Blockchain Use Cases: Think of a "Public" Pub/Sub Queue
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Transcript of Blockchain Use Cases: Think of a "Public" Pub/Sub Queue
Blockchain Use Cases
Think of a “Public” Pub/Sub Queue
SWIFT Institute: “Little short-term payoff”● “Impact and Potential of Blockchain on the Securities Transaction Lifecycle”● Opportunity: Cost and risk reduction● Challenges & Constraints
○ Regulatory support required,○ Institutional board-level support necessary,○ High investment with little short-term payoff
● Technical choices○ Access Rights: Permissioned v. Permission-less○ Deployment progress: Iterative v. ‘Big Bang’○ Business Process Re-engineering pre-requisites
Accenture: “Not mature enough”● “Delivering an industry-standard platform through community collaboration”● Opportunity to● Benefits
○ Trusted information propagation○ Full Traceability○ Simplified reconciliation (settlement)○ High Resiliency
SWIFT & Accenture: “Not mature enough”● Requirements, Challenges & Constraints
○ Strong governance○ Data controls○ Regulatory compliance○ Standards (or lack thereof)○ Identity framework○ Security & Cyber defence○ Reliability ○ Scalability
A Simple Use Case
A B
D
EF
G
H C
● Inter-organizational systems integration
Simple Use Case
Blockchain as persistent “Public” Pub/Sub Queue A B
D
EF
G
H CPeer Peer
PeerPeer
● Shared ledger, ● Events, ● Smart contract, ● Consensus network
Simple Use Case
Technical Advantages ● Mutual Ledger
○ A single source for all messages from any actor to any actor. ○ Fewer point-to-point integrations and batch file exchanges. ○ Metadata source identified in the message itself.
● Distributed○ Better availability
● Immutable Persistent Messages○ One agreed source as part of overall Financial Services system upgrade replaces multiple file
archives and simplifies audit processes.
● Real-time(ish)○ Real-time(ish) settlement, rather than ‘tail-chasing’ batch files and lagging reconciliation.
Simple Use Case
Technical Challenges● Standardization
○ Most firms want to rent the platform, the business applications and the business process.○ A Business Process Re-engineering challenge for vendors.
● Cross Institution Consensus Mechanism○ Centralized platform ala clearinghouse.○ Permissioning for security?
● ‘Mining’ Incentive and control○ Built into ‘rented’ shared service like clearing houses.○ BitCoin for all? Is it how you pay the rent?
● Integration○ Blockchain integration to Systems-of-Record needed.
Adoption
Too Big to Change?● Predicted Large Financial Institution adoption cycle
○ Early Adopters■ 2016: Demonstration, tutorials, Proof-of-concept systems■ 2017: Proof-of-concept systems become pilots (low message volume)■ 2018: Catch on to VC funded accelerators
○ Early Majority■ 2018: Bank system refresh cycle funding■ 2020: Funded projects to join emerging communities
● Disrupters - First Movers?○ Facebook - Google - Amazon (any European or Japanese entity?)○ Baidu - Alibaba/Alipay - Tencent (China)○ Developing markets, not Developed markets?
Adoption
Single Process● Verified by Visa - 3DSecure
○ Multiple Acquirers, Issuers and Schemes - One Blockchain?
● Card purchase chargeback process
○ FDC + TSYS + Card Schemes ++, One blockchain?
Adoption
Single Product● Peer-to-Peer Lending ● One Chain to Bind them All
○ Multiple Lending Platforms (brokers),
○ Multiple Investors,○ Multiple Partner Banks
■ Loan payment processor?
○ One blockchain for greater mix-
and-match flexibility, asset
ownership tracking, asset transparency?
Adoption
Likely Industry Processes
● Virtually all securities processes○ Trading & settlement, depository, lending, portfolio creation and balancing, securitization
● Global Payments○ SWIFT rewrite of global payments and settlement systems based on need for more
transparency and better security
● Regulatory reporting○ Proof of delivery (nonrepudiation) and timestamping○ Know-Your-Customer and Anti-Money-Laundering
■ KYC and AML components of all financial processes
● Regulatory arbitrage, avoidance?○ Any process with highly variable regulatory and compliance costs?
Simple Use Case
Likely Organizations
● Integrated Financial Institutions○ “On Us” credit card processing?○ Bank loan and payment processing?
● Multi-tenant banking platform vendors● Payment card schemes (Visa, MC, etc.)
○ As trusted blockchain guardian
● Integrated Manufacturing○ B2B partner negotiation - the old EDI