Blockchains and distributed ledgers ----- Bitcoin was always so much more….. Professor Robin Teigland Stockholm School of Economics www.slideshare.net/eteigland www.funnovation.se April 2016 www.hhs.se
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Blockchains and distributed ledgers
----- Bitcoin was always so much
more…..
Professor Robin Teigland Stockholm School of Economics
www.slideshare.net/eteiglandwww.funnovation.se
[email protected] @RobinTeigland
April 2016www.hhs.se
Halloween in Nashville, 1974
Valuecreation
People• “Net generation”• 24x7 “mobile”
workforce• Knowledge via MOOCs• Sharing not owning• Sustainability
Technology • Broadband access• Mobile phones• The cloud• Internet of Things • Big Data• 3D printing• Robotics/AI• VR/AR• Holography• Blockchains
Open Source IP
• Software • Hardware• Physibles
Convergence of…..
Finance•
Microlending/microfinance
• Crowdfunding/equity/P2P
• Non-fiat cryptocurrencies
• Mobile money/payments
• M2M payments
Banking is essential,
but banks are not.
Bill Gates
The emergence of FinTech
Stockholm hits 100 Fintech companies in 2015
Acquired companies included in these totals
Strong investment in Stockholm Fintechs
* 2015 estimate based on 2014 growth rates.
m USD
658.5m USDInvested over the past 5 years
>14bn SEK Estimated 2015 Revenue for Stockholm
Fintechs*
>5800Estimated 2015 Employment for Stockholm
Fintechs
2015 2014 2013 2012 2011
137.7
266.2
17.6
55.4
181.6
Investments in Stockholm Fintech Companies
Stockholm Fintechs moving in on traditional bank territory
Inspiration from CB Insights, SEB base webpage slightly modified to make more room
+
USD 137.7 mln in funding to Stockholm Fintech Companies in 2015
66.6m USD Intel, Zouk
Capital, Creandum, Dawn Capital,
Index Ventures, MCI Capital, Northzone
15.0m USDAccel, Creandum,
GP Bullhound, Martin Wattin
10.0m USDNorthzone, White Star
Capital
1.9m USDUndisclosed
1.4m USDNorthzone, Undisclosed
Angels
0.6m USDPeter
Gyllenhammar
0.6m USDNFT Ventures
0.5m USDAndreas Bonnier
0.7m USDCrowdfunding,
Techstars
Undisclosed UndisclosedAggregate Media
UndisclosedNFT Ventures
UndisclosedNFT Ventures
38.0m USDKinnevik, LeapFrog
0.7m USDNFT Ventures
0.5m USD Karl Johan
Persson
1.2m USDStaffan Persson,
Thord Wilkne
UndisclosedNFT Ventures
Corporates investing in bitcoin and blockchains
https://www.cbinsights.com/blog/largest-blockchain-deals-strategic/
No one knows everything, everyone knows something,
all knowledge resides in humanity.
networks.
Adapted from Lévy 1997Image: Krebs
Bitcoin – An emergent phenomenon• Open source project on SourceForge in Jan 2009 • Original source code by “Satoshi Nakamoto” –
pseudonym?• Developed by self-organizing, online community of
thousands of strangers across globe• Approx USD 6.6 bln market cap and 200,000
transactions equal to USD 150 mln in daily transaction volume
• 1 BTC = USD 425 (April 13, 2016)
Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
Within 6 years: Challenging
the fiat money system?
InstitutionsEmergent Collective v
s
E.g., Central Bank~ Long-standing financial
institutions and regulations
E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet
Teigland, Yetis, Larsson 2013
Why do banks exist?
How does Bitcoin work?
https://99bitcoins.com/get-your-first-bitcoin/
• Digital• Decentralized, P2P• No third party
• Shared public ledger
• All transactions ever made logged
• Chronology and integrity enforced by cryptography
The blockchain underlies bitcoin transactions
Financial Times
Centralized vs distributed ledgers
Financial Times
A global network of Bitcoin nodes
https://bitnodes.21.co/
https://www.youtube.com/watch?v=K8kua5B5K3I
AltCoins and the Blockchain
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdf
Where can I spend my bitcoins?
MicrosoftDell
WordpressNewegg
OverstockGiftcards
Bitcoin – one of 100s of AltCoins
http://coinmarketcap.com/
Sluggish growth in bitcoin usage? Users satisfied with current payment systems
that continuously improving Practical difficulty of purchasing bitcoins Volatility of bitcoin’s value relative to
government issued currencies Perception that bitcoin is insecure Questions over bitcoin’s legal status Irreversible and unforgiving nature of bitcoin
transactions Lack of support for bitcoin in mainstream
financial sector
http://www.multichain.com/download/MultiChain-White-Paper.pdf
The blockchain: bitcoin only one application
Decentralized - robust, no central control or authority required to coordinate behavior or interaction
Shared public history of all transactions Displaces roles of trusted third parties
• Can’t do same transaction twice • No double spending• No transaction repudiation
‘Trustful – initial entry requires high degrees of trust but then system operates on trustless basis
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdf
The (Ethereum) blockchain
Betting on the blockchain - together
>40 banks and counting…Goldman Sachs, JPMorgan,
Credit Suisse, Barclays, Commonwealth Bank of
Australia, State Street, RBS, BBVA,
UBS, Nordea, SEB, + ……
+ +
Benefits of blockchain for financial services
Lower costs through shared infrastructureFaster settlement that leads to lower
capital and liquidity needs Increased transparency, especially with
cross border paymentsGreater security through cryptography,
transparency
Citi Research, Jan 2016
Blockchain insurance applications
Enabling smart contracts
Weather dataalgorithm
Insuranceclaim payout
From “trusted”, centralized human authorities
to trustless, decentralized networks
IBM Institute for Business Value (PDF)
• World’s first decentralized computer• Commoditizes trust
https://www.youtube.com/watch?v=U_LK0t_qaPo
robots
Enablers of a “true” Collaborative Economy?
Blockchains
Sharing/ Collaborative Economy
IoT/sensors
P2P/M2M micropayments
Big data
Time will tell…..
The Blockchain is the glue that is going to drive a productivity revolution across the globe on par with what Henry Ford did with the automobile.
— Paul Brody, Americas Strategy Leader, Technology Sector, Ernst & Young
1950s vision of home PC in 2004
If the rate of change on the outside (of an organization) exceeds the rate of change
on the inside, the end is near....
-Jack Welch
Robin [email protected]
www.slideshare.net/eteiglandwww.funnovation.se
@robin.teigland
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