the most interesting startups atStartupFest’s seven events: CapitalFest, Impact StartupFest,FinTech Vortex, EnergyFest, Digital Health & Medtech, The Future of High Techand the Blockchain Summit.

ENVIRONMENTSOUNDENERGYTHENETHERLANDSWHAT IT DOES: Using a cost-efficient and cleanprocess, SoundEnergy claims it can take wasteheat and convert it to sound and then into cold airwhich can be used for industrial waste heatrecovery, air conditioning, cold chain shipmentsand data center cooling.

http://soundenergy.nl/

TRANSPORTATIONHARDT HYPERLOOPTHENETHERLANDSWHAT IT DOES: Hardt Hyperloop won acompetition held by Elon Musk’s SpaceX to developsuperfast hyperloop transporttechnology. It is setting up a full-scale testingcenter and aims to break ground on a commercialhyperloop between Amsterdam and Paris by 2021.

www.hardtglobalmobility.com

ENERGYSONNENGERMANYWHAT IT DOES: Designed to store and manageenergy generated by solar panels mounted onhousehold roofs, the sonnenBatterie claimsa minimum lifespan of 10,000 charging-cycles.It is participating in a blockchain-distributed energytrial with TenneT and IBM.

https://www.sonnenbatterie.de/en-gb/start

ENERGYKITE POWER SYSTEMSUNITEDKINGDOMWHAT IT DOES: KPS is developing a low-costsolution to harness energy from the wind.Its system employs two kites flying in the sameairspace so that while one is generating power theother is being retracted, ensuring energy productionis constant.

http://www.kitepowersystems.com/

ENERGYRAFIKI POWERGERMANYWHAT IT DOES: Rafiki Power supplies acontainerized solar-powered solution that can bringelectricity grid-style services to communitieslacking power. To date it has installed and operateseight mini grid solutions in Tanzania.

www.rafikipower.com

ENVIRONMENTTHE OCEAN CLEANUPTHENETHERLANDSWHAT IT DOES: Aiming to start extracting plasticfrom the Great Pacific Garbage Patch within thenext 12 months, The Ocean Cleanup hasdeveloped U-shaped screens that direct floatingplastic to a central point. The concentrated plasticcan then be extracted and recycled.

www.theoceancleanup.com

BLOCKCHAINPARITY TECHNOLOGIESUNITEDKINGDOMWHAT IT DOES: A blockchain specialist, Paritydevelops software solutions for enterprises andindustries designed to unlock the full value ofdecentralized technology. Its Ethereum browser isthe first in a series of planned software releases.

www.parity.io

NEWMATERIALSMISCQTHENETHERLANDSWHAT IT DOES: Miscq isouttoprovethatMiscanthusgrasscanbeusedtoproducecelluloseasareplacementforoil-basedequivalents.Inconstruction, it canbeusedasaneffectivesoundandheat insulator.Made intopelletsorbriquettes,it canbeburntasanenergysourceorused inagriculture in itsrawform.http://www.miscq.nl/

NEWMATERIALSPHOTANOLTHENETHERLANDSWHAT IT DOES: Photanol uses engineeredcyanobacteria to produce chemicals from CO2 andsunlight. The first compound to market is a lacticacid used to produce a biodegradable plastic.

www.photanol.com

NEWMATERIALSIONIQATHENETHERLANDSWHAT IT DOES: Ioniqa has developed a magneticsmart materials and separation process, which itsays can recycle any kind of PET plastic andproduce “virgin” raw materials, similar to thosemade from crude oil.

www.destygo.com

HEALTHOVIVASWITZERLANDWHAT IT DOES: Oviva uses digital technology tohelp treat diabetes, obesity and food allergies.It employs virtual clinics and high-frequencyfollow-up to improve clinical outcomes and lowerthe cost of delivering care.

https://oviva.com

— P.27

TRANSPORTATIONWINDHORSEUNITEDKINGDOMWHAT IT DOES: Windhorse has developed aspecialist aid drone that can be loaded with foodand water, before flying independently to apre-planned destination. The drone’s shell can bereused to provide shelter and the frame can beburnt safely to cook food.

windhorse.aero

TRANSPORTATIONFARE PILOTUNITEDKINGDOMWHAT IT DOES: Fare Pilot uses machine learningto help Uber, Lyft and taxi drivers find more faresand earn better deals. Its data platformuses historical and live data to identify potentialdemand hot spots.

www.farepilot.com

TRANSPORTATIONAMBER MOBILITYTHENETHERLANDSWHAT IT DOES: Amber is developing a modular,autonomous, customizable electric car designedspecifically to be shared. ABN Amro has signedon as a launching customer.Amber plans to have the self-driving cars on theroad in Eindhoven by mid-2018.

www.ambermobility.com

ENERGYGENERAL FUSIONCANADAWHAT IT DOES: General Fusion is trying to developthe fastest, most practical and cost-competitivepath to fusion power. In its labs just outsideVancouver the company is developing the keycomponents of a fusion power plant.

http://generalfusion.com/

BLOCKCHAINDUTCHCHAINTHENETHERLANDSWHAT IT DOES: Developing a programmable moneysoftware solution on the blockchain that allows asender to program the destination into thetransaction, ensuring a payment is spent for a specificpurpose. It has co-developed such a smart vouchersystem with the Dutch city of Groningen.

https://www.dutchchain.com/

BLOCKCHAINBANCORSWITZERLANDWHAT IT DOES: Built on the Ethereum blockchain,Bancor’s tokens are a type of monetary reserve thatprovides liquidity to other tokens.

https://www.bancor.network

E-COMMERCEMMUZEISRAELWHAT IT DOES: Mmuze has developed an artificialintelligence platform that can turn productcatalogues into smart shopping assistants.The Mmuze chatbot can identify most discussedproduct features and real-time social trends thatimpact customers’ purchasing decisions.

www.mmuze.com

FUTURETECH/IOTGUARDHATUNITEDSTATESWHAT IT DOES: Using its open industrial IoTplatform, GuardHat has developed a smarthardhat that supports real-time location tracking,audio and video streaming, as well as gasdetection and biometric data capture.

www.guardhat.com

FUTURETECH/AIUNBABELPORTUGALWHAT IT DOES: Unbabel supplements machinetranslation technology and artificial intelligencewith 50,000 bilingual individuals around the worldwho post-edit the outputs from the automatedsystem.

https://unbabel.com/

NEWMATERIALSENERKEMCANADAWHAT IT DOES: Enerkem’s proprietary technologyconverts the carbon contained in garbage into apure synthesis gas (also called syngas), then turnsin into biofuels and chemicals..

http://enerkem.com

Compiled and written by David Pringle.

Pringle is a former Wall Street Journal telecomsand technology reporter. He currently worksas an associate senior analyst at STL Partners,running the Dealing With Disruption stream whichcovers Google, Apple, Amazon, Facebook andMicrosoft, as well as the broader digital commercemarket.

HEALTHSKINVISIONROMANIA/THENETHERLANDSWHAT IT DOES: To detect early and potential signsof chaotic growth (skin cancer), SkinVision hasdeveloped an algorithm that can scan an image ofa lesion and check for irregularities in color, textureand shape.

https://skinvision.com/

HEALTHEYEWIREUNITEDSTATESWHAT IT DOES: Tounderstandhowthebrainworks,scientistsneedtofigureouthowelectrical impulsestravel through85billionneurons,connectedthrough100trillionsynapses.EyeWire iscrowdsourcingthenecessarymappingprocessthroughanonlinegame.

https://eyewire.org

E-COMMERCEPICNICTHENETHERLANDSWHAT IT DOES: The grocery delivery startup Picnicuses custom-built electric vehicles that follow setroutes and deliver at set times, as traditionalmilkmen did. As the vehicles don’t have to crisscrosstown to deliver at requested times, Picnic can delivergroceries for free.

https://www.picnic.nl/

FINTECHREVOLUTUNITEDKINGDOMWHAT IT DOES: By offering free internationalmoney transfers and fee-free spending in dozensof currencies via a mobile app, Revolut has gainedover 730,000 customers across Europe who havecollectively transacted over US$3.2 billion.

www.revolut.com

P.28 — THE INNOVATOR

If you want a glimpse at the future potential of blockchain,visit Estonia, urges Kaspar Korjus, the country’s managing director ate-Residency. Almost all public services in Estonia are digitalized and accessedthrough secure digital identities that are provided to every citizen andresident.One of the innovations that is integrated into some of the services is adistributed ledger that can never be erased or rewritten. This kind of ledgertechnology is nowmore commonly known as a blockchain. Estonia’s digitalledger was built years before current-day blockchain existed but is basedon the same principle. The distributed ledger gives citizens and residentscontrol over their own data. “Every transaction unit is backed up on thedigital ledger so no one canmisuse it or change it,” says Korjus. “As a citizenno one has a right to check my data without permission. Before I had totrust some government employee. Now I put my trust in mathematics andencryption.” While digital ledger technology is secure it isn’t failsafe. InSeptember a groupof international security researchers identified apotentialsecurity vulnerability that affects the use of Estonia’s ID cards and digitalIDs. The cards are used to access a wide range of digital services, fromsigning documents to submitting tax returns and checkingmedical records,as well as by foreigners who are e-residents in the country.When notified, Estonian authorities immediately took precautionarymeasures, including closing the public key database and being transparentabout the risk. Korjus, who points out there was no actual breach, saysother governments could learn from theway the country has implementedpublic policy to foster the use of innovative technology and digital IDswhile protecting its citizens and e-residents.For example, he explains that simply having the technology to monitorwho is accessing people’s data, conduct e-voting or digitally signingdocuments, would be pointless without a policy framework to ensure

improper access of data is punished, e-votes are counted and digitallysigned agreements are legally binding.Estonia’s e-residency program is another example of smart public policy, hesays. It allows people from anywhere in the world to apply for a digitalidentity in Estonia. You can then use a government-issued identity card tosign documents, open a bank account and register companies from abroad.“It has opened up a business opportunity for Estonia,” says Korjus.The primary benefit at present is the ability to establish and manage atrusted location-independentcompanyentirelyonline.Some20,000companieshave already opted in. Now blockchain entrepreneurs have started askinghow the digital IDs can be integrated into their products and services as away of on-boarding their customers faster and at lower cost.“Estonia is nowablockchain nation,” says former President ToomasHendrikIlves. “Our digital society is underpinned by blockchain technology and oursecuredigital identitiesprovideasignificantadvantage toblockchaincompaniesthat need to verify online identities. Through e-Residency, Estonia is readyto support blockchain pioneers from anywhere in the world so they canbuild the future through our digital infrastructure, even without steppingfoot in Estonia.”Estonia should take advantage of its edge while it can. Trent McConaghy,the founder and CEO of the Berlin-based blockchain startup BigchainDB,says he believes it is only a matter of time before the tiny Baltic state hassome competition.“The concept of e-residency is based on the same philosophy as blockchain– spreading power,” says McConaghy. “I am sure other nations are goingto start to copy them. In 10 to 15 years 10 or more nations will havee-residency programs. These nations are going to be competing on whichbenefits they give. As the power of nations fades and everything becomesmore decentralized this movement will follow.”

PUBLIC POLICY

FirstMoverAdvantage— Estonia’s early adoption of digital ledgertechnology is giving it an edge.

Europe’s IOTA Foundation is planning to launchablockchain-based exchange that will allow corporations to securely buy and sell datacollected by devices on the Internet of Things (IoT). IOTA plans to maketheannouncement atAutonomy, anOctober19-20urbanmobility conferencein Paris, says co-founder Dominik Schiener, a scheduled speaker at theevent. Initial participants in the data exchange include Bosch, Huawei,Samsung, Engie Lab, SAP and Deutsche Telekom, he says.IOTA, which is developing its own flavor of blockchain, called Tangle, aimsto help big corporates use the technology to create new business modelsand new revenue streams for the financial services, logistics and supplychain, energy, auto and healthcare sectors.The IoT is made up of applications that connect to the Internet everythingfrom cars and factory-floor machines to home appliances and humans. Allof thesemachines generate enormous amounts of data which, for themostpart, is currently neither analyzed nor monetized.While some of this data contains valuable business insights that could beused to launch new services, there isn’t an easy, secure way for companiesand individuals to start buying and selling it directly from each other.In order for businesses and consumers to safely use the IoT, each deviceon the network will need to have a secure digital identity, says Schiener.That’s the first challenge. Then, a settlement layer needs to be establishedin order to enable a new “economy of things,” allowing devices, sensorsandmachines to exchangevalue in real-time,without automatically incurringfees. And, to be trusted there needs to be an immutable record of thetransactions.The IOTA Foundation aims to meet all of those objectives through Tangle,its blockchain offering,which claims to be scalable and to enable the transferof data in an authenticated, tamper-proof and encrypted fashion.

The exchange will be a proof of concept to illustrate how an IoT sensorusingTanglecanselldatastreamson-demandthroughadedicatedmarketplace,Schiener says.

IOTA is asking corporate and institutional partnersto participate in the initiative.“The goal of IOTA is to obviously run on tiny sensors but for this proof ofconcept we intend to make it possible for corporates to easily submit non-sensitive data to the data marketplace,” says Scheiner. “Some of the datathat is being submitted is from weather stations, environmental sensors,machines in shopfloors, cars, base stations and more.”IOTA’s technology is open source and free to use, so any one can join thefoundationanduse the technology tobuildapplications.Corporate involvementin the foundation is crucial, says Schiener, an Italian entrepreneur who hasbeen in the blockchain space for more than five years. There are big usecases but IOTA isn’t surewhat corporates want. “Our attitude is ‘let’s do thistogether,’ ” he says.The IOTAFoundation is amember of a consortiumcalled Trusted IDAlliancethat also includes Cisco, Bosch, Gemalto and Foxconn. The Trusted IDalliance is working on ways of standardizing how blockchain can be usedto secure and improve IoT applications. The IOTA Foundation is also amember of theDecentralized Identity Foundation, a grouping of competitivecompanies, includingMicrosoft and Accenture, launched inMay, that aimsto create a universal, secure, decentralized way for data to be accessed byinstitutions and for individuals to verify identity. These consortia are amongseveral collaborative efforts aimed at advancing the development ofblockchain technology.

TheBlockchainOfThings— Using the blockchain to exchange data generatedby the Internet of Things

— P.29

P.30 — THE INNOVATOR

More than seven million container ships move in and outof The Port of Rotterdam annually carrying flowers from Kenya, orangesfrom California, pineapples from Colombia and a whole array of othermerchandise. Europe’s largest port is always bustling because90%of goodsin global trade are carried by the ocean shipping industry each year. It is ahighly inefficient process that is ripe for disruption.Maersk, the world’s largest shipping container company, found that just asimple shipment of refrigerated goods from East Africa to Europe can gothrough nearly 30 people and organizations, involving more than 200different interactions and communications. So it is no surprise thatMaerskhas teamed up with IBM to test how the blockchain, which enables moresecure, transparentmonitoring of transactions,might streamline the supplychain. It is just one of a number of trials involving blockchain’s use in thesupply chain. Supply chains are basically a series of transaction nodes thatlink tomove products frompoint A to the point-of-sale or final deployment.With blockchain, as products change hands across a supply chain frommanufacture to sale, the transactions can be documented in a permanentdecentralized record – reducing time delays, added costs, and humanerrors. Some of theworld’s biggest retailers and food companies – including

ChainReaction— Supply chains are often highly inefficientprocesses that involve hundreds of interactions.Blockchain can help.

—O3TRADING ONTHE BLOCKCHAIN

Nestlé, Unilever and Walmart – are now working with IBM to use theblockchain to improve food traceability and transparency in the supplychain. Several blockchain startups are innovating around supply chain inother sectors, notes the research firm CBInsight.For example, SteelTrace, a Dutch startup, is using the blockchain toautomatically trace steel quality fromorigin to endproduct. Another startup,Provenance, is building a traceability system for materials and products,

enablingbusinesses to engage consumers at thepoint of salewith informationgathered collaboratively from suppliers all along the supply chain, permittingit to substantiate product claims with trustworthy, real-time data. Othersstartups targeting this space include Hijro, which offers an alternativeplatform for lending into global supply chains, and Skuchain, which buildsblockchain-based products for the business-to-business trade and supply-chain finance market.

Financing TradeTrade finance is also being moved onto the blockchain. The trade financeenvironment involves export and import, bank credit and managing thewhole supply chain. “The financial payment is not linked to the supplychain so there is a paper version control issue and it adds significant costbecause it is manual,” says the blockchain specialist Oliver T. Bussman, aformer CIO at UBS.Another issue is that the payment stream is not linked to the supply chainfrom a time-to-delivery point of view.With the blockchain, smart contractscan be issued between all the involved parties, delivery can be confirmedand the payment will automatically be executed. Cost efficiency savingsare estimated to be between $14 billion to $16 billion, says Bussmann.“This is an example of how blockchain allows for real-time integration notonly of the banking industry but to team upwith peers and non-banks andmove that onto a platform to enable simplified real-time business,” he says.A group of banks, including Deutsche Bank andHSBC, have formedDigitalTrade Chain, a project to build a blockchain-powered cross-border tradefinance platform for small and medium-sized companies in Europe.The consortium started in January 2017 with seven European banks andis expected to grow to include additional banks from other countries aswell as trading partners such as shippers, freight forwarders and creditagencies. Bank ofMontreal, Caixabank andErsteGroup recently announcedthat they are joining a blockchain-based trade platform started by UBS andIBM. The platform, called Batavia, would help banks and their clientsautomate the trade finance process. Among other things, Bataviawill allowparties to track a transaction from when a shipment leaves a port to whenit reaches its destination.J.L.S

— P.31

More than seven million container ships move in and outof The Port of Rotterdam. Cargo companies as well as big retailers areexperimenting blockchain-based services to improve traceabilityin the supply chain.

BLOCKCHAINSUPPLYCHAINSTARTUPSTOWATCH

PROVENANCEUNITEDKINGDOMWHAT IT DOES : Provides a platformthat empowers brands to take stepstoward greater transparency by tracingthe origins and histories of productsthanks to blockchain-basedtechnology and open data.

www.provenance.org

STEELTRACETHENETHERLANDS

WHAT IT DOES : A blockchain-basedplatform that enables traceability ofsteel quality via digital certificates.The platform enables data storageand exchange of ownershipcertificate in a format that machinescan understand.

https://steeltrace.eu/

AMBROSUSSWITZERLAND

WHATITDOES: A community-drivenecosystem to assure the quality,safety & origins of products, combininghigh-tech sensors, blockchain protocoland smart contracts.

https://ambrosus.com/

P.32 — THE INNOVATOR

cross-border payments, includingFrance’s Crédit Agricole, Brazil’sBexs Banco and Uruguay’s dLocal.

Banks need to be creativeIt also said that SEB, the Swedishbank, had used Ripple’s system totransfer$180millionbetweenSwedenand the U.S. in recent months tohelp manage the cash balances ofone of the bank’s large corporatecustomers. Ripple’s cross-borderpayments system is based on usingits XRP cryptocurrency, whichcustomers buy and sell almostinstantaneously to move moneybetween countries and currenciesover the company’s system. It allowscross-borderpaymentstobecompletedwithin 10 to 15 seconds, comparedwith about three days for interbanktransactions using theSwift network.But along with opportunities forimproving the way existing businessis done, blockchain poses somechallenges. The new, decentralizedbusiness platforms unleashed byblockchain are spawning new, de-centralized business models thatthreaten some of banks’ core bu-sinesses. “For banks the issue is thataccess to capital is being disinter-mediated pretty aggressively” byinitial coin offerings (ICOs), anunregulated way of crowdsourcingfunds, notes Lex Sokolin, a partnerand global director of fintech strate-gy at Autonomous Research. Some$2.3 billion in funding has been

The finance sector isdivided on the virtues ofcryptocurrencies such as bitcoin.JamieDimonmade headlineswhenhe recently said he would fire anytrader who was “stupid” enough totrade in them.But there is one thing that almosteveryone in the banking industryagrees should be embraced:blockchain, the technology under-pinning cryptocurrencies.Banks are scrambling to hireblockchain experts and are joiningtechnology-oriented consortia suchas R3, the Enterprise EthereumAlliance or Hyperledger.They are first focusing on low-han-ging fruit: areas where there is alot of inefficiency such as global

payments, trade finance, auto-mated compliance and post-tradeprocessing. Potential savings fromefficiency gains are between $80billion and $110 billion, says theblockchain expert Oliver T.Bussmann, a former CIO at UBS.SWIFT, in collaboration with lea-ding global transaction banks, is de-veloping a proof-of-concept appli-cation that will test whether distri-buted ledger technology can beused by banks to improve the re-conciliation of their nostro accountsin real time, optimizing their globalliquidity.But it would be a mistake for banksto regard this as just an efficiencyplay, Bussmann says.Blockchain gives them the opportu-

nity to become the backbone oflarge-scale, open, decentralized bu-siness platforms, he says.A first step toward that end is forbanks to organize themselves intoblockchain-based business networksand consortia, such as one invol-ving the U.S. startup Ripple, an en-terprise blockchain solutions provi-der, which has built a blockchain-based direct settlement networkwith more than 75 banks and pay-ment providers. The company haspartnered with about 90 additionalbanks across the globe, includingStandard Chartered Bank, BancoSantander, National Australia Bankand BBVA.Several banks recently signed upto start using its technology for

FINANCIAL SERVICES

BankingonBlockchain— The finance sector may not agree on the virtuesof cryptocurrencies, but they are embracingblockchain, the technology underpinning them.

— P.33

Jamie DimonJPMorgan Chase Chairman and CEOreferring to bitcoin at a September 12 bankingindustry conference organized by Barclays.

“It’safraud…It’sworsethantulipbulbs.Itwon’tendwell”

“Notsolongago,someexpertsarguedthatpersonalcomputerswouldneverbeadoptedandthattabletswouldonlybeusedasexpensivecoffeetrays.SoIthinkitmaynotbewisetodismissvirtualcurrencies”

about this negatively it is actually abullish signal,” Solokin says. “IfJamie is being publicly negativethen it means it is actually reachinghim. This shows the power of themoment. This thing is really goingmainstream.”J.L.S

raised that way in a very short pe-riod of time and banks haven’t beeninvolved at all.“It is the wild, wild west but crowd-funding (through ICOs) actuallyworks. You are adding value tothese projects without the existingfinancial system,” Sokolin says.

Banks need to think creativelyabout how they might carve out arole in this new world, he says.They could, for example, becomethe on-ramp and off-ramp betweenfiat and crypto-currency and offerdata and analytics around differentnew products. To remain relevant

banks will need to hire skunk-workdevelopers who can visit Internetforums and use tools like Slack andTelegram, where a lot of the conver-sation is taking place – and figureout how to get the data and how toanalyze it, Solokin says.“When thenumber one incumbent is talking

FINTECHBLOCKCHAINSTARTUPSTOWATCH

BANCORSWITZERLANDWHAT IT DOES: Built on the Ethereumblockchain, Bancor’s tokens are a typeof monetary reserve that providesliquidity to other tokens.

https://www.bancor.network

RIPPLEUNITEDSTATESWHAT IT DOES : Ripple connectsbanks, payment providers, digitalasset exchanges and corporates viaRippleNet to provide one frictionlessexperience to send money globally.

https://ripple.com/

DIGITAL ASSET HOLDINGSUNITEDSTATESWHATITDOES: Digital Asset is atechnology company that usesdistributed ledgers to track and settlefinancial assets in a cryptographicallysecure environment where counter-party risk is minimized, and settlementtimes are reduced.

http://www.digitalasset.com

ChristineLagardeManaging director of the InternationalMonetary Fund, during a talk at a Bank of Englandconference.

P.34 — THE INNOVATOR

FINANCIAL SERVICES

TakingStock— Exchanges are finding it pays to useblockchain

Kaidi Ruusalepp, founder and CEO of Funderbeam, which was recentlyvoted European Startup of the year

plex. Blockchain technology helpsto make the process more straight-forward.Nasdaq was among the first to em-brace the technology. Called NasdaqLinq it uses blockchain technologyto power capitalization tables, whichprivate firms use to manage sharesin their companies.The Linq takes what is typically asystem of paper certificates, whichthen become outdated or invali-dated by newer certificates, andmakes it more efficient and lessprone to errors.

First experiments acrossthe globeThe blockchain-based electronicshareholder voting system solvesseveral problems. It allows peopleto participate and cast votes remo-tely, and it allows a shareholder todelegate those votes. Other ex-changes are also exploring uses ofblockchain.

transferred or the securities arenow transferred’ but once theblockchain and cryptocurencies be-come the intermediaries then thefunction of trust is fulfilled by thetechnology and not by intermedia-ries.”Funderbeam launched its platformof funding and trading in April oflast year. “At the start we had onlyfour startups raising funds- andFunderbeam amongst those four –to test whether the tech and bu-siness model could get some liqui-dity for the startup companies . Weproved it. We have 15 companiestrading and investors from 94countries. Now we just need toscale. “Traditional stock markets are alsoinvesting in blockchain. The func-tioning of stock exchanges involvesprocedures that can be time consu-ming, cost inefficient, cumbersome,and prone to risks. The multi-laye-red processes—pre-trade, trade,post-trade and custody, and securi-ties servicing—is extremely com-

Kaidi Ruusalepp, aformerCEOoftheNasdaqTallinnstockexchange, has built something akintoastockexchangeforgrowthstartupsbased on blockchain technology.Her company, Funderbeam – whichwas recently voted EuropeanFintech Startup of the year- hascreated a funding and trading en-gine for growth companies whichcan issue tradable securities. Theplatform is part research tool andpart investment platform, provi-ding a way for startups to raise fun-ding and for investors to invest inpotentially high growth companies.Funderbeam’s underlying technolo-gy is a type of crypto-currency.“Wekind of tokenize equity investment ,”says Rusalepp. “We record, everysingle trade on the blockchain sowe don’t need clearing houses andcentral security depositories.The reason stock exchanges exist isto inject trust. “That’s their mainbusiness, says Ruusalepp., “to pro-vide the trust, to say ‘we canconfirm that the funds are now

The Australian Stock Exchange se-lected U.S.-based blockchain star-tup Digital Asset Holdings to deve-lop distributed ledger based solu-tions for clearing and settlingtrades and later invested in thatcompany. The Korea Exchange isusing blockchain technology to en-able equity shares of startup com-panies to be traded in the openmarket.The London Stock Exchange,is in-volved in ways to improve the post-trade space using the blockchaintechnology. And the LuxembourgStock Exchange has already intro-duced a blockchain-enabled secu-rity system that stores a so-calledofficially generated signature by ap-pointed mechanism (OAM), alongwith document type and documentURL, in the blockchain.J.L.S

— P.35

How might blockchain impact the future of pensions? Tofind out APG, Europe’s largest pension asset manager and administrator, isboth launching a new pension fund on the blockchain and investing in astartup that uses digital ledger technology to cut out traditional funds. Theseare just two of ten trials the pension asset manager is running to test thetechnology at the Brightlands Smart Services campus, an initiative of theDutch province of Limburg, Maastricht University Medical Center, ZuydUniversity of Applied Sciences, and Fontys International Campus Venlo.“When our innovation department opened three years ago we started tolook into this blockchain thing to explore how it fit our business model andwhatwouldbe theapplication in thepensionbusiness,” saysHiddeTerpoorten,blockchain lead for APG Group, which manages around €451 billion inpension assets. “We came up with not one but 150 use cases.” Blockchaintechnology is expected to significantly improve the services pension fundsprovide to their participants. A key objective is to lower participant costs andto simplify pension administration, and make it more secure. In addition,personal pension data is expected to becomemore accessible to participants.To test this theory APG, and the Dutch pension fund manager PGGM co-developed a pension administration blockchain application. The developedprototype is comparable to a pension administration system shared by allparties. While current systems are paper-based and not very efficient oruser-friendly, theblockchain version is controlledbydigitized smart contracts,a set of programmable rules that specify who can view, change and use thedata. The use of digital ledger technologymakes it possible to store pensioninformation in the nodes of the blockchain network. These nodes are pointsin the network and consist of, for example, pension providers, employersand regulators. The nodes check the information, execute the programmedpension contracts and synchronize with each other. This makes the storage

of pension information secure, and participants—with one click— can seehow much pension they have accrued, says Terpoorten.The first phase of the trial was deemed a success, so APG announced onOctober 16 that it plans to further test the technology by launching a newpension fundontheblockchain in2018. APGsays itbelieves that thecontinueddevelopment of this prototype will produce a more flexible and transparentpension administration system at lower cost. Other strong uses cases forblockchain includekeeping trackof assets andusing smart contract technologyto handle risk sharing and distribution of risk. Blockchain is also expected tofoster new business models that will disrupt the current system. That is whyAPG says it partnered with the Netherlands’ annual blockchain hackathon.During the hackathon, which attracts around 500 hackers from over 12countries, corporations define a particular challenge. The winner of a trackgets access to funding and other help. Thewinner of the “future of pensions”trackat last year’s hackathonwasabusiness plandevelopedby three students.APG, the track’s sponsor, is paying the salaries of the students while theydevelop the business model for their startup, called Nestegg. If the businessproves sustainable APG will take stakes in it, Terpoorten says.Nestegg aims to uses the blockchain to give people a choice in where theirretirementmoneyis invested,givingpeopleanalternativetotraditionalpensions.The firm offers fractional ownership in the sustainable infrastructure thatpowers each person’s future, such as energy from local windmills and ridesin autonomous cars. Each individual would receive the value created fromhis or her investment, traceable to the percentage of ownership in the asset.Terpooten isn’t concernedthat– if successful–Nestegg’smodelwouldeliminatethe need for traditional pension funds. “That iswhywe got involvedwith thehackathon,” he says. “We want entrepreneurs to get to know the world ofpensions and come up with newmodels for how we do things now.”

ReinventingPensions— Blockchain technology could streamlineor even eliminate traditional asset managementservices

P.36 — THE INNOVATOR

—O4REINVENTING ENERGY

— P.37

theblockchainby crypto-tokens that are equippedwith self-enforcing sets ofsoftwarerulescalledsmartcontracts.Thesmartcontractsprovidegeographicalcertificationofproductionandconsumptionbasedonactual carbonreductionand replacement of fossil fuels.Swytch is one of several emerging blockchain-based global exchanges thatare aiming to democratize access to sustainable power and reduce the costof energy to zero. Think of these exchanges as an “Internet for Energy” thatcould upend the balance of power, both literally and figuratively.Access to power has always been unequal across the world. Infrastructureis inequitable and economic development often suffers fromdisruptions inpower supply. The economic models of the energy sector are built aroundthe scarcityof fossil fuels, sowarsare frequently startedoveraccess toenergyresources. Blockchain enables exchanges that cut out themiddleman – thetraditional utility – anderase thedivisionbetweengenerator and consumer,allowing anyperson, companyormachine to directly exchange energy, firstat the local level and eventually, globally.An early example is the Brooklyn Microgrid, a blockchain-based peer-to-peer trading platform run by the U.S. startup L03 Energy. The microgrid,which was first piloted in 2016, enables local trading between producersand consumers of power in three Brooklyn neighborhoods, balancing outlocal production and consumption. Microgrids allow the bypassing of theelectric company energy supply, creating energy generation and storagecomponents that can function on their own.The challenge is in figuring out how to scale that concept globally. Swytchisnot theonlyemergingexchangeworkingonways todo that.Others includePower Ledger, an Australian blockchain-based peer-to-peer energymarketplace,which raised34millionAUD(about$26million) inSeptemberthrough an initial coin offering; Greeneum, a peer-to-peer exchangewhichleverages blockchain technology, smart contracts and artificial intelligence(AI) to allow energy trading in a decentralized marketplace; andUniversalright.org’s initiative,anewglobalblockchain-basedenergyexchangebasedout of theNetherlands andbackedbyArashAazami, a former electricutility executive. All of the exchanges are planning initial coin offerings, anunregulated way of quickly crowd-sourcing funds while simultaneouslycreating a community, as users on the networkmust own tokens in order toparticipate.

The Birth Of New Business ModelsThe rise of blockchain-based energy exchanges does notmean therewill nolonger be a business – and profits to be made – in energy. “There will bemajor, growing energymarkets in the next decades,” predicts Aazami.The Internet of energy needs interconnections so therewill always be a rolefor a third-party that can connect peers in an energy system to one other, aroleplayed todayby transmissionsystemoperators (TSOs), entitiesentrustedwith transporting energy on a national or regional level.But the way that TSOs and distribution system operators (DSOs) operatetoday is going to radically change. Rather than regarding peers as suppliers

The mayors of six South Korean cities, including Seoul, areencouragingcitizenswithrooftopsolarpanelsand large-scale industrial solar-powergenerators to trade their energy fornetwork-specific crypto-tokensonablockchain-basedexchangecalledSwytch. The trial is part of a larger effortby that nation to create smart cities andmove away fromnuclear- and coal-powered plants. But Swytch is not just targeting SouthKorea. It is aiming toconnect the world, changing the way energy is generated, priced anddistributed. Today less than 5% of all electricity is generated by abundantsources of energy such as sunorwind. Swytch’s goal is to fulfill global needs– some 36.5 trillion kilowatt hours – by relying 100% on renewable energyby 2040.Theplanned system is beingpoweredbya renewable energy currency in theform of crypto-tokens. Instead of using the gold standard, the currency isbacked by the production of renewable energy, creating a kind of virtuouscircleof increasedproductivityandgrowth, explains theMITresearcher JohnHenry Clippinger, who is creating Swytch with the help of a group ofexperienced executives in energy, finance and technology as well asentrepreneurs and experts in the field of password cryptography.From large-scale industrial power generation to small-scale residentialinvestment, Swytch tokens can be created anywhere electricity is producedand consumed. Users earn tokenswhen they trade excess energy and spendthemwhen they are in need. Their use is carefully tracked and recorded on

ENERGY

Is ItTimeForASwytch?— Blockchain technology is enabling globalexchanges that promise to democratize accessto sustainable power and reduce the costof energy to zero.

ENERGY

BLOCKCHAINENERGYSTART-UPSTOWATCH

GREENEUMUNITED STATESWHAT IT DOES : Greeneum Networkleverages blockchain technology, smartcontracts and artificial intelligence todecentralise the clean energymarketplace.

https://greeneum.net/

POWER LEDGERAUSTRALIAWHAT IT DOES : Uses blockchaintechnology to allow households totrade excess solar power over theelectricity network.

https://powerledger.io/

UNIVERSALRIGHT.ORGTHE NETHERLANDSWHATITDOES: A consultancythat help corporations defineinnovation and investment agendas.Aims to build a new globalblockchain-based energy exchange.

http://universalright.org

appliances to turn on or off, and also that advises them on when it makessense to invest their tokens into solar or thermal orwind.“You can’t educate hundreds of millions of people to be energy expertsovernight, says Aazami. “There is definitely a role to do this as a service inan easy, simple, non-intrusivemanner.”The service could be provided by a traditional utility provider. But notnecessarily. A company likeGoogle could fulfill that function. And so couldanemergingblockchain-basedenergyexchange like theonebeingdevelopedby Univeralright.org. “We are not in it just to make a profit and we will beownedby all our users,” says Aazami. “I think a certain part of themarket isgoing to find that very appealing.”J.L.S

and others as consumers, they “will be required to view all as both,” saysAazami. “The grid of the future needs to be designed for bidirectional use.”That is because on the Internet of Energy, an energy consumer will movefrom the equivalent of being a passive viewer of television content to beingtheuserofanInternet-connectedcomputerwhois free touploadordownloadatwill.Traditionalenergyproviderswill alsohave tomakemajoradjustmentsto thewaytheyruntheirbusinesses.Utilities likeGermany’sRWEorSweden’sVattenfall work on a volume-based business model: the more energy theysell themore they earn, so the incentive is to sell asmuch generated energyas possible.In the future volume is not going to count anymore because utilities can’tmakemargins on something that is free. In the early days of the Internet theequivalent of electricity service providers were large telecommunicationscompanies that charged by the megabyte for downloading or uploadingdata. Today consumers pay a flat service fee to ensure they always haveenoughbandwidth.The samewill be true in the future for theenergy sector:insteadof paying for the quantity of energyused, consumers andbusinesseswill be charged a flat free for ensuring they get the amount of energy theywant to usewhen theywant to use it. Another difference is that in the nearfuture, on these emerging exchanges, energy users will be able to specifywhere they want to source their energy. A unit of energy will be valueddifferently depending onwhether it comes from a neighbor’s solar plant ora coal-fired plant 300 kilometers away. The emerging exchanges will serveasan incentive forutilities toburn less fossil fuelbecauseembracingabundantsources of energywill no longer cannibalize their businessmodels.“Today these service providers are still part of the problem. In the future iftheywant to survive theywill have to be part of the solution,” says Aazami,whomanaged aDutch utility company for four years and founded anotherutility before starting work on Universalright.org. “There is no use for theutility we know today in themarket tomorrow.”A new role Aazami sees for utilities is in making energymanagement easy.Itwill be possible to do this by running analgorithm that tells userswhethertheir electric cars should be supplying or charging, when it is best for their

P.38 — THE INNOVATOR

The innovation hub of the German utility Innogy, a subsidiaryof the energy company RWE, has developed a blockchain product thatenables electric cars worldwide to charge, without the need for a contractwith a utility, a pass or any kind of payment at all. Innogy has teamedwith ElaadNL, a Dutch operator of public charging stations for electriccars; the German startupMotionWerk; and the Dutch utility Enexis Groepto launch a pilot project based on this blockchain solution during the firstquarter of 2018. Anybodywith a charging station and/or anelectric vehiclein the Netherlands will be able to register via a mobile phone and usethe service for free.Why would these utilities design and test a service that cuts them out ofthe equation? Because it is the best way to prepare for a very different fu-ture – one in which the cost of energy is expected to be zero, says CarstenStöcker, the man leading Innogy’s work on the blockchain, a distributedledger technology that is helping change the way energy is generated,priced and distributed. Innogy – and other traditional energy providers,including electricity retailers and Transmission System Operators (TSOs)– are testing whether the blockchain could not just disrupt but empowerincumbents, helping them to compete in new ways, using new models.“Idon’t think we will have transactions models in future,” says Stöcker, “sowe have to think further and test newmodels that will monetize things atthe edge like systems integration, analytics and personalized services.”Stöcker acknowledges the introduction of services based on the blockchainwill “not leave much space for the big traditional energy retailers.”New blockchain-based ventures are already challenging retailers locallyand globally. Grid+, a startup owned by the New York blockchain deve-lopment house ConsenSys, raised $40million in September to build a U.S.retail energy company based on blockchain. Among other things, the new

company intends to allow peer-to-peer energy trading. Platforms that al-low local trading between producers and consumers of power, cutting outthe new need for traditional suppliers, are just the start. Blockchain-basedenergy exchanges are emerging that are planning to use the technology todemocratize access to sustainable power internationally. (See the story onpages 36.) Energy retailers aren’t the only ones impacted. Rather than re-garding peers on the network as suppliers and others as consumers, TSOswill be required to treat all of their customers as both, radically changingtheir business model and the way the grid functions.

Blockchain and the GridThe job of TSOs is to make sure that there is a balance of supply anddemand at all times on the high-voltage network. That is getting tougherbecause renewable electricity generation accounts for a growing share inthe overall power supply, making the electricity gridmore volatile. TenneT,a European TSO with 41 million customers, is the first to explore howblockchain technology for managing the grid might help. It has joinedforces with Sonnen, a German startup; Vandebron, an Amsterdam-basedgreen energy company; and IBM on two pilot projects to develop ablockchain-distributed database for managing the electricity grid in itsterritory, which includes both the Netherlands and Germany.TenneT is exploring the use of a permissioned blockchain network to in-tegrate flexible capacity supplied by electric cars and household batteriesinto the electrical grid.In one trial Vandebron is working with customers who own an electric carto make the capacity of their vehicles’ batteries available to help TenneT

ENERGY A unit of the German startup Sonnenhas developed a home energy batterystorage unit that connects to off-gridenergy sources.

P.40 — THE INNOVATOR

PoweredByBlockchain— The same technology that is threateningthe energy sector’s business models could also helpensure the survival of traditional players.

farm in the north that produced too much energy for the power lines tohandle. That is where Sonnen comes in. In the pilot project a network ofresidential solar batteries is being made available to store the energy, hel-ping reduce the imposition of limitations on wind energy at times of insuf-ficient transport capacity. The blockchain presents TenneT with a view ofthe available pool of flexible battery power. If activated, the blockchain re-cords the batteries’ contribution, enabling the integration of renewable en-ergy sources into the German electricity supply system.Not just the battery energy contributions but all of the billing and settle-ments can be managed through the blockchain, helping make the entireprocess efficient, says Rene Kerkmeester, who is in charge of TenneT’s cor-porate digital transformation program. Other energy-sector players arealso testing the blockchain. On October 3 a group called the Energy WebFoundation (EWF) launched a test network, codenamed Tobalaba, thatthe group developed to enable both commercial and noncommercialblockchain applications. EWF affiliates taking part in the test includeSingapore Power Group, Engie and Shell. The stated goal is to create jointstandards and further global application of blockchain technology in theenergy sector to increase efficiency and enable new business models.If they succeed, the same technology that is threatening their businessmodels could also help ensure their future survival.But this will only happen if they embrace the disruption and not just po-tential efficiency gains, says Arash Aazami, a former utility companyexecutive backing a new global blockchain-based energy exchange fromthe Netherlands. He has the following advice for traditional providers:“Invest all of your profits into new models that are going to make youobsolete.”J.L.S

balance the grid. The blockchain enables each car to participate by recor-ding its availability and action in response to signals from TenneT. In theother trial TenneT is working with a unit of Sonnen, a GE Ventures-backedmaker of residential batteries that has developed a home energy batterystorage unit that connects to off-grid energy sources, allowing users toobtain, store and use free electricity from the community without nee-ding to connect to a public utility.The batteries can also be used to balance out fluctuations in the publicpower grid, helping to stabilize it. This energymanagement service is pro-vided thanks to a pool of thousands of “sonnenBatterie” units that are di-gitally linked to one another. TenneT hopes to use the blockchain to harnessthis capability, helping it overcome issues related to so-called re-dispatchmeasureswhichwere designed to prevent regional overloads onGermany’selectric grid. In Germany, there are restrictions on howmuch of the windenergy produced in the north can be transported to the industrial centersin the south of the country in order to ensure that toomuch power doesn’tflow through the grid at the same time.

Controlling the FlowUnder the current system energy suppliers in Germany make a forecast ofhowmuch energy consumers will use the next day. Then they go to an en-ergy exchange or the operators of power plants and buy that amount ofelectricity and provide the information to TenneT, which runs a simulationof the electricity flows on the system tomake sure there is enough capacity.If any of the calculations are off-base TenneT might have to pay a powerplant in the south to generate more energy and/or pay damages to a wind

— P.41

P.42 — THE INNOVATOR

—O5THE NEW URBANMOBILITY

— P.43

players. Ofa, the operator of a bike-sharing scheme in China involving10 million bikes, has recently launched services in Milan, Vienna,Valencia, and the London borough of Hackney. It will be present atAutonomy and now says Paris is next on the list. The French electricutility company Engie, which in March acquired EV-Box, a Netherlands-based electric vehicle charging service provider with over 40,000charging stations, is launching a new car-sharing service at theconference, an example of how a whole variety of actors – includingutilities, car companies and insurance companies – are widening therange of their mobility offerings.Allianz France will announce at Autonomy that it is expanding anexisting offer for drivers of semi-autonomous cars that tracks how wella person drives and communicates the information back to the insurancecompany. If drivers gets high marks, they get a discount on theirinsurance. The company is announcing on Oct. 19 that it will offerreductions of up to 30% to the driver of any kind of car, because Allianzis now able to track driving patterns through an app that will work onsmartphones rather than through special equipment installed in a car,which has been the case to date.The offer is just the latest in a series of moves made by Allianz toembrace new types of technologies and business models impactingurban mobility. The company has partnered with sharing-economymobility startups including Drivy, Virtuo, Coup and Cityscoot, a providerof self-service electric scooters.“There is a reason why we have started talking about mobility. There isa profound transformation going on,” says Delphine Asseraf, who hasjust been named to head up Allianz France’s focus on mobility. “Whatwill be most important going forward is not to insure a car or a scooterbut the movements of our clients.”

Car Companies Get in the GameCar companies are also adapting their offerings. Daimler’s mobilityservices now include the car-sharing company car2go, which givescustomers the option of renting a car at any time; mytaxi, a taxi hailingapp; and the mobility platform moovel, which offers on-demand accessto various services, including booking and payment. It now has some15 million mobility services customers registered in over 100 cities inEurope, North America and China.Startups, too, see an opportunity in catering to the demand for newtypes of mobility. Amber Mobility in the Netherlands is developing amodular, autonomous, customizable electric car designed specifically tobe shared. The Dutch bank ABN Amro has signed on as a launchingcustomer. Amber plans to have the self-driving cars on the road inEindhoven by mid-2018. TomTom, the Dutch company famous for in-car navigation systems, announced in July that it is teaming with CiscoResearch to create the next generation of traffic information technology.The research combines Cisco’s data with TomTom’s traffic fusion

The promise is that we will soon be able to smoothly movefrom our current destination to anywhere we want to go in a city, whetherit be by bicycle, scooter, bus, train, metro, a ride-hailing or car-sharingservice or even a flying taxi, or a combination of any of these services.Autonomous cars will transact and communicate with their passengers,each other, and countless other Internet of Things (IoT) devices in cities,ranging from electric charging devices to parking lots and toll stations.And it will all be underpinned by blockchain, a digital ledger technologythat looks poised to take urban mobility to the next level.Autonomy, an urban mobility conference in Paris taking place October19 and 20, will showcase these types of present-day and future mobilityservices.

A Profound Transformation Going onA representative from a European ESPRIT research project is scheduledto talk about work on electric cars for inner-city and suburban use thatcan be connected in a Lego-like train formation and charged eithertogether or separately. (See the picture on page 42.)City bike-sharing services are exploding worldwide, giving rise to new

URBAN MOBILITY

MovingOn— As urban mobility becomes increasinglymore sophisticated, blockchain looks set to playa key role in driving mobility-as-a-service

P.44— THE INNOVATOR

technology and expertise, supported by Cisco’s Internet of Thingsplatform.Data is collected via a distributed acoustic-sensing technology, whichhas the ability to convert a fiber-optic cable into an array of virtualmicrophones that detect and measure vehicle movements. This data isbeing merged with TomTom’s pool of car data from over 500 milliondevices. It is then displayed and analyzed in a TomTom interfacespecifically designed for the needs of traffic management centers. Thegoal is to increase the accuracy of real-time traffic services, whilereducing the costs of traffic-monitoring infrastructure.Such services “will be very useful for everyday commutes and even moreimportant tomorrow in an autonomous driving situation,” says AntoineSaucier, managing director for TomTom Automotive. Mobility-as-a-service will require all the different services to link up “and it has to beoffered in a smooth way from a user experience.”Seamless mobility-as-a-service will go far beyond existing concepts ofintermodal transportation and routing apps, predicts Open MobilitySystem (OMOS), a not-for-profit blockchain-based system that is aimingto create new ways of transacting and data sharing among allparticipating mobility players. In this new highly interconnectedmachine economy, bills will be settled automatically, no matter howmany different mobility services or transport modes passengers use. Butto work well, seamless mobility-as-a-service will demand significantlymore cooperation between companies and industries as well as a newdigital infrastructure layer.The question is whether that future will be centralized and controlledby one or more big commercial players – such as a car company buildinga closed ecosystem or a Silicon Valley player like Google – or if the kindof open system envisioned by OMOS will take root.

An Open Platform“An open system encourages participants to co-create with one anotherand thus to leverage the expertise and skills of people and companiesfrom around the globe,” OMOS argues in a position paper. “It does notevolve in the minds of a select few developers within a closed platformecosystem.”Cross-industry and cross-company collaboration will not be easy toachieve, since nearly all the big players in the mobility sector are on a

path to build proprietary systems that will compete with each other. Thebenefits of an open system, argues OMOS, are avoiding lock-in effectsand information monopolies; encouraging creative and fair competitionwithin a communal and democratically governed digital transactioninfrastructure; allowing a high level of data sovereignty for customersand companies; and ensuring secure, controlled, use-case-specific andreal-time data sharing. The type of open collaborative platform forcoordinating mobility-as-a-service that OMOS describes works well onthe blockchain.So do autonomous cars. Blockchain’s architecture is ideally suited tohandling the negotiation of payment, who you are, your reputation, thecar’s reputation and the contract.

On The BlockUsing blockchain, trip charges can be automatically deducted frompassengers’ blockchain-enabled digital wallets or charged to their creditcards, with payment instantly flowing to the vehicle owner.Access and identity tokens and P2P transactions will enable the easy,secure sharing of not only vehicles but infrastructure such as toll roads,recharging stations and parking lots, predicts Carsten Stöcker, a seniormanager in the Machine Economy Innovation Program at Innogy, theGerman utility..For example, Share & Charge, which was developed by the Germanstartup MotionWerk and bills itself as the first mobility service on

“DistributedLedgerTechnologiescanprovidethesharedidentitymechanism,assettransferandmonetaryexchangelayertoenableaP2Psharingeconomy[...]Mostimportantly, itenablesus–theconsumer–tostay incontrolofourdataasthenewfuel.”Jochen Renz, New Mobility Consulting

URBAN MOBILITY

vehicle owners can search for the next driver’s station on an interactivemap. A transparent and safe payment system based on blockchain isplanned.The blockchain-enabled identity of each user will carry proof of identity,age, insurance coverage and ability to pay, while protecting theanonymity of the passengers and information about their travels, as wellas the security of their payment mechanisms. The smart contractsgoverning such transactions are based on standard templates that assureaccurate, instant collection of taxes and regulatory reporting, whereverthe trip takes place. In the short run, blockchain will allow any vehicleowner to join the transportation market without barriers to entry suchas paying a fee and agreeing to the terms of centralized ride-sharingservices or paying a bank to process payments.

blockchain, connects public and private e-charging infrastructure acrossEurope on a “Decentral Mobility Network” to enable direct, cross-country e-charging. The service, which launched in May, includes acentral charging platform for car owners and charging station operators.Private charging station owners are able to independently determinethe charging methods and the price of their electricity service. Electric

— P.45

URBANMOBILITYSTARTUPSTOWATCH

CGONUNITED KINGDOMWHAT IT DOES : CGON has created fueladditive systems that reduce caremissions. Its units create a smallamount of pure hydrogen that issucked into the engine and burns offpolluting gases.

www.cgon.co.uk

COSMO CONNECTEDFRANCEWHATIT DOES: The company hasdeveloped a helmet with the firstwearable brake light connected to amobile app that calls emergencyservices with GPS coordinates in caseof an accident.

http://cosmoconnected.com

PLUGSURFINGGERMANYWHATITDOES: Plugsurfing gives usersaccess to Europe’s largest network ofelectric car chargers, through ansubscriptionless app that locates thenearest free charging points and aspecial key to charge your car.

www.plugsurfing.com

Some energy companies already involved in deploying charging stations arenow expanding into wider mobility solutions.

With blockchain-enabled mobility, all providers and consumers canequally participate in a transportation system, setting the terms,conditions and pricing they choose.Eventually, the vehicles themselves may become economicallyindependent with their own profit and loss statements, Stöcker says.They’ll make independent decisions based on algorithms and real-timeinformation about everything from demand levels to the prices of repairsand recharging to maximize either the owner’s profit or the good ofsociety. Over time, ownership models will evolve. By registering vehicleson the blockchain “ownership” and “access” will be tokenized, meaningowners can trade their shares in the vehicles or their rights to use themdirectly through the blockchain without the involvement of third parties.Some vehicles will continue to be owned by individuals or legal entities.Others will have multiple owners whose identities and shares in thevehicle can change in real time. Car companies will not necessarilygenerate sales via car dealers.

Self-Owned CarsThey will simply deploy cars in areas where their use can generate aneconomically viable cash flow, and trade ownership to other partieswhen algorithms show that would maximize cash flows. Secure,immutable information about the ownership and usage of the vehiclewill be stored on the blockchain. As P2P marketplaces become moremature and consumers become more comfortable with “ownerless”

transportations, some vehicles may “own” themselves as economicallyautonomous entities. Autonomous vehicles eliminate the cost of humandrivers, while blockchain eliminates the middlemen like Uber and Lyftthat match customers with rides, charge a transaction fee and set termsand conditions, says Stöcker.

Taking ControlOMOS says it can use blockchain to offer all partners a base on whichto build business applications that give customers the seamless mobility-as-a-service experience they are seeking. Its advancement depends onsolving a few technological problems but also on a shift in mindset

URBAN MOBILITY

P.46— THE INNOVATOR

URBANMOBILITYSTARTUPSTOWATCH

POMPFRANCEWHAT IT DOES : A mobile fuel stationconnected to an app, Pomp deliversfuel directly to its customers.The service is especially interestingfor companies with fleets, which canwaste time and money refueling.

www.pompfuel.com

STROMA VISIONTURKEYWHATIT DOES: Stroma Vision’s drivermonitoring system uses facialrecognition and image processingtechnology to track drivers’ attention,fatigue and distraction, whilebiometrical reading can detect drunkendriving.

www.stroma.tech

“Anopensystemencouragesparticipantstoco-createwithoneanotherandthustoleveragetheexpertiseandskillsofpeopleandcompaniesfromaroundtheglobe.Itdoesnotevolve inthemindsofaselectfewdeveloperswithinaclosedplatformecosystem.”

— P.47

around co-operation. “In the media world we painfully experience therepercussions of what happens when Internet services establish quasi-monopolies,” says Jochen Renz, a managing partner at New MobilityConsulting and a scheduled speaker at Autonomy. “Mobility is tooimportant to have powerful platforms control it and dictate terms.Distributed Ledger Technologies can provide the shared identitymechanism, asset transfer and monetary exchange layer to enable a P2Psharing economy without central intermediaries and provide seamlessaccess to multi-modal transportation. Most importantly, it enables us –the consumer – to stay in control of our data as the new fuel.”J.L.S.

Ofo, a sharing service that operates 10 million bikes in China,has recently launched services in Milan, Vienna, Valencia, and the Londonbourough of Hackney.

FAZEL ONEIRANWHATITDOES: Drivers of electric carsoften fear that they will run out of juicefar from a station. Fazel One offerswireless charging technology thatworks by induction to charge its ownbattery while driving and extend range.

https://fazelone.weebly.com

SAFEMODEISRAELWHAT IT DOES : A system fordetecting danger on the road,Safemode says it can improve drivingand eliminate the human factor in caraccidents. The product is aimed atfleets, rental car companies and carmanufacturers.

www.safemode.co

BUSUPSPAINWHATIT DOES: Busup is a mobileplatform for organizing bus trips –between friends, colleagues, teammembers. The app offers tools forplanning the trip, ways to invite friendsand a secure payment system to sharecosts.

www.lawgeex.com

FREEWIRE TECHNOLOGIESUNITED STATESWHATIT DOES: Provides mobilecharging units for electric vehicles.Users can charge their vehicleon-the-go but also use thebattery-supported device to chargeasynchronously and benefit fromfavorable electricity rates.

www.freewiretech.com

COVER STORY

AnInterviewWithDominikSchiener,Co-founderof the IOTA Foundation

“Thereallypowerfulcomponentofthedatamarketplaceistheabilitytomakesmarterdecisions.”

Foundation we intend to developand standardize new distributedledger protocols, and make iteasy for anyone to build produc-tion-ready applications with it.The IOTA Foundation was foundedby me and David Sonstebo. Rightnowweareworking on a frameworkthatmakes it possible for companiesall around the globe to join, contri-bute and benefit from products andservices offered.Who are the members?— D.S.:Right now the members aremostly individuals that have joinedthe IOTA Foundation to give adviceon domain-specific topics such asmobility, energy, healthcare, etc. Forexample Oliver Bussmann, who isthe ex-CIO of UBS and SAP, is partof the Foundation.When it comes to corporates joining,we are right now fully finishing up

Dominik Schiener,an Italian entrepreneur, is a co-foun-der of the IOTA Foundation and ascheduled speaker on blockchain atAutonomy, an October 19-20 urbanmobility conference in Paris. He re-cently spoke to The Innovator abouthow the foundation aims to help bigcorporates use blockchain technolo-gy to create new business modelsand new revenue streams.

What is the IOTA Foundation andwho is behind it?— D.S.: The IOTA Foundation is anon-profit foundation registered inGermany with the purpose of brin-ging distributed ledger technologiesand ecosystems to maturity. Webring large conglomerates, as wellas startups together in a collabora-tive environment that fosters per-missionless innovation. With the

P.48— THE INNOVATOR

— P.49

first digital ledger-based data mar-ketplace that makes it possible forusers to buy and sell data with mi-cropayments. The datamarketplacemakes it possible for sensors to selltheir data, either by selling access toa data stream itself, or by sellingeach individual data packet. What’svery unique about this data market-place is that it fully runs on IOTA:with our micropayment capability,machines can easily pay each otherfor small data sets while being ableto fully verify the authenticity andintegrity of the data.This data marketplace is incrediblypowerful, as it offers entirely newpossibilities for corporates and star-tups to acquire new revenue sources.With this datamarketplace wewantto showcase what new business mo-dels are possible with IOTA.Because this is a Proof of Conceptinitially, where we want to experi-ment and offer corporates an oppor-tunity to learn more about IOTA it-self, we offer only non-sensitive data(e.g. weather and environmentaldata, current states of machines,etc.). For the actual data market-place, corporates will have an op-portunity to sell any kind of data,whether it’s structured or unstruc-tured, raw or analyzed.And what sorts of servicesmight they launch with the datathey buy?— D.S.: The really powerful compo-nent of the data marketplace is theability to make smarter decisions.Any kind of machine learning, bigdata and analytics algorithm willgreatly benefit from the ability to ac-quire fine-granular and diverse da-tasets. Even smart contracts will be

ds production-ready applications byhaving a framework that enablesdifferent parties to collaborate onuse cases, and to contribute towar-ds the development of the base pro-tocols themselves. We want to gobeyond the typical alliances thatcenter around a specific technology,and instead offer joint-collaborationopportunities for use cases across allindustries. There are key sectors thatwe will initially focus on, but theIOTA technology has vast potentialacross all industries.What technology problems needto be solved before businesses cantake full advantage of the IoT andleverage data from it?— D.S.: There is still a lot of work todo before distributed ledgers areproduction ready and can run onembedded systems. Right now, theentire ecosystem is in a Proof ofConcept stage, where we are stilltrying to figure out what works andwhat doesn’t. This is true for the dis-tributed ledger protocols themsel-ves, but also for many of the appli-cations and business models thatrun on top.We need to develop a frameworkthat makes it possible to determinewhat application stack to chose forwhich IoT environment. The bestway to get there is to start experi-menting and to actually share thelearnings and the “do’s and don’ts”from these use cases.You’ve said that IOTA is planninga new data exchange which willallow corporates to exchangedata. What sorts of data streamsare your corporate membersinterested in capturing?— D.S.:Whatwe’re developing is the

the membership structure of theFoundation, and will make it pos-sible for corporates to join beginningof December this year. We alreadyhave more than 10 letters of intentfrom some of the largest multinatio-nals in the world, so I’m confidentthat we will establish the IOTAFoundation as one of the leading en-tities when it comes to permission-less innovation and distributed led-ger technologies.What is the motivation and criteriafor joining?— D.S.: Right now blockchains anddistributed ledgers are still in an ex-perimentation phase.We have to de-termine what works and whatdoesn’t before we will see produc-tion-ready applications go live. TheIOTA Foundation is there to helpcorporates and startups to moveaway fromProof of Concepts, towar-

able to acquire data from sensors,and thenmake automated decisionswith that data. Because this will bean open marketplace, we will seedifferent roles be filled by certainservice providers. For example onecompany is specialized in analyzingand re-packaging datasets for a cer-tain industry, while another one isonly interested in selling raw data.Through this we enable a variety ofcompanies to participate and contri-bute directly with their internal re-sources.How do you get companiesinterested in sharing their data toget enough volume on thenetwork?— D.S.: Initially this is a Proof ofConcept where companies can par-ticipate by simply deploying sensorsin their offices or innovation labs. Allof the data which is being submittedis non-sensitive, which obviouslymakes it incredibly easy to partici-pate. Once we start rolling this outas a full-fledged product, we willwork closely with some key partnersto fill buy- and sell-side demand.What advice do you have for corpo-rates who want to explore what theycan do with blockchain technology?Should they believe the hype?— D.S.:We have to look beyond thehype and understand the potentialand most importantly, the limita-tions of the technology. Many of theuse cases that are being proposed to-day don’t need a blockchain and arebetter off without it. There is tre-mendous potential, but the onlywayto start benefitting from this techno-logy is by co-creating and co-lear-ning.J.L.S.

EXPERT INSIGHT

P.50 — THE INNOVATOR

POUR NOS LECTEURSFRANCOPHONES

EDITOET TABLEDESMATIÈRES

ACTUALITÉSDe nouvelles innovations sont présentées lors du SalonAutonomy Paris qui aura lieu à Paris le 19 Octobre

LA CONFIANCE DECENTRALISEELa blockchain rend les transactions plus simples, moins cou-teuses, et plus fiables, mais se passer de tiers de confiance nesera pas chose aisée

INTERVIEWDEJOHNHENRYCLIPPINGER,CHERCHEURAUMIT

LABLOCKCHAINVA-T-ELLEDEMOCRATISERL’ACCESAL’IASingularityNET,uneplacedemarchéqui fonctionnegrâceà latechnologieBlockchainveurconcurrencer lesgéantsde laSiliconValley dans l’IA

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REACTIONEN(SUPPLY)CHAINELaBlockchainpeutfluidifier lesprocédés logistiquecomplexes

LAFINANCETRADITIONNELLEETLABLOCKCHAINAlors que les avis des acteurs financiers divergent sur les ver-tus des cryptomonnaies, ils sont tous d’accord pour dire que lablockchain présente de vraies opportunités

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LANOUVELLEMOBILITEURBAINELa mobilité urbaine devient de plus en plus sophistiquée, et lablockchain a un rôle à jouer dans la création de nouvellesoffres de services.

INTERVIEWDEDOMINIKSCHIENER,CO-FONDATEURDELAFONDATIONIOTA

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