OCT 25 2017

Welcome to DCG’s Enterprise Blockchain Workshop

2

AGENDA

Details Time

Introductions 2:00 - 2:10 pm

State of Enterprise Blockchain 2:10 - 2:30 pm

Theme 1: Protocol and Platform Choices 2:30 - 3:30 pm

Break 3:30 - 3:45 pm

Theme 2: Opportunities and Challenges for Enterprise Adoption

3:45 - 4:15 pm

Theme 3: Emerging Themes in Enterprise Blockchain 4:15 - 5:00 pm

Review and Wrap Up 5:00 - 5:30 pm

3

WHAT WE’RE SEEING

Key Themes for Corporate Blockchain Activity

• Interest in Enterprise Blockchain Growing Outside of Financial Services

• Blockchains with Native Payments

• Financial Institutions are Responding to Client Demand for Digital Currency Services

• Startups and Incumbents Partnering to Deliver Projects

• Still Many Unanswered Questions

• Most Fortune 1000 organizations are dedicating time and energy to investigating blockchain

• Use cases for blockchain technology include B2B payments, financial applications, provenance and supply chain tracking, identity, and more

• We’re seeing an increasing number of projects leave the lab and go into pilot, although the boundaries of what constitutes a POC v pilot are not well defined

4

INTEREST IN ENTERPRISE BLOCKCHAIN GROWING OUTSIDE FINANCIAL SERVICES• The last two months alone have seen 60+ blockchain projects announced, many of them by corporates who are

publicly sharing their activities in the space for the first time

• Interest in the technology from outside of financial services is growing – corporates want to solve difficult coordination, fraud, and efficiency problems with blockchain technology as one component

• Despite early experimentation, adoption of enterprise blockchain will be a long process, with early leaders fighting now to establish competitive positions

• Consortia and group experimentation will play an increasingly important role in expanding projects to scale

2015

As more industries begin to build blockchain platforms, networks will be critical to connect corporates in the same value chain

2016 2017

Blockchain Experimentation Continues to Spread Across Industries

Financial Institutions Healthcare Industrials Agriculture

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New opportunities are emerging for companies to extend payments capabilities and infrastructure into enterprise blockchain applications

• Most enterprise blockchain applications require a payments or transaction layer and a native payment mechanism, leading to an increasing need for financing partners in blockchain projects

• Supply chain, compliance, audit, and auto are examples where financing and payments is a core component of the process being optimized with blockchain; new partnership models emerging

• Being the service provider for the payments or the transaction layer of these use cases is an emerging opportunity for banks to deploy capital in new ways and potentially develop new revenue streams

Supply Chain Transaction Cross Border Payments

• Brighann Cotton sent cotton shipment from Australia to US, tracked on the Skuchainblockchain

• Used smart contract to release payment to Walls Fargo upon arrival

• Settling transactions between Asia Pacific countries using the Stellar blockchain and its native digital currency Lumens

• Enabling instant exchange across regional currencies via cryptocurrency, but users won’t have to touch Lumens directly

BLOCKCHAINS WITH NATIVE PAYMENTS

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Global financial institutions are beginning to test a variety of digital currency products and services

• Retail and institutional investor interest in digital currencies is growing but service providers who can provide institutional-grade infrastructure and service are limited

• Multiple large FI’s have publicly announced or launched services that provide their customers with exposure to digital currencies as an asset or payment mechanism

• Most projects begin in wealth management groups or asset management groups in a small pilot program

Incumbent Startup Use Case Details

• Payment Rail• In 2016, announced the bank was enabling

employees to use the Ripple network to send cross-border payments

• In 2017, accounced that clients could view Coinbase digital currency holdings alongside Fidelity asset balances

• Asset Management

FI’s RESPONDING TO CLIENT DEMAND FOR DIGITAL CURRENY SERVICES

• In 2017, Japan-based SBI announced they will launch a digital currency buying platform

• Asset Management

7

STARTUPS AND INCUMBENT VENDORS PARTNERING TO IMPLEMENT SOLUTIONS• Many trials and POCs involve partnerships between startup or specialized systems integrators, and larger

systems integrators such as IBM for deploying solutions at scale

• Experienced technology providers can provide the expertise needed to evaluate and change legacy processes associated with “pre-blockchain” infrastructure

• Startups who have incumbent vendor relationships are at an advantage when it comes understanding the challenges for established companies wanting to adopt blockchain technology

Partnerships between specialized and larger systems integrators can help speed time to market

• IBM and SecureKey Technologies partnered to help organizations build digital identity and attribute-sharing ecosystems among organizations that already share and validate consumer data. The new service enables secure and private attribute sharing through a network of trusted parties including banks, credit bureaus, telecommunications companies, government, and more.

• IBM provides the IBM Blockchain Platform for organizations to quickly get on the network with minimal effort and blockchain operations experience

• As SecureKey continues to expand the digital identity network across existing customers in Canada, SecureKey will work with IBM to introduce the digital identity network to other jurisdictions around the world

+

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STILL MANY UNANSWERED QUESTIONS

Legacy IT Systems

• Large FIs working with multi-decade old legacy systems

• These systems are inefficient, but reliable

• Significant risk comes with altering proven infrastructure

• Significant regulatory barriers and uncertainty across industries such as healthcare, finance, insurance, and industrials

• Many company cultures will be resistant to decentralized processes

• Need clearer ROI metrics which will emerge after initial projects

• End goal important: cost cutting, new revenue opportunities

Industry and company barriers

Clear business case lacking

• Most or all participants in any supply chain will need to contribute information for the solution to be successful

• Will be difficult to get large incumbents to engage with startups seeking to disintermediate them or reduce their economic position

Stakeholder coordination

• As a new technology for managing compliance and audit functions, there are many legal issues that will need to be settled (for example, what happens if a smart contract executes in a way neither party anticipated?)

• Regulators and auditors need to get comfortable with the technology for businesses to feel comfortable substituting out legacy processes

Open legal questions

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PROTOCOL AND PLATFORM CHOICES

1.

2.

HYPERLEDGER

BRIAN BEHLENDORF, HYPERLEDGER FOUNDATION

THE USE OF 3RD PARTY ENTERPRISE BLOCKCHAIN FRAMEWORKS

ALOK BHARGAVA, CAMBRIDGE BLOCKCHAIN

3. BUILDING AN IDENTITY STANDARD

ROUVEN HECK, UPORT

10

OPPORTUNITIES AND CHALLENGES FOR ENTERPRISE ADOPTION

1.

2.

ECOSYSTEM DEVELOPMENT

SHARON LADAY, IBM

COLLABORATING FOR ENTERPRISE ADOPTION

ARIEL MUSLERA, RSK

3. THE BLOQ PERSPECTIVE ON ENTERPRISE ADOPTION

JEFF GARZIK, BLOQ

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EMERGING THEMES

1.

2.

PRIVACY & CONFIDENTIALITY

JACK GAVIGAN, ZCASH

IOT AND BLOCKCHAIN

SHILPI KUMAR, FILAMENT

3. DIGITAL ASSETS ACROSS BLOCKCHAINS

SEAN MOSS-PULTZ, BITMARK

4. INNOVATING B2B PAYMENTS USING DIGITAL CURRENCIES

TONI GALLIPI, BITPAY