Blockchain: FinTech, Cryptocurrency & Some Perspectives

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

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

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Outline Background FinTech Cryptocurrency Blockchain 5 / 65

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Blockchain Background 6 / 65

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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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Google Trends | Last 2 Years | Blockchain vs Cryptocurrency 10 / 65

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

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Google Trends | Last 2 Years | Blockchain vs Cryptocurrency vs Bitcoin 12 / 65

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Gartner Hype Cycle for Emerging Technologies 2017 | Blockchain 14 / 65

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

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FinTech 17 / 65

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

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19 / 65 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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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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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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Major Technologies Transforming Financial Services | Ref: [Fintech and Financial Services - IMF] 22 / 65

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

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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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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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Cryptocurrency 27 / 65

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28 / 65 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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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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30 / 65 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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Cryptocurrency | Top 10 31 / 65

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Cryptocurrency | Bitcoin 32 / 65

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Cryptocurrency | Top 5 34 / 65

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Overview & Perspectives Blockchain 35 / 65

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37 / 65 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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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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39 / 65 Blockchain Technology Stack of Ethereum and similar Blockchains. Ref: [blockchainhub.net]

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Types of Blockchains: Public vs. Enterprise 40 / 65

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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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42 / 65 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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A Chain of Blocks 43 / 65

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Proof of Work (PoW) 44 / 65

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BTC Mining Farm | Ref: [Bitcoin.com] 45 / 65

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BTC Mining Farm | Ref: [Bitcoin.com] 46 / 65

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Antminer S9 | Ref: [Bitmain.com] 47 / 65

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Mining Pool 48 / 65

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Mining Pool 49 / 65

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Mining Calculator 50 / 65

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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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54 / 65 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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MS Azure Blockchain Ref:[S. Tempesta] 55 / 65

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

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Enterprise Use Cases - Ref:[IBM] 58 / 65

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Enterprise Use Cases - Ref:[IBM] 59 / 65

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Telco / Networking Use Cases - Open CryptoTrust 60 / 65

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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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62 / 65 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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Refs/Resources 63 / 65

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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 64 / 65

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65 / 65 END Eueung Mulyana https://telematika.org/remark/idnog2018 IDNOG5 2018 | CC BY-SA