BLOCKCHAINDEMYSTIFICATIONMr. BELLAJ BADR

THE DISRUPTIVE TECHNOLOGY

MCHAIN CTO

By 2027, 10% of global GDP is likely to be stored on blockchain platforms.

”

”

Blockchain technologies could reduce banks' infrastructural costs by $15-20bn a year by 2022. Santander

””

Gartner’s Top 10 Strategic Technology Trends for 2017

”

”

By 2025 : Tax collected for the first time by a government via a blockchainWEF

Blockchain has potential to save global financial industry up to $110bn, McKinsey ”

”

WHY THE BLOCKCHAIN?

Understanding the problem is 1/2 of the solution

”

”

WHY THE BLOCKCHAIN?

CHINA 800 AD 700 BC Ancient Lidya Turkey

October 1994, Stanford Federal Credit Union: Internet banking

CONTINUING THE INTERNET REVOLUTION

DIGITAL ERA DIGITALCURRENCY

Rai, or stone money

Failure

Ecash‘1983-1998’

Failure

E-gold‘1996- 2007’

Failure

Liberty Reserve‘2006-2013’

WHY THE BLOCKCHAIN?

WHY THEY FAILED

• CENTRAL AUTHORITY (SPOF)

• FRAUDS

• DOUBLE SPENDING PROBLEM?

WHY THE BLOCKCHAIN?

Currency issuance, transaction storage, fight frauds.

CENTRAL

AUTHORITY

FRAUD

SPOF

VIRTUAL

CURRENCY

WHY THE BLOCKCHAIN?

RESHAPE THE PROBLEM : VIRTUAL CURRENCY

UNSTOPPABLE• How to create an unstoppable cash system

without any Central authority?

TRUSTFULL• How to establish the trust in such system

if there is no authority behind?

UNFORGEABLE• How to avoid the double spending

problem?

SOLUTION 2008 BLOCKCHAIN

WHY THE BLOCKCHAIN?

Failure

Ecash‘1983-1998’

Failure

E-gold‘1996- 2007’

Failure

Liberty Reserve‘2006-2013’

Success

Bit Gold

Success

Bitcoin‘Since 2008’

Designed in 98

WHY THE BLOCKCHAIN?

WHAT IS THE BLOCKCHAIN?

A SINGLE SOURCE OF TRUTH

WHAT IS THE BLOCKCHAIN?

Definition N1

THE TRUST MACHINE

WHAT IS THE BLOCKCHAIN?

Definition N2

Ledgers, the foundation of accounting, are as ancient as writing and money.

A DISTRIBUTED LEDGERWHAT IS THE BLOCKCHAIN?

Definition N3

WHAT IS THE BLOCKCHAIN?

• A blockchain is a tamper-proof, shared digital ledger that records transactions(history) that take place between the peers in a peer-to-peer network.

• All the confirmed and validated transaction blocks are linked and chained from the beginning of the chain to the most current block, hence the name blockchain.

BLOCK CHAINDefinition N4

In the Context of protocol stack, cryptocurrency is a blockchain service

15

THE DIGITAL CURRENCY

CONSENSUS PROTOCOL

TRANSACTION PROTOCOL

THE LEDGER : SHARED DATA LAYER

GMAIL

SMTP – SIMPLE MAIL TRANSFER PROTOCOL

TCP/IP – TRANSMISSION CONTROL

PROTOCOL/INTERNET PROTOCOL

Application Layer

Application Protocol Layer

General Protocol Layer

HOW IT WORKS?

STACK VUE (Blockchain System):Definition N5

FEATURES

DECENTRALIZED CONSENSUS

Ensure Consensus within a decentralized Network.

TRANSPARENCE & ANONYMITY

DATA is available to the participants.Users are anonymous

IMMUTABILITY

Data is stored for ever in the blockchain and can’t be altered

*The genesis blockchain

WHAT IS THE BLOCKCHAIN?

HOW BLOCKCHAIN SYSTEMWORKS?

INTERBANKSETTLEMENT

DEBIT CREDIT

Balance 100$

Transfer 100$

DEBIT CREDIT

Balance 200$

Balance 100$Transfer 100$

DEBIT BANK A’s ACCOUNT 100$

CREDIT BANK B’s ACCOUNT 100$

TRANSACTIONBA

HOW IT WORKS?

N5545 N5546

Block validated by the network and added into the blockchain (updated)

TX+Signature

Transaction cryptographically signed and sent to the network Nodes

ADDRESS:

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2

ANNONYME

Transaction is complete

N5547

Block processed(Mining Process)Verified and included in a block (timewindow)

TXj+Signature

TXi+Signature

N5547

HOW IT WORKS?

HOW IT WORKS?

BLOCKCHAIN

SINGLE BLOCK

SINGLE TRANSACTION

HOW IT WORKS?

LET’S DIVE DEEP

MORE DETAILS

• 1 Vote = 1 CPU (Proof-of-work), Byzantine general problem.

• Only miners add Blocks (Data) to the blockchain.

• Everybody could become a miner.

• One miner is rewarded at time and its block is added to the blockchain.

HOW IT WORKS?

The computing power of the Bitcoin network is 7468 times higher than the one of the cumulative 500 world supercomputers.

X7500

THE POWER OF DECENTRALISATIONHOW IT WORKS?

THE POWER OF DECENTRALISATION

BTC HASH RATE : 3,576,533,297 GH/S

194 MH/S

HOW IT WORKS?

A SINGLE SOURCE OF TRUTH

WHAT IS THE BLOCKCHAIN?

$27,703,262,823Total Market Cap

THE POWER OF DECENTRALISATION

THE POWER OF DECENTRALISATION

THE POWER OF DECENTRALISATION

BENEFITS OF THE BLOCKCHAIN

. EMPOWERED USERS

PROCESSINTEGRITY

DISINTERMEDIATION & TRUSTLESS

EXCHANGE

DURABILITY, RELIABILITY, &

LONGEVITY

HIGH DATA QUALITY

TRANSPARENCY & IMMUTABILITY

BLOCKCHAIN BENEFITS?

ECOSYSTEM SIMPLIFICATION

COSTS REDUCTION

TIME REDUCTION

SMART CONTRACTS

BLOCKCHAIN BENEFITS?

SMARTCONTRACT

“A smart contract is a program that runs on the blockchain

and has its correct execution enforced by the consensus protocol”

They enable trustless financial services like loans, micropayments, and more.

Get rid of intermediaries and third parties

BLOCKCHAIN BENEFITS?

BLOCKCHAIN BENEFITS?

SMARTCONTRACT

USE CASE :LETTER OF CREDITTRADE FINANCE

CREDIT PERIOD OF 30 DAYS, 60 DAYS, 90 DAYS, 120 DAYS

USE CASE : LETTER OF CREDIT

LETTER OF CREDIT AS SMART CONTRACT :• Accelerating payment and simplifying the creation

and delivery of trade payment documentation.

USE CASE : LETTER OF CREDIT

Months to hours

No more Papers

USE CASE : LETTER OF CREDIT

BLOCKCHAIN

ACCESS

CONTROL

AUTONOMOUS

PAYMENT

REAL ESTATE

INTELECTUEL

PROPRETY

TITLE RECORD

LENDING(p2p)PAYMENTS

TRADE

AGREEMENTS

ASSET EXCHANGE

DOCUMENT EXCHANGE

VOTING

DOCUMEREGIST

RATIONNTS

PERMITS

TELE-ATTORNEY

SERVICES

USE CASES : BLOCKCHAIN APPLICATIONS

SECURITIES REGISTRATION

EQUITY DERIVATIVES

MICRO FINANCE

SMART CITY

Know Your Customer

Anti Money Laundering

Management

REMITTANCE STOCK

EXCHANGE

BLOCKCHAIN

STATE

2016-2017

2018-2019 2020

EARLY ADOPTION

GROWTH MATURITY

BLOCKCHAIN STATE

EXPLORATION2013-2015

GLOBAL

BLOCKCHAINS

TUNISIA2015, Tunisian poste adopted an internal blockchain system with cryptocurrency (E-dinar)

SENEGAL Introduce a Blockchain-Based National Digital Currency eCFA. Announced in 2016, the digital currency will be legal tender just as the current currency, CFA Franc. It will be introduced in all West Africa.

SOUTH AFRICA :Barclays Africa and its UK parent company Barclays plc completed the world’s first trade finance transaction using blockchain technology.South African Reserve Bank (SARB) plans to launch a blockchain-based digital version of the South African Rand

KENYA :Kenyan Government is implementing Blockchain-based education management system that would make it hard to forge academic certificate

NIGERIA :Nigerian government offers support to blockchain development group

BLOCKCHAIN STATE (AFRICA)

PRIVATE

BLOCKCHAIN

PUBLIC

BLOCKCHAIN

PERMISSIONED

BLOCKCHAIN

PERMISSIONLESS

BLOCKCHAIN

BLOCKCHAIN STATE

Nascent technology

Resolving challenges such as lack of standards transaction speed, the verification process, and data limits will be crucial in making blockchain widely applicable.

Uncertain regulatory status

Because modern currencies have always been created and regulated by national governments, blockchain and Bitcoin face a hurdle in widespread adoption by pre-existing financial institutions if its government regulation status remains unsettled.

Cost & volatility

Blockchain offers tremendous savings in transaction costs and time but the high initial capital costs could be a deterrent.

Control, security, and privacy

While solutions exist, including private or permissioned blockchains and strong encryption, there are still cyber security concerns that need to be addressed before the general public will entrust their personal data to a blockchain solution.

Integration concerns

Blockchain applications offer solutions that require significant changes to, or complete replacement of, existing systems. In order to make the switch, companies must strategize the transition.

Cultural adoption

Blockchain represents a complete shift to a decentralized network which requires the buy-in of its users and operators.

Scalability

Data inside a blockchain cannot be deleted.

CHALLENGES

BLOCKCHAIN IS THE NEW DISRUPTOR

DISRUPTION IS THE NEW BM

NEW TAXI NEW CINEMA NEW COMMUNICATION PROVIDER

NEW HOTEL NEW RETAILER

NEXT IS ..

FINANCE

BANKS

INSURER(NBFI)

PSD2 – Disrupting Payments in Europe

INSURTECH

TAKEAWAYS

BLOCKCHAIN IS AN ONGOING REVOLUTION

BLOCKCHAIN ESTABLISHES THE TRUST

BLOCKCHAIN IS NOT YET MATURE, BUT IN FAST DEVELOPEMENT.

BLOCKCHAIN IS FOR ANY DOMAIN

BLOCKCHAIN IS THREATENING ANY MIDDLEMAN ACTOR.

BLOCKCHAIN WILL BOOST ECONOMIC GROWTH AND PROSPERITY

LET’SMAKE MOROCCO A HOTSPOT FOR BLOCKCHAIN INNOVATION

QUESTION

BELLAJ BADRBellaj.badr@mchain.uk

@badrbellaj