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Overcoming the Barriers
to Blockchain Adoption
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{ : }
Agenda
Relevance of our partnership
The Promise of Blockchains
Challenges of Blockchain Adoption
MongoDB & BigChainDB
MongoDB Inc,
700+ employees 3000+ customers
Offices in London, NY & Palo Alto and
across EMEA, and APAC World Class Advisory
How we drive value
Dramatically
reduce TCO
Reduce Risk for
mission critical
applications
Accelerate time
to value
Use data and
technology to gain
competitive advantage
We bring next generation platforms to life
Powering Single
View use cases
Modernizing
Mainframes and
increasing resilience
Enabling
micro services,
a driver for
transformation
NOW:
The underpinning
for Blockchain
Blockchain
Moves away from
the pack
Already at the
peak of hype
Why: The benefits are enormous
“Numerous research reports put potential efficiency
gains to financial services from blockchain at between
$15bn and $20bn. Already today, using blockchain-
based applications, companies could bring the cost of
a cross-border transaction down from $25 to $1 or $2.
This will drive adoption.”
-Oliver Bussmann
– Bussmann Advisory and ex-Group CIO of UBS
FT: Banks will not adopt blockchain fast
IBM: Leading the pack in blockchain banking
Strategy is already being defined
The Early
Adopters
have already
made
progress
Raconteur: The Future of Blockchain in 8 Charts
You will be hearing from:
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Agenda
Relevance of our partnership
The Promise of Blockchains
Challenges of Blockchain Adoption
MongoDB & BigChainDB
The Promise of Blockchains
Simon Taylor – Director of Blockchain 11:FS
The Promise of
Blockchains
A Framework for Understanding Blockchain
My Background at Barclays
• Started looking at Blockchain “side of desk” in early 2014
• Became officially full time October 2014
• Identified now over 60x use cases, completed 20 experiments and now
moving into develop pilots
• Founder member of R3 consortium
• April 2016 became the first UK bank to offer accounts to Blockchain
companies
• PoCs and Accelerator companies…
Why Blockchain
FI’s Have Recognised the Potential of Blockchain…
• Met with over 300 Blockchain Companies
• SME’s have delivered live pilots, and over 60
PoCs
for Tier one Global Bank
• Highly networked with access to global network
of founders~
• Former Gartner Head of Digital Banking
leading research tool build out
• 3 of the top 20 Global Fintech SME’s (rated by
City AM)
• Advisors to Governments, Central Banks and
Regulators globally
But are struggling to convert that into value
creating product…
• DAH raised $60M
• R3 consortium 55
banks / exchanges /
asset managers
• Visa / Nasdaq invest
$30M in Chain.com
• CLS Announced first
large scale project
• Total value of
Blockchain investment
exceeds $2bn
• Start-ups struggling with access and SME knowledge to impact Post
Trade, Trade Finance, Identity and Provenance use cases
• Early Bitcoin companies closing or seeking funding outside the USA
• Second wave of Blockchain start-ups based on Ethereum (e.g.
Clearmatics, Axoni) now progressing with banks behind closed doors
• Banking on Blockchain brings commercial and execution expertise to turn
this potential into ARR for these start-ups
We have collated the insights to find value for banks… And assembled the team that allows us to deliver value…
Blockchains without the Coin?
• Recent discourse has evolved. There’s now an argument over what The Blockchain is. Is it the actual
code and network that supports Bitcoin?
• Bitcoin’s breakthrough was to have everyone share an entire copy of an entire ledger. The opposite of
what banks do, but it introduced new problems
• Replicating all data to all nodes isn’t compatible with data privacy legislation banks need to adhere to, it
also places uncomfortable amounts of control on core devs and mining conglomerates (consider there
are 192 SWIFT members, vs 9 dominant miners)
• Richard Brown (R3) described a continuum in 2014 (pictured below) where there are a set of design
choices and trade offs to be made depending on what you’re trying to achieve.
Traditional
Financial Services
Centralised
Bitcoin
Decentralised
Opportunity Space
Ripple
Stellar
Ethereum
Counterparty
Eris Industries
BigchainDB
“Blockchain” – A Three Layer Model
There are a number of technologies all being called “Blockchain”
• In addition within each of these technology types, there are a number of approaches each with their own world
view and terminology
• The diagram below attempts to simplify this by abstracting the broader concepts
• The diagram on the right then puts this in the context of Bitcoin (as a reference only)
Shared Ledger - “The Database”
Smart Contract “The Middleware”
Application “The Interface”
Three Layer Model
Shared Ledger e.g. “The Blockchain”
Smart Contract e.g. “Unspent txn Output”
Application e.g a “Bitcoin Wallet”
Three Layer Model applied to Bitcoin
A
SC
SL
A
SC
SL
Smart Contract Implementation Types
Smart Contract is a loaded term that means something very different to lawyers than software
engineers
• Smart Contract Code: Code that governs something important or valuable and executes “everywhere”
• Smart Legal Contracts: Replace or re-implement paper contracts with smart contract code
• The DAO / DAO’s: An entire organisation incorporated using smart contract code, including bylaws, asset
ownership and governance
The Diagram below shows these broken out
• Note: The term “contract” creates a great deal of confusion for a type of software that is actually highly varied and fragmented in approach and design
• Note 2: However the potential for both replacing existing legal agreements and creating entirely novel agreements is still highly exciting
• Note 3: There are now a good number of start-ups offering a mixture of SC1 and SC2 implementations
Smart Contract “The Middleware”
The DAO / DAO’s
Smart Legal Contracts
Smart Contract Code
SC
SC1
SC2
SC3
Three Layer Model Example –
Application Layer (A)
The App layer can be changed easily without changing the underlying technologies
• From 2013 developers began to use the underlying Bitcoin infrastructure (miners, Blockchain and UTXO) to
perform other tasks. This is arguably the simplest change, but is not the focus financial services players to date
• The diagram on the left shows Bitcoin in the standard configuration
• The diagram on the right then shows what a different application might look like with the two base layers
unchanged
Shared Ledger e.g. “The Blockchain”
Smart Contract e.g. “Unspent txn Output”
Application e.g. “Bitcoin Wallet”
Three Layer Model
Shared Ledger “The Blockchain”
Smart Contract “Unspent txn Output”
Application “Notary Service”
Three Layer Model applied to Bitcoin
A
SC
SL
A
SC
SL
• Conceptually the idea is to create one “global” ledger for the world rather than each bank maintaining books and
records separately
• Below is a scenario where multiple banks and corporates need to keep up to date with where their assets and
liabilities are (image courtesy for Richard Brown www.gendal.me )
Today Tomorrow
Reconciliation through paper, many databases
2 – 5 day settlement of transactions
Reconciliation through cryptography “mining”
2 – 5 second settlement of transactions
The Shared Ledger (SL) Concept
Smart Contract and Shared Ledgers
Summary
Shared Ledger
Smart Contract
Application
Three Layer Model Three Layer Model exploded
A
SC
SL
A
SL1
SC1
SC2
SC3
SL2
SL3
Applications remain simple / programmable
Smart Contract Code
Smart Legal Agreements
The DAO / DAO’s
Private
Permissioned
Permissionless
A
B
Notary
Tokenised
What is it?
A registry for start-ups to record ownership and founder equity on a blockchain. They have
signed up 6 pilot customers (Changetip, Peernova, Chain.com, Tango, Vera and Synack). The
NASDAQ pilot facilitates the issuance, cataloging and recording of transfers of shares of
privately-held companies on The NASDAQ Private Market.
Why?
Ttypically founder share agreements are verbal, leading to issues at seed and Series A. By contrast
the NASDAQ pilot provides customers with agreed state of equity, the shared history of ownership,
backed up by the network and fixed in the blockchain history. This eases dispute resolution
procedures and ensures data integrity and freedom from corruption.
How did they do it?
They implemented a standard implementation of Chain.com (which is a forked version of Bitcoin
itself). It essentially shared the data between nodes and uses a modified mining algorithm to
sign the transactions
Could they have done this without a Shared Ledger or Smart Contract stack?
Yes, but the audit transparency / certainty would be removed.
Industry Case Study – NASDAQ LinQ
(Chain.com)
SL1A : Peernova
SC1: Chain.com
App: NASDAQ
Breakdown
App: NASDAQ has not
released details about
the App
Smart Contract: TDG
assumes Chain.com
uses a private version
of UXTO
Shared Ledger: Private
Notary Shared Ledger
to record ownership
What is it?
A customer uses an app embedded in the dashboard of a car to “sign” for a car rental contract
digitally. A “smart contract” (computer code) running on a blockchain records that legal
agreement, and is then able to use that authority to unlock the car and complete the payment
with Visa.
Why?
To create a seamless consumer experience around car rental, for the transparency / audit trail a
blockchain provides. The longer term aim is that cars themselves would use Smart Contracts
to be able to manage their own time (think Uber / Automated cars), a consumer would rent the
car itself for a small period of time. The car itself would manage the administration.
How did they do it?
Leveraging DocuSign's Digital Transaction Management (DTM) platform, eSignature solution
and APIs together with the Visa Token Service for secure payment processing.
Could they have done this with a DevOps stack?
Yes, in fact most of it is on DevOps, it’s unclear what (if any) smart contract solution they’re
using or if its proprietary
Industry Case Study - Visa, Docusign Car Rental
Unknown / VISA
SC2: Docusign
App: Docusign
Breakdown
App: Docusign bespoke
Smart Contract:
Docusign bespoke
Shared Ledger:
Unknown if there is any
shared ledger at the
back, may be helpful for
audit purposes. Visa
payment engine used
The Next 12 Months
Building on early PoCs with regulatory involvement
• The regulatory reaction to the subject of “blockchain” has been interesting. Whilst
Bitcoin as a virtual currency without control presents a few issues, it’s stagnation in
recent years has largely stemmed the flow of regulation in that arena.
• Regulators and governments absolutely see the benefits of the technology and appear
content to allow the subject to evolve. Regulator feedback to new design choices will
be crucial in coming years.
• CFTC speech
• UK Government Office for Science report
• Bank of England / UCL / RS Coin – Governer Carney Remarks
(Impact on liquidity risk, focus on DLT for resilience)
• We’re now seeing the beginnings of free market competition with solutions like Axoni (in
which 7 banks and DTCC collaborated), R3 and Digital Asset now potentially evolving a
VHS / Betamax format war. Pay particular attention to recent CLS announcement.
• There is a lot of whitespace – wherever legal document automation is required.
Payments and settlement likely the last to change because of their complexity
Key Remaining Challenges
Education
• Given the context laid out in this deck, it appears many are still assuming “classic”
blockchains need to be made to fit the scale challenges of banks. Instead of starting
with bank requirements and seeing what blockchain characteristics apply
• The C-Suite understands it’s got hype, but need people they can trust who can
• Understand how banking works today
• Fully get the complexity of the evolving “blockchain” space
• Successfully translate those into business cases
• Can bring the control teams and stakeholders across a large organisation on that
journey
Skills
• Finding and recruiting the right skills into the right team structure will be a key challenge
as the subject scales
• Many hidden gems inside a large organisation!
Research Invest Experiment
✓ Met / Qualified 100s of start-ups
✓ Filtered based on SME
knowledge
✓ Database of Start-up
Capabilities
• Research Portal for Banks
• Curated Knowledge Base
• Database of Start-up
Capabilities
✓ SME led deal flow
✓ Business Case and Tech
DD
✓ Network of FI’s as
customers
• Direct investments
• Co-investments
• Partnerships
available
✓ Knowledge of Good / Bad Use
Cases from prior experience
✓ Experience delivering inside
banks
• Proof of Concept
• Pilots and Consortia
Building
• Live Delivery Support with
compliance / control
training
Market Leading Blockchain Insights
Simon Taylor / World leading Blockchain SME and Fintech Influencer
• Led Barclays Blockchain R+D team completing over 60
experiments and 4x pilots in development as of June 2016
• Trusted advisor to UK Government, Bank of England, Tier 1
Banks, Asset Managers and Investors
• World leading subject matter expert with a highly influential
network in the Blockchain ecosystem
• WEF Fintech Advisor 2015 - Present
• UK Government and Bank of England Advisor
• Consultant for top 20 Global Banks on Blockchain
• Led development for Barclays to become first Bank to Offer Bank accounts to
Blockchain Companies in UK
• Personally met with over 300x Blockchain companies
Chris Skinner / CEO & Managing Director
• Author of the bestselling book Digital Bank and its new sequel
ValueWeb,
• Contributor to BBC News, Sky News, CNBC and Bloomberg.
• Chair of the European networking forum: the Financial Services
Club
• Voted one of the most influential people in banking by The
Financial Brand
• Named one of most influential people in financial technology
by the Wall Street Journal’s Financial News.
• C-Suite relationships with Tier 1 Banks Globally
David Brear / Investment Director „Right money in the right places“
• Voted as one of the most popular business and FinTech influencers
by City AM, WSJ & BBC.
• Advising to banks, regulators & governments
• Global Director of Digital Banking in Gartner with senior roles before
this at Infosys, Lloyds Banking Group, Aviva and Foolproof.
• Over 10 years working at an agency, consultancy and on the client side
for a number of top financial services global brands.
• Key note speaker at Money 2020, Next Moneyand Finnovate
The Team
Thank you!
We believe financial services is only 1% done and with the power of modern technologies like Blockchain there is
significant value to be unlocked. 11:FS team have built digital banks, research portals, benchmarking products and fintech
labs across a range of financial services disciplines. Be sure to follow @11FSteam and our podcast @Fintechinsiders which
is available on iTunes now!
October 2016
11:FS is a Global Advisory Firm who are recognised subject matter experts in Fintech
11:FS
www.11fs.co.uk
simon@11fsc.o.uk
@sytaylor
@fintechinsiders – fintech podcast goodness on the go
Simon Taylor – Co founder and Blockchain Director at 11:FS
{ : }
Agenda
Relevance of our partnership
The Promise of Blockchains
Challenges of Blockchain Adoption
MongoDB & BigChainDB
The Challenges of Blockchain Adoption:
Interoperability, Integration & Scale
Bruce Pon – Co-Founder & CEO of BigchainDB
Challenge: Interoperability
Evan Schwartz – Co-inventor of Interledger
Interledger
Evan Schwartz
Blockchain Interoperability
In this talk:
1.How Interledger solves blockchain interoperability
2.Future opportunities and the Internet of Value
3.Why Ripple & BigchainDB are the companies to work
with
First, the boring reasons you
should care about
interoperability
Adopting any new technology
is
a big investment
Will this new technology...
1.Work with my existing stack?
2.Work with other new tech in the future?
3.Enable new business opportunities?
Will this new technology...
1.Work with my existing stack?
2.Work with other new tech in the future?
3.Enable new business opportunities?
What is a blockchain?
Blockchains are ledgers
Ledgers record accounts,
balances, and transfers
Central Ledger Model
Distributed Ledger Model
We need a protocol for
connecting blockchains
and other ledgers
InterledgerThe protocol for connecting
ledgers.
Transferring Assets Across Ledgers
48
Sender RecipientLedger Ledger
Connectors Link Two Ledgers
Connector
Alice 100
Chloe 0
Chloe 110
Bob 0
100 110
49
EUR USD
TO:
us.wf.bob
First Step: Interledger Address
Sender Attaches Interledger Packet to Local Transfer
Alice 100
Chloe 0
Chloe 110
Bob 0
100
51
us.wf.bob
110.00
Connector Forwards the Packet via Another Transfer
Alice 0
Chloe 100
Chloe 110
Bob 0
52
110
us.wf.bob
110.00
If Connectors Fail, Would We Lose Money?
Alice 100
Chloe 0
Chloe 110
Bob 0
?
100
53
Ledgers Provide Hold Functionality
Alice 100
On Hold 0
Chloe 0
Chloe 110
On Hold 0
Bob 0
54
Holds Are Dependent on Conditions + Expiries
55
EXECUTE
ROLLBAC
K
Condition Fulfillment Executes Transfer
56
EXECUTE
ROLLBAC
K
Timeouts Cause Funds to Be Returned
57
EXECUTE
ROLLBAC
K
Sender Commits Funds
To Initiate Payment
Funds Are Committed From Left to Right
59
Alice 100
On Hold 0
Chloe 0
Chloe 110
On Hold 0
Bob 0
COMMITMENT
Sender Puts Funds On Hold
Alice 100
On Hold 0
Chloe 0
Chloe 110
On Hold 0
Bob 0
100
60
us.wf.bob
110.00
Connector Gets Notification of Funds on Hold
Alice 0
On Hold 100
Chloe 0
Chloe 110
On Hold 0
Bob 0
61
?
us.wf.bob
110.00
Connector Puts Funds on Hold
Alice 0
On Hold 100
Chloe 0
Chloe 110
On Hold 0
Bob 0
62
110
?
us.wf.bob
110.00
Recipient Gets Notification of Funds on Hold
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 110
Bob 0
63
? ?
us.wf.bob
110.00
Recipient Triggers Execution
By Fulfilling the Condition
Transfers Are Executed Right to Left
65
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 110
Bob 0
EXECUTION
? ?
Recipient Signs Receipt
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 110
Bob 0
66
? ?
Signature Fulfills Condition, Ledger Releases Held Funds
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 110
Bob 0
110
67
?
Connector is Notified That Funds Have Been Released
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 0
Bob 110
68
?
Connector Passes on the Recipient’s Signature
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 0
Bob 110
69
?
Receipt Releases Funds from Hold
Alice 0
On Hold 100
Chloe 0
Chloe 0
On Hold 0
Bob 110
70
100
Sender Gets Non-Repudiable Proof of Payment
Alice 0
On Hold 0
Chloe 100
Chloe 0
On Hold 0
Bob 110
71
Paths Can Be Short
72
Paths Can Be Extended to Connect Everyone
73
This Is The Interledger
This Is The Internet of Value
Will this new technology...
1.Work with my existing stack?
2.Work with other new tech in the future?
3.Enable new business opportunities?
The state of payments today
Accepting Payments In a Turkish Coffee Shop
79
Payment Methods Accepted By Prineta.com
Accepting Payments Online
Many Types of Payment Networks
80
ACH SEPA Card Blockchain
Payment Networks are Disconnected
81
ACH SEPA Card Blockchain
is what matters.
In global payments today,
Everywhere you want to be.
There are some things money can't buy.
For everything else, there's MasterCard.
Payment Networks Today Compete To Be...
Surprisingly similar to...
Information Networks Before The Internet
"… biggest …"
"… more members …"
"… more services…"
Networks Competed To Be...
Internet Solved the Problem With Internetworking
in·ter·net·work·ing
The interconnection of two or more
networks so as to form a larger network.
noun
"… the fastest Internet provider in the nation …"
Now Providers Compete To Be...
"… with super-fast Internet …"
Now Providers Compete To Be...
Now Providers Compete To Be...
"America's fastest, most
consistent and most
reliable Internet."
COST
In information networks, it's all about
RELIABILITY SIMPLICITY
COST
SPEED
Internetworking changes the game.
QUALITY
REACH
The Internet Enabled Much More Than
Sending Faster Letters
Interledger is
internetworking for money
Interledger is
inspired by the history and
architecture of the Internet
Internet Is A Simple Protocol With A Layered Architecture
IP
WIFI BLUETOOTH ETHERNET
Internetwork
Network
Transport TCP UDP
Application HTTP SMTP NNTP NTP RTP
ILP
BIGCHAINDB RIPPLE
ISO 20022 BITCOIN ETHEREUM
Interledger
Ledger
Application SPSP PPSP ...
Interledger Is A Simple Protocol With A Layered
Architecture
Interledger enables for money
what the Internet did for data
Global connectivity