Blockchain and Financial Services:Everything could be different - APEC

Blockchain and Financial ServicesEverything could be differentTHE IMPACT OF TECHNOLOGY ON SERVICES DELIVERY

Mark Mueller-Eberstein Rutgers UniversityThe Innovation Economy InstituteCEO of Adgetec Corporation@MarkMeberstein

WeChat: MarkMEberstein

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©Mark Mueller-Eberstein & Adgetec Corporation

“Every inefficiency in a system will be removed (by technology)

sooner or later.”

Mark Mueller-Eberstein

3Organizations that benefit from inefficiencies

will see their business models disappear when customers have the option to get

“better (experience)” for “cheaper.” Ecommerce: Amazon; Alibaba,…

Cellphones vs. land lines / phone boothCalls & emails vs. WeChat or WhatsApp

On premise computing vs. cloud computingTrying to call a taxi or requesting an “Uber”

Owning a car or paying for transportation (incl. car sharing…)Cars & trucks with drivers vs. driverless vehicles

…….

Financial Services Industry?

Mark Mueller-Eberstein & Adgetec Corporation

What differentiates Winners from Losers?

Low IT Capability Maturity HIGH IT Capability Maturity


“Top Companies in 2007”



“….. And where they are in 2015”


7Opportunity for Everybody !

Organizations size doesn’t really matter (anymore) Geographical location is less relevant Access and Connectivity are key enablers Agile and creative people will seize the opportunities

(if allowed and enabled) People need to be able to challenge and voice even

stupid ideas for discussion Often new players take on (and out) the established

incumbents


It’s the F A S T who eat the SLOW


The trick is being open to changing your mind, and more importantly, knowing when

to do so.

George Bernard Shaw

“Those who cannot change their minds cannot change anything."


11At least $1.7 trillion in “inefficiencies” up for grabs…

The Economist, 2014

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And that is only the banking system…

Think any kind of transaction and related services…

13… for example….

Records of estates Records of shares Any financial transaction Voting Domain control (DNS) Central Trust (“Escrow”) for any kind of deals Messaging (“signed and unchangeable”) IP management …

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The more you learn, the more opportunity you will see.

Nobody knew in early 1990s what the Internet was or would lead to.

Milton Friedman: “Eventually, there will be a digital value system beyond the nation state.”

16Blockchain

Blockchain is like the Internet (it changed everything)

The implications for traditional financial services are massive

The end of banks? The end of central banks? Big implications for regulators.


The “technical stuff”…

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Networking….

Old school computing and business

Changed computing and business over the last 20 years

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Peer-to-Peer (P2P)

Peer-to-Peer (P2P) Networking is everywhere

P2P(structured & Unstructured)

File Sharing• Napster• BitTorrent Media

• Spotify• Popcorntime• PPLive (TV)

Marketplaces• BitCoin• “Sharing

Economy”

Cryptography

Storage & Search• Minerva Project

Communication• Skype• Google Talk• I MMobile

• WeChat• WhatsApp• Line

Messaging as Payment

E-Commerce• E-Bay• AirBnB• Uber

Defense• DARPA

High Performance Computing• Grid

Computing• HIVE• SETI@home

Analytics techniques exchange• Chinook

Many commercial or government services are basically “databases”

that are centrally owned and managed.

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Transactions are recorded in a “Ledger”

23Central Control = Central Point of Failure

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Blockchain technology allows a distributed ledger vs. a centrally managed ledger.

All transactions within a block are recorded and visible. And can never be changed.

Blockchain with out a “token” is just a database

25Blockchain – in 2 minutes

https://m.youtube.com/watch?v=r43LhSUUGTQ

26Benefits of Blockchain secured distributed leger vs. central ledger

Information can be put on block chain and can never be changed

Worldwide ledger: IP, land titles, art,...Full transparency for every transaction"Record every information forever"

27Bitcoin vs. Blockchain

Bitcoin is (currently the best know) usage of blockchain technology

One of many digital currencies using blockchain technology Many more uses for blockchain technology other than

“currency” Why digital currency is used?

No need to use exchange (e.g. banks) for people who know/use Bitcoin

Direct exchange between individuals is possible

28Bitcoin basics Insider: "It feels like when we first developed the

Internet" It is a way to transfer value in the Internet Bitcoin can not be copied. First "scarce" digital asset. Bitcoin protocol (blockchain) is final piece of Internet

puzzle Very early and experimental stage As longer as Bitcoin exists, the stronger it gets 60% of all Bitcoin mining done in China (up from 40% 8

months ago) New block created every ten minutes

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How “real” is Bitcoin?

... Most virtual believe might be "love"

Virtual goods are as real as people believe in them...

There is very little “real money”. Most are “0s””1s” on some bank’s database

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How “real” is blockchain?

Goldman-Sachs invest $500+ Million Microsoft declares “blockchain” as one of

the key “must win” workloads for their Azure platform and business (and announced collaboration with many US banks)

Some governments invest into developing their own “local” blockchains


Understanding change



is scaryChange


have emotions

People


Is constantUncertainty

Endings Exploration New Beginnings

Reconciliation Reorientation Recommitment

DenialAnxiety

Shock

FearAnger

FrustrationConfusion

StressCreativity

Approach-Avoidance

SkepticismAcceptance

ImpatienceHope

EnergyEnthusiasm

ProductivityMorale

Theory of Transition

Schlossberg; 1981 & 1995

37Regulations and restrictions?

From an economist perspective: Every restriction (and forced inefficiency) comes with a cost.

Lets be clear who carries the cost and if that is in the best interest of an economy and society.


Your Opportunity!

1.Change will be fundamental on business, technology, processes, structures and people.

2.Technology leaders are positioned to drive and realize the vision and image of the future.


“IT TAKES TEAMWORK DO MAKE THE DREAM WORK!”

John C. Maxwell; Walt Disney; Martin Luther King Jr.; Captain Kirk;…


NOW … “MAKE IT SO!”

THANK YOU!

[email protected] Twitter: MarkMEberstein US +1 855.423.4383

Mark Mueller-Eberstein The Innovation Economy Research Institute

CEO of Adgetec Corporation

Bestselling Author

WeChat: MarkMEberstein