Making Blockchain Real for Business

— CityName
Nitin Gaur
Director, Blockchain Labs

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Agenda
•Blockchain and Digital Money
•IBM strategy
•Crypto World
•Back to Basics
•My focus for 2018 wrt to Blockchain
•Solution Overview
•Stable Coins: Lifecycle, Actors and
Engagement
•Path to enterprise adoption
•Separating blockchain from
cryptocurrencies

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation 2

 Blockchain and Digital Money

Time &
Trust

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

3
 Blockchain Impact

10% of Global $176 Billion $2.3 Billion 17% of Banks

GDP will be stored on The business value added by Estimated size of the Will release a blockchain
blockchains or blockchain blockchain by 2025, then surge blockchain technology market application in 2017. 3
related technology by to exceed by 2021. 2
2025. 1 $3.1 trillion by 2030. 2

1 Source: World Economic Forum 1 Source: Gartner

2 Source: IBM 3Source: MarketandMarkets

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 • Blockchain
• A Platform for:

• Trusted Digital Transaction System

• Disintermediation

• Co-creation models

• Digital Marketplace

• Multiparty trust network

• And more …
 Blockchain use cases are emerging in every industry
Banking Financial Markets Retail Supply Chain

• Supply chain and • Post trade • Supply chain • Workflow digitization

trade finance • Unlisted security and • Loyalty programs • Supply chain visibility
• Know your customer private equity funds • Information sharing • Provenance and
• Transaction banking, • Reference data (supplier – retailer) traceability
payments and digital • Cross currency payments
currencies • Mortgages

Healthcare Manufacturing Governance Insurance

• Mediated health data • Supply chain • Asset registry • Complex risk coverage
exchange • Product parts • Citizen identity • Group benefits
• Clinical trial management • Maintenance tracking • Fraud and compliance • Parametric insurance
• Outcome based contracts • Asset usage history
• Medicine supply chain • Claims filing

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 IBM strategy:
Transforming industries and business processes with
blockchain

IBM
Blockchain
Blockchain
Solutions
Ecosystem
Blockchain
Services
HYPERLEDGER
IBM Platform Project

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

Making blockchain real
for business with over
600 engagements and
multiple active networks
 Network of networks: Driving NextGen
economies
Customs / Govt. Agencies

Freight Forwarders
GLOBAL FINANCIAL
TRADE Trade Finance SERVICES
Insurance
Payments
Airlines

Supply Chain
Provenance Finance
Digitization Insurance
Ocean Carriers Shared Economy Payments
Port
Authorities

Agriculture Wholesale
Suppliers

Consumers
Flowers &
Perishables Wholesale

Retail
Cattle Farms
Consumers
Warehouses
Think Warsaw / September 18, 2018 / © 2018 IBM Corporation
• And …there is
Crypto World
Understanding the divide – Disruption and
transformation
 New currencies and new complexities
Two taxonomies of new forms of currency

Cryptocurrency, Central bank digital

CPMI (2015) currency, Bjerg (2017)
Not the liability Central
of anyone bank-issued

Commodity Cash Reserves

money
Crypto- Central
currency bank digital
currency
Cash Bank
deposits
Peer-to- Universally Bank Electronic
Peer Electronic accessible
account
money

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Going back to basics
Fundamental Tenets – Duality of Transactions –
Trade, Trust and Issues of Clearing
Ownership and Settlement
Focus just cannot Is Digital Identity
be on digital assets Essential?
(Tokenization • Non repudiation
of assets) • Establish ownership
• Claim on instance of an
digital/crypto asset

What are we solving if we Digital Fiat or a similar Digital Identity

are ONLY solving for instrument is essential to is diagonally essential to
reconciliation of ledger solve Digital fiat/crypto asset/
entries? the last mile – settlement Digital asset
issue

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 My focus for 2018 wrt to Blockchain

Digital identity Digital fiat Asset tokenization

foundation technology address the last-mile issue ensure that digital manifestations
to ensure the trade of settlement for every reflect
and ownership financial transaction real-world assets

Security design of the blockchain Business of blockchain business Governance

system models model
address non-repudiation, privacy, a befitting business self-governance networks
confidentiality; and model to progress to consortium-defined;
verifiability of claims with consent- blockchain agenda and semi-autonomous
driven models $ governance structures

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Solution Overview
We are creating a new global financial rail and real time FX platform
Supported Digital Assets: Future Digital Assets:

• Stable Coins (Fiat Backed) • CBDCs (Central Banks)

• Lumens (XLM) • Tokenized Metals (Gold)
• Bitcoin (BTC) • Digital SDRs (Fiat basket)
1 Payment Service Provider (PISP, Corporate, MTO or Bank) • Ether (ETH)

2 Market Maker (MTO or Bank)

3 Digital Asset or Stable Coin Issuer / Liquidity Provider

(Bank, Central Bank, MTO, or Fintech)

$ €
D D

Originating Stellar Protocol Receiving

Originator Financial Financial Recipient
Institution (OFI) World Wire Institution (RFI)
Global Payment Network & Asset Registry

EXCHANGE(S) EXCHANGE(S)
Think Warsaw / September 18, 2018 / © 2018 IBM Corporation
 Stable Coins: Lifecycle, Actors and Engagement
1 Bank or Regulated Financial Issuer Engagement Scenario:
1 2 Custodian
Services Firm / Fintech – • Executive Visioning Workshop (1-Day)
must be a regulated entity
• Design & Engineering Engagement
because of KYC / AML
(8-12 weeks)
requirements
• Controlled Production Circulation
2 Chartered Bank or Trust (12-month minimum)
Banks can act as both Issuer
and Custodian with limited
impacts and integration
Business model supported by repeatable coin
requirements with existing
engineering services and network operation
process controls and core
fees derived from transaction volume as stable
banking systems – this is the
coins are exchanged to facilitate various
ideal scenario
payment activities.

3 Any consumer or business

that meets the Issuer’s KYC /
AML controls can use the
token as they would use cash
4 This is IBM’s long game
Banking clients have modest one time
IBM Digital Currency Lifecycle investment with limited ongoing KYC / AML
process and operational staff requirements
to support funding and redemptions.
4 Operator 3 User

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Lessons learnt:
7 design principles of sustainable blockchain
business networks

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Path to enterprise adoption

Enterprise Impact Existing business Technology to align Integration with

and Industry Impact process is distilled with the business down stream
Meaningful issues down to blockchain- imperatives transaction systems
should revolve based model Technology design reflecting on critical
around significant Reinventing the decisions and business systems
costs to enterprise business based on deployment options
and industry a trust system

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 What would enterprise chain
infrastructure look like?
Partner
Enterprise / Payments
Integrated enterprise will need more DAO

than one specialized use case Interledger /

Conditional
Contracts
ILP

Mortgage
• Driving synergies between blockchains Initiation

• Invisible blockchain infrastructure

Conditional
• Inter- and Intra-enterprise connections Enterprise Chain Contracts
Infrastructure
• Concept introduction
– Interledger
– Intraledger Securitization

• Cross the trust systems for transactions Identity

Trade
• Fractal visibility of ledger data Finance

• Enterprise visibility – control systems Crowdfunding

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Vision – ‘Interprise Synergy’
Enterprise chain infrastructure
BI / Data

Design that enables new business Enterprise

Systems

models Partner
Enterprise /
Payments
DAO

Interledger / Conditional BI /
ILP Contracts Enterprise Data

• Invisible enterprise chain

Systems

infrastructure will provide foundation Mortgage

Initiation

• Use of connectors, APIs to enable Enterprise Chain

Conditional
Contracts
incumbent systems chain aware Infrastructure
Enterprise
BI /
Data
Systems

• Conditional contracts between Securitization

chains – ‘Interprise Synergy’
Identity

• New business (e.g., P2P Trade

Finance BI / Data

lending, crowdfunding) Enterprise

Enterprise
Systems
solely on blockchain Systems
Crowdfunding

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

 Separating blockchain from
cryptocurrencies

• Cryptocurrencies are one specific

usage of Blockchain technology
• Blockchain can be used to solve
many more real-life business
challenges without the fallacies of
cryptocurrency
Thank you

•Nitin Gaur
•Director, Blockchain Labs

•ngaur@us.ibm.com

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation

Think Warsaw / September 18, 2018 / © 2018 IBM Corporation 23