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Blockchain: FinTech, Cryptocurrency & Some Perspectives

Blockchain: FinTech, Cryptocurrency & Some Perspectives

My talk at IDNOG5 (ID Network Operators Group) Conference, Jakarta, 2018.

Eueung Mulyana

July 25, 2018
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  1. 1 / 65
    Blockchain
    FinTech, Cryptocurrency & Some
    Perspectives
    Eueung Mulyana
    https://telematika.org/remark/idnog2018
    IDNOG5 2018 | CC BY-SA

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  2. 2 / 65
    Eueung Mulyana
    Dr.-Ing. (TUHH/DE 2006)
    M.Sc. (Uni Karlsruhe/DE 2001)
    ST. (ITB/ID 1997)
    Institut Teknologi Bandung
    School of Electrical Engineering and Informatics
    Head of Telematics Laboratory
    Institut for Innovation & Entrepreneurship Dev.
    Division Chief - Industrial & Business Incubator

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  3. 3 / 65
    Past Activities
    Researches eg. Legacy IP & Optical Networks
    Partnerships eg. CSC,HW,etc.
    Startups eg. Infra (Submarine Cable), Software/Apps
    Communities eg. GDG
    Current Activities
    Emerging Connected Services
    (IoT, Bots, Blockchain, etc.)
    Future Networking & Software-De ned Infrastructure
    (SDN, SDS, NFV, etc.)
    Startups (LPIK) | Communities (ON-ID)

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  4. Full / Complete Version
    bit.ly/bcfull | HTML 
    bit.ly/bcfull-ss | PDF 
    4 / 65

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  5. Outline
    Background
    FinTech
    Cryptocurrency
    Blockchain
    5 / 65

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  6. Blockchain
    Background
    6 / 65

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  7. 9 / 65
    The 2008 nancial crisis caused a lot of people to lose trust in
    banks as trusted third parties. Many questioned whether
    banks were the best guardians of the global nancial system.
    Bad investment decisions by major banks had proved
    catastrophic, with rippling consequences.
    Bitcoin - also proposed in 2008 -
    presented something of an alternative.

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  8. Google Trends | Last 2 Years | Blockchain vs Cryptocurrency
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  9. Google Trends | Last 2 Years | Blockchain vs Cryptocurrency vs Bitcoin
    11 / 65

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  10. Google Trends | Last 2 Years | Blockchain vs Cryptocurrency vs Bitcoin
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  11. Gartner Hype Cycle for Emerging Technologies 2017 | Blockchain
    14 / 65

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  12. 16 / 65
    Gartner Top 10 Strategic
    Technology Trends for 2018
    Blockchain

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  13. FinTech
    17 / 65

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  14. Growth of FinTech Investments Since 2000 | Ref: [IOSCO 2017]
    18 / 65

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    The term Financial Technologies or FinTech
    is used to describe a variety of innovative
    business models and emerging
    technologies that have the potential to
    transform the nancial services industry.
    Financial Technology describes tech-enabled products and
    services that improve traditional nancial services.

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  16. 20 / 65
    Innovative FinTech Business
    Models
    o er one or more speci c nancial products or services in
    an automated fashion through the use of the internet.
    unbundle the di erent nancial services traditionally
    o ered by service providers -- incumbent banks, brokers or
    investment managers.
    Examples
    Equity crowdfunding platforms intermediate share placements
    Peer-to-peer lending platforms intermediate or sell loans
    Robo-advisers provide automated investment advice
    Social trading platforms o er brokerage and investing services

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  17. 21 / 65
    Emerging Technologies
    Cryptography
    Big-Data
    Machine Learning/ Arti cial Intelligence
    Distributed Ledger Technologies (DLTs)
    Such emerging technologies can be used to supplement both FinTech new entrants and
    traditional incumbents, and carry the potential to materially change the nancial services
    industry.

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  18. Major Technologies Transforming Financial Services | Ref: [Fintech and Financial Services - IMF]
    22 / 65

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  19. Unbundling the Banking Business Model | Ref: [CBInsights, Adaptive Lab]
    24 / 65

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  20. 25 / 65
    FinTech has Changed the
    Competitive Landscape
    Since the 2008 Financial Crisis, FinTech
    startups have targeted single underserved
    nancial products with better UI, digital
    marketing, and services that cater to shifting
    customer demands.
    Ref: [Banks in Fintech]

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  21. 26 / 65
    Disruption
    from Every
    Direction
    Challengers to the big banks now
    range from PayPal, the granddaddy of
    e-payments which spun o from eBay
    (2015), to cryptocurrency companies
    such as Coinbase. Ref: [IOSCO 2017]

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  22. Cryptocurrency
    27 / 65

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    Digital
    Currency
    Most of the traditional money supply
    is bank money held on computers.
    This is also considered digital
    currency.
    One could argue that our increasingly cashless society
    means that all currencies are becoming digital
    ("electronic money"), but they are not presented to us
    as such. Cf. [Digital currency]
    Cryptocurrency
    A special kind of digital currency. The most
    popular Cryptocurrency is Bitcoin.
    "Crypto" refers to the cryptographic method used in the
    currency to secure transactions and create new unit of the
    currency.
    This kind of digital money is a revolutionary technology that
    allows people or institutions to transfer funds instantly, securely
    and without a middleman.

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  24. 29 / 65
    Altcoins
    Alternative Coins
    Coins that were created after Bitcoin.
    Because Bitcoin's code is open-source, anyone can use Bitcoin's
    code to create an altcoin. Many of them seek to improve on
    Bitcoin or expand its capabilities.
    Altcoins use di erent rules and engage with other economic
    models.

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    Cryptocurrencies focus on di erent goals, but almost all shared the original purpose of
    removing middlemen.
    Some of the most popular cryptocurrencies include Ethereum, Ripple, Litecoin, Dash,
    NEO, Monero, and IOTA. The list grows constantly, because new cryptocurrencies are
    created all the time.
    Anybody is allowed to create their own cryptocurrency. In fact,
    there are already over 1,500 di erent ones, and that number is
    growing quickly. People are developing new cryptocurrencies
    for fun, to solve problems, and to make money.
    Because anybody with some technical skills can make them, it's important to know that
    some cryptocurrencies are more trustworthy than others.
    Ref: [upfolio.com]

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  26. Cryptocurrency | Top 10
    31 / 65

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  27. Cryptocurrency | Bitcoin
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  28. Cryptocurrency | Top 5
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  29. Overview & Perspectives
    Blockchain
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    A (public) Blockchain is a
    shared, trusted, public
    ledger of transactions, that
    everyone can inspect but
    which no single user
    controls.
    It is a distributed database that
    maintains a continuously growing list
    of transaction data records,
    cryptographically secured from
    tampering and revision.
    Ref: [blockchainhub.net]

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  31. 38 / 65
    The ledger is built using a
    linked list, or chain of
    blocks, where each block
    contains a certain number
    of transactions that were
    validated by the network in
    a given timespan.
    The crypto-economic rulesets of the
    blockchain protocol (consensus layer)
    regulate the behavioral rulesets and
    incentive mechanism of all
    stakeholders in the network.

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  32. 39 / 65
    Blockchain Technology
    Stack of Ethereum and
    similar Blockchains.
    Ref: [blockchainhub.net]

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  33. Types of Blockchains: Public vs. Enterprise
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  34. Public vs. Federated/Private
    Public Federated/Private
    Participants
    Permissionless
    Anonymous
    Could be malicious
    Permissioned
    Identi ed
    Trusted
    Consensus
    Mechanisms
    PoW, PoS, etc.
    Large energy consumption
    No nality
    51% attack
    Voting or Multi-Party Consensus Algoritm
    Lighter
    Faster
    Low energy consumption
    Enable nality
    Transaction
    Approval
    Freq.
    Long
    Bitcoin: 10+ mins
    Short
    100x ms
    USP Disruptive
    Cost Cutting
    E ciency / Automation
    41 / 65

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    Blockchain
    Basics
    Hash
    Hash Chain
    Blockchain
    A Sequence of Hash-Chained Records
    Procedure for Adding Blocks
    Procedure for Validation of New Blocks
    Procedure for Resolving Disagreements

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  36. A Chain of Blocks
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  37. Proof of Work (PoW)
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  38. BTC Mining Farm | Ref: [Bitcoin.com]
    45 / 65

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  39. BTC Mining Farm | Ref: [Bitcoin.com]
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  40. Antminer S9 | Ref: [Bitmain.com]
    47 / 65

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  41. Mining Pool
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  42. Mining Pool
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  43. Mining Calculator
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  44. Blockchain/DLT Implementation
    Approach What/How Examples
    BaaS
    IT Services
    Build on request ConsenSys
    Blockchain
    First
    Develop using the tools provided
    by the blockchain
    Ethereum, Bitcoin
    Development
    Platforms
    Tools for IT Professionals
    ERIS, Tendermint,
    Hyperledger
    Vertical
    Solutions
    Industry speci c
    Axoni, Chain, R3, itBit,
    Clearmatics
    Special APIs &
    Overlays
    DIY building blocks
    Blockstack, Factom, Open
    Assets, Tierion
    53 / 65

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    Blockchain as a Service
    BaaS
    Accenture, ConsenSys, Cognizant,
    Deloitte, IBM, PWC, Ernst & Young
    Developers will have a single-click cloud-based
    blockchain developer environment, that will allow for
    rapid development of smart contracts.
    The big players in the cloud industry like Amazon(AWS),
    Microsoft(Azure), IBM(BlueMix) have seen the potential
    bene ts of o ering blockchain services in the cloud and started
    providing some level of BaaS to their customers.
    Users will bene t from not having to face the problem of con guring and setting up a
    working blockchain. Hardware investments won't be needed as well.
    IBM BueMix Blockchain (Hyperledger Fabric).
    AWS Blockchain Templates (Hyperledger Fabric,
    Ethereum).
    Google: "would introduce open-source integrations for
    apps built with the blockchain-based platforms
    Hyperledger Fabric and Ethereum later this year".

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  46. MS Azure Blockchain
    Ref:[S. Tempesta]
    55 / 65

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  47. Blockchain Use Cases - Ref:[P. Bergstrom]
    57 / 65

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  48. Enterprise Use Cases - Ref:[IBM]
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  49. Enterprise Use Cases - Ref:[IBM]
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  50. Telco / Networking Use Cases - Open CryptoTrust
    60 / 65

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  51. 61 / 65
    Blockchain VXLAN
    BaaT
    BaaT leverages blockchain to create an
    architecture that can connect
    geographically dispersed L2 islands
    over any available infrastructure.
    BaaT achieves control plane (VXLAN)
    operation via blockchain. It supports
    unicast, multicast & broadcast.
    Ref: [OpenCT Whitepaper]

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    Blockchain-De ned WAN
    BD-WAN
    BD-WAN integrates blockchain with
    Software-De ned WAN (SD-WAN) for
    a secure, scalable virtualization of
    WAN transport technologies.
    BD-WAN dynamically establishes and
    tears down logical and physical circuits
    so customers pay only for what they
    consume.
    Ref: [OpenCT Whitepaper]

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  53. Refs/Resources
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  54. Selected References
    1. Discover Bitcoin, Ethereum & Blockchain @Upfolio
    2. Machine Intelligence Platform @CBInsights
    3. Mastering Bitcoin 2nd Edition - Programming the Open
    Blockchain
    +Many others cited in-context (on resp. slides).
    Credits
    Icons made by Pixelmeetup from Flaticon
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    END
    Eueung Mulyana
    https://telematika.org/remark/idnog2018
    IDNOG5 2018 | CC BY-SA

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