Professional Documents
Culture Documents
BUILDING
THE FUTURE
OF BLOCKCHAIN
AND CRYPTO
Plus BlockChain and IoT,
The End of Trade Wars, and
more insight from the
CoinDesk Advisory Board Contains
complete
AGENDA &
GUIDE for
Consensus
2018
Powered by
THINKING
AHEAD
FOR THE
2020s
A black-and-white ad.
A computer as big as the
woman hunched over it.
“Only $5,995.”
T
of the art, it turns At a time when money is flowing Are these early blockchains akin to
out, in the age freely and promises of riches abound, the first computers, expensive toys
of “microcom- it’s important to remember that long- useful mostly for advancing science?
puters,” but the term value isn’t reflected in transitory Or will the blockchains already avail-
pricing, plucked price tags, nor can it be adequately able grow and change, thriving over
from a 1970s measured by dollars and cents (or, time due to the power and inclusive
advert, still has resonance, maybe I’m afraid, in gwei or satoshis). nature of open-source code?
now more than ever, given that the Personal computing may cost less For the next three days, we
nascent tokens and cryptocurren- today, but would anyone argue even hope you’ll find value in the ques-
cies of today cost as much as family its smallest offerings (think 140-char- tions, even if we can’t promise any
vehicles. acter tweets, basic calculators, answers. As the advert that inspired
The lesson? What we value and simple flashlights) aren’t valuable? A this messages ends with the mantra,
how we value it fluctuates over time. vital resource for millions? “Thinking ahead for the ‘80s,” so,
You’d be hard-pressed, I’d assume, Such questions of the notions too, would we be well served by
to find a buyer willing to pay that of value, while complex, are no adopting a similar mindset.
asking price for an “IMSAI 10-mega- doubt top of mind given the explo- For the next three days, you
byte computer” at Consensus 2018 sion of interest and investment in have an opportunity unique in its
(though I can’t be too sure given the blockchain sector. Many of you value—the best and brightest minds
the many events that comprise NYC will likely have pressing questions— are here to learn, listen and chart a
Blockchain Week). where should you invest your time, course for the future.
Looking out at the landscape of resources and money? Am I too Let’s think ahead for the 2020s, a
competing blockchains, cryptocur- early or too late? better 2030s—and beyond.
rencies and tokens you’re likely to That’s something you’ll be hearing
hear from in the coming days, it’s more about, no doubt, in the coming –Pete Rizzo,
perhaps helpful to observe with days as our agenda of global experts Editor-in-Chief, CoinDesk
Consensus 2018 1
24
16
CONTENTS
Features
Letter from the Editor......................................................................................................................................................... 1
Thank You to our Sponsors............................................................................................................................................. 4
Coindesk Advisory Board................................................................................................................................................ 7
Amid Chaos, our Decentralized Future is Being Built............................................................................................ 10
Adapting Blockchain for IoT: Establishing Trust Among Things........................................................................... 16
Capital Set Free............................................................................................................................................................... 24
And What Has the Blockchain Ever Done for Us?....................................................................................................31
Manufacturing and Blockchain: Prime Time Yet to Come.................................................................................... 35
Making Trade Wars Obsolete ..................................................................................................................................... 40
2 Consensus 2018
4 31
40
Consensus 2018 Agenda
Sessions & Track Descriptions.................................................................................................................................... 46
Roundtables & Demos................................................................................................................................................... 58
Conference Maps............................................................................................................................................................ 63
Exhibitor Locations.......................................................................................................................................................... 68
Content copyright ©2018 CoinDesk. All rights reserved. For more information on CoinDesk or upcoming Consensus conferences, visit www.coindesk.com.
Consensus 2018 3
TITLE SPONSORS
4 Consensus 2018
BITSANE
An initiative of the
BLOCKCHAIN RESEARCH INSTITUTE
Consensus 2018 5
MetalPay
6 Consensus 2018
Michael Casey
Michael Casey is chairman of CoinDesk’s advisory board and
a senior advisor at MIT Media Labs’s Digital Currency Initia-
tive. He also consults for businesses on the challenges and
opportunities in blockchain and digital asset technologies.
Formerly a columnist at The Wall Street Journal, Casey has
authored five books, including The Age of Cryptocurrency:
How Bitcoin and Digital Money are Challenging the Global
Economic Order, published in 2015, and its follow-up, The
Truth Machine: the Blockchain and the Future of Everything,
which was released in February of 2018. Both were co-au-
thored with Paul Vigna of The Wall Street Journal.
Mic Bowman
Mic Bowman is a principal engineer in Intel Labs and leads the distributed
ledger research group. Mic has spent over 20 years working on large-scale
databases and distributed systems. For the last two years, he has served as
a member of the Hyperledger Technical Steering Committee contributing to
various aspects of architecture definition and evaluation of technologies for
privacy and confidentiality. He is currently working on methods for improving
the security, scalability, and privacy of distributed ledgers. He received his
PhD in Computer Science from the University of Arizona.
Simon Johnson
Simon Johnson is the Ronald A. Kurtz (1954) Professor of Entrepreneurship
at the MIT Sloan School of Management, where he is also head of the Global
Economics and Management group and chair of the Sloan Fellows MBA
Program Committee. He co-founded and currently leads the popular Global
Entrepreneurship Lab (GLAB) course.
Johnson is a senior fellow at the Peterson Institute for International Economics
in Washington, D.C., a co-founder of BaselineScenario.com, and a member
since inception of the FDIC’s Systemic Resolution Advisory Committee.
Johnson holds a BA in economics and politics from the University of
Oxford, an MA in economics from the University of Manchester, and a PhD in
economics from MIT.
Consensus 2018 7
Balaji S. Srinivasan
Balaji S. Srinivasan is the CTO of Coinbase and a Board Partner at Andreessen
Horowitz. He was previously CEO at Earn.com, which was recently sold to Coin-
base. Before taking the CEO role at Earn.com, Dr. Srinivasan was a General
Partner at Andreessen Horowitz.
Prior to joining a16z, he was the cofounder and CTO of Founders Fund-
backed Counsyl, where he won a Wall Street Journal Innovation Award and
was named to the MIT TR35. Dr. Srinivasan holds a BS, MS, and PhD in Elec-
trical Engineering and an MS in Chemical Engineering from Stanford University.
He also teaches the occasional class at Stanford, including an online MOOC in
2013 which reached 250,000+ students worldwide.
Maja Vujinovic
Maja Vujinovic is an executive leader in both entrepreneurial and corporate
environments. Starting as an entrepreneur in mobile payments in Sub Saharan
Africa, Maja worked across five continents at the intersection of technology
and infrastructure finance.
In her past role as a Chief Innovation Officer of Emerging Tech & Future
O
of Work at GE, Digital, she spearheaded the full vision and framework for
blockchain and transformational change. She designed and ran pilots across
treasury, aviation, energy and additive manufacturing addressing internal
inefficiencies. Maja was a catalyst for ideas such as electronic wallet for auton-
omous machines in GE’s brilliant factory project.
Maja is an investor and a CEO of OGroup, an investment firm and accelerator
focused on emerging technologies such as blockchain and token economics.
Pindar Wong
Pindar Wong is the Chairman of VeriFi (Hong Kong) Ltd., a discrete Internet Finan-
cial Infrastructure consultancy. Pindar is an Internet pioneer, who co-founded
the first licensed Internet Service Provider in HK and leads the “Belt and Road
Blockchain Consortium.”
Pindar also serves on the Hong Kong Government’s Committee on Inno-
vation, Technology and Re-industrialiZation, as a Director of the Hong Kong
Applied Science and Technology Research Institute (ASTRI). He also serves on
the HK Trade Development Council ICT Services advisory committee and the
HKUST School of Engineering Advisory Committee.
8 Consensus 2018
m
AACoin
AACoin is the virtual currency/token issued by Antique World, it’s backed by the assets of Antique World with guaranteed base
value. AACoin is designed to be stable and suitable for antique and art lovers to enhance the liquidity of their existing collec-
tions, develop new collecrtions cross countries, and maximize their investments. With AACoin, trades in Antique World is not
limited by locations and local currencies.
Our Ecosystem
AACoin Exchange Antique & Art
Service Center Insurance Service
Valuation Service
Antique World Allow members to exchange with Our insurance service system
other virtual currencies and fiat provides our Our world-class team of analysts
Social Media currencies. Using AACoin Wallet to members various insurance use the cutting-edge technology
access, store, transfer and track packages on the antiques or and rigorous evaluation process
AACoin. The platform can be easily arts in transaction, to provide the highest level of
The entry point for all accessed through IOS APP, Android shipment, and storage. antique & art assessment service
the systems in APP, and desktop/mobile web. to the members.
Antique World. It is a
multilingual social
network platform
designed for all antique
and art lovers. It allows
the Antique World
members to look up the
Antique & Art Auction Service
catalog of all the
Mortgage Service
antiques and arts in the
Antique World Museum Provide members the The auction platform
and the estimated investment leverage by provide e-commerce features
mortgage loans on their for the members to buy or sell
values accordingly. antiques & arts, with the their antiques and arts,
mortgage amount received, our payment processed with
members would have more AACoins or USD.
flexibility to reinvest.
With all this money being made recovery to higher highs came Most importantly, the Segregated
and lost, and the “What the hell is much sooner than it did for, say, the Witness (SegWit) protocol upgrade
going on?” questions it provoked Nasdaq, which took 15 years to top was introduced, which streamlined
among the general public, Bitcoin, its dot-com bubble peak of March data management and enabled
cryptocurrencies and blockchain 2000. The crypto markets may be other software improvements.
technology were thrust into the redefining the nature of investment In particular, SegWit facilitated
headlines. Suddenly, they were booms, speeding up the entire one the most exciting cryptocur-
topics of conversation at dinner process of speculation, correction, rency innovations since Satoshi
tables. Mothers were asking their retrenchment and recovery. Nakamoto’s white paper: the Light-
crypto-obsessed teenagers what ning Network. Now live on Bitcoin,
coin to buy. And those of us who’d Big Changes Under the Litecoin and other cryptocurren-
floated around the space for some Hood, Too cies but still in its infancy, Lightning
years were looked upon with Price, though, is a distraction. It is an off-chain payment channel
intrigue: Are you one of them? A makes people miss the forest for solution that promises to signifi-
bitcoin billionaire? (For the record, I the trees, overlooking the important cantly increase transaction-pro-
most decidedly am not.) innovations on which the invest- cessing, enable derivative-like smart
This level of public curiosity was ment ideas are supposedly founded. contracts, and lower costs.
totally new. But the market mania So, we must note that amid all the Not to be outdone, Ethereum
wasn’t, not for crypto. Ratio-wise, the money mania, big changes were developers introduced their own
BPI chart of 2017-2018 looks similar also occurring with the development scaling initiatives. These included
to the 12 months from April 30, 2013, of crypto technology itself. the Lightning-inspired Raiden and
when bitcoin started at $144.30, In that same 12-month period, Plasma, which aimed to enable smart
soared to $1,151.30 on December 4, the Bitcoin community’s three-year contracts at massive scale. Mean-
2013, and then slid to $445.87 on internecine war, otherwise known while, new projects from Polkadot,
April 30, 2014, where it more or less as the “block size debate,” came to Ripple and Cosmos and others
stayed for the rest of the year. The a divisive conclusion with a software sought cross-blockchain interop-
erability while still more worked on
decentralized exchanges for custo-
dy-free token trading.
The crypto markets may Meanwhile, businesses, NGOs
and government agencies launched
be redefining the nature of blockchain projects covering a
smorgasbord of use cases. Almost
investment booms, speeding every day a new private or public
collaboration was launched for
up the entire process of supply chain management, digital
identity, land titles, trade finance,
speculation, correction, commodity exchanges, decentral-
ized electricity or additive manu-
retrenchment and recovery. facturing. The UN, the IMF and the
World Bank set up blockchain labs.
Consortia comprising established
companies, startups and even state
same goes for the calendar year hard fork to create Bitcoin Cash, a governments and cities were formed
2011, when the price started at 30 new, competing version of Bitcoin to explore open-source standards in
cents, peaked at $29.60 on June 8, with a larger block capacity. That energy, climate data, and the Internet
and then closed the year at $4.25. left the community that supported of Things. People everywhere were
I believe we were in a bubble the original small-block standard, striving to make blockchain go live.
in 2017, but we were also in one in now known as Bitcoin Core, free to Many of these ideas are ahead
2013 and in 2011. In those two cases, incorporate code changes of its own. of their time, mostly because the
underlying infrastructure, the proto- and self-regulating governing money also paid for the infrastruc-
cols and programming rules that bodies to encourage standards, ture that would underlay Internet 2.0
govern platforms such as Bitcoin adjudicate disputes and disincen- post-bubble. It enabled algorithmic
or Ethereum, aren’t sufficiently tivize wrongdoing. search, cloud computing, smart-
developed for them. That they are phones, social media, big data and
being proposed puts pressure on Welcoming the Bubble all the other functionality that have
core blockchain developers. Unlike Although the hysteria ensures changed our way of life and made a
the mostly academic and publicly this industry’s development won’t few titans of tech fabulously wealthy
funded founders of the Internet, chart a methodical straight line, the and powerful.
who worked for decades in rela- crazed market need not be viewed What’s the equivalent now? The
tive obscurity before their work on as a negative phenomenon. capital unleashed by the crypto
packet switching and the Transmis- Throughout history, the arrival bubble isn’t funding physical infra-
sion Control and Internet Protocols of transformative technologies has structure but social infrastructure.
was ready for the online boom in the been accompanied by Wild West- Token valuations might be out of
nineties, blockchain developers are like speculation. It happened with whack with reality and imply big
in the spotlight. The world is already electricity, with railroads and with losses for many. But they’re also
demanding applications while highly
speculative crypto markets want
returns on their money. Having We don’t know what new
hundreds of billions of dollars at
stake does not make for an ideal, innovations will emerge, but
tranquil environment for testing and
developing software. it’s fair to say these early
Still, developers have no choice.
Like it or not, the ecosystem is innovators are laying the
coming together at once rather than
in sequence. Programmers and cryp- building blocks of our future,
tographers are working on cleaner
code, designing smarter security decentralized economy
solutions and installing faster trans-
action mechanisms at or on top of
the base protocol layer, while estab- the Internet itself in the nineties. incentivizing global groups of inno-
lished companies and startups are As the economist Carlota Perez vators to come together online,
rolling out smartphone products explains, speculation and bubbles conceive of new decentralized
at the higher, application layer. All are not just a byproduct but are a economic models, and codify those
this is occurring as day-traders flip core feature of how new, disrup- ideas in open-source software. Their
in and out of multiple crypto tokens, tive technologies are developed, startups may fail but their code will
creating huge, distracting gyrations deployed and ultimately incorpo- be freely available for others to later
in the developers’ own net worth. rated into our economy. work with, even more readily and
Out of this chaos, order will even- Speculation unlocks cheap capital. cheaply than the dot-com era fiber
tually come. It will partly be forced Much of it just lines the pockets of helped Google, Facebook and co.
by regulators like the Securities and early investors in crazy, overvalued in the 2000s. We don’t know what
Exchange Commission, which will proposals such as Pets.com in 1999, new innovations will emerge, but
set rules and enforce them, hope- but it also funds real, valuable infra- it’s fair to say these early innovators
fully without killing innovation. Order structure. In the dot-com bubble, are laying the building blocks of our
will also come from the community money went into physical infrastruc- future, decentralized economy.
itself, driven by the demands of the ture: fiber-optic cable, giant server
market. We need best practices for farms, research into 3G mobile tech- The Big Idea
token-issuing startups, software nologies. People lost billions on At times like this, there’s a broad
audits and other quality assurances, silly ideas in the nineties but their understanding that something big
is happening. It’s just hard to predict life. Without bookkeeping, modern they don’t trust each other.
its economic impacts. So people society simply couldn’t function. Blockchains promise to supplant
throw scattershot money at every- We’d have no idea of who owes this centralized approach with a
thing. Inevitably, their bets over- what to whom and of how much distributed, shared ledger whose
shoot and prices decline. That this is value to assign to the assets of indi- updates follow a robust, ongoing
going on in crypto is perhaps vindi- viduals, companies and entire econ- consensus in real-time. At any given
cation of the underlying technolo- omies. It’s how we overcome the time, everyone who’s with access can
gy’s importance. core challenge of mistrust among know the current state of agreed-to
This begs some fundamental strangers, the means by which we transactions and balances. No more
questions: What is the paradigm reach agreement on sets of facts need for weekly, monthly, quarterly,
shift, the big idea that breeds such and make exchanges of value. This or annual reconciliations and audits.
excitement? Why, after almost ten is the stuff of civilization. Anything The entire rhythm of our financial
years is the market assigning $159 that transforms this function is, by system could change.
billion of value to a digital asset definition, extremely important. And it’s not just financial data.
based on a software system that Until now, we’ve had to rely on Valuable information of all kinds
no one controls? What’s so special, centralized ledger keepers, essen- can be tracked in this decentralized
anyway, about a decentralized, tially requiring us to trust the say-so manner. It includes the online data
censorship-resistant system of of those who control the books. that defines digital identities, titles
value exchange? We’ve assigned regulators and audi- to assets, and compliance infor-
The big, underlying idea, I believe, tors to randomly check their work, mation. It could disintermediate
is that blockchain technology can but for the most part we are blind to middlemen of all stripes because,
upend not just the business models the accuracy of the data, beholden by having a decentralized algorithm
of recent decades but a millennia-old to what the bookkeeper tells us. resolve our mutual mistrust rather
societal practice of deep signifi- This siloed recordkeeping results than depending on all-knowing
cance to civilization. Its decentral- in a “cost of trust” that takes many centralized ledger-keepers, we can
ized structure portends a profound forms. One is found in financial crises, trade directly with each other. When
change in ledger-keeping, a such as that of 2008, when society this system is reliably attached
to trusted devices in the Internet
of Things, it could even allow for
machine-to-machine trade.
It’s hard to overstate how Such a transformation points to
unimaginable new efficiencies. It
important ledgers are to could create untold new forms of
value. And it could massively disrupt
our way of life. Without existing businesses and jobs.
These prospects have stirred a
bookkeeping, modern society hive mind of dreamers and fueled
an unprecedented bout of economic
simply couldn’t function. speculation. We don’t know where
it’s headed. But we sense some-
thing profound is afoot.
Blockchain is a software tech-
nology, but its sweeping potential
dramatic re-imagination of society’s lost faith in the ledgers produced by has fostered a giant sideline industry
methods for tracking and assigning banks such as Lehman Brothers and of speculation and ideation. As the
value. It overturns the centralized the Royal Bank of Scotland. Another technology “goes live,” this hurly
model installed with the first ledger, is less obvious: the endless work of burly process of creative innovation
the Code of Hammurabi, which was millions of accountants at businesses and destruction will only intensify.
founded around 1754 BC in Babylon. around the world, each reconciling That’s both exciting and daunting,
It’s hard to overstate how their company’s books to those of but it poses massive potential
important ledgers are to our way of their counterparties. Why? Because payoffs. Join us for the ride.
ur Chairman and CEO, Abby One year later, as we gather as a community We are still building, laying the foundation
Johnson spoke at Consensus last again, do these four challenges continue? that will enable scalability and wider
year to acknowledge the potential Which have changed? adoption.
for the innovations we’re exploring.
Abby shared stories from a few I see signs of maturity. Yes, many obstacles The excitement to date has largely been
of our bitcoin and blockchain experiments, and remain, and the work we are all doing is focused around retail investors, and
addressed the barriers – or “blockers” – that challenging and remains largely undefined. institutional groups have watched patiently.
needed to be addressed before this future is Yet, we have come a long way in one year. Are we nearing readiness of enterprise-
realized, including those related to technology, ready tools and solutions for digital assets?
Government regulators in several countries I – and my colleagues – remain optimistic.
regulation and the user experience.
have published their opinions, and
financial services regulators are starting My team and others within Fidelity have
Technology. The tradeoffs between to recognize the need to further explore worked for several years to envision a future
scalability, privacy and peer-to-peer the developments where the promise of
settlement being made. I’ve “What if this could do for some form of these new
had the chance to digital assets is mature,
Policy. Innovation in this space is fast- meet with several
the transfer of value what accessible and a key part
moving and is often outpacing regulation. such regulators here the internet did for the of our customers’ daily
We continue to work with regulators and in the U.S. and am transfer of information?” lives. We have been
policymakers to have an open dialogue encouraged to see working to help create
and to find solutions to protect customers’ ABBY JOHNSON, CONSENSUS 2017
a true willingness to that future as well, both
interests, but there is more work to be done learn and understand. in allocation of resources
It appears these conversations will continue and the talent we’ve brought together to
Control. Networks like Bitcoin and Ethereum with people across our community. build, experiment, learn, and build again.
by design have no formalized management
structure. Are these systems growing with the We believe policymakers must provide We are deep in several projects, some
right level of governance where needed? clear and consistent guidance, both from of which we just aren’t ready to discuss
regulator-to-regulator and from jurisdiction- yet, so we’ll be watching alongside you at
Human. Blockchain was created for and by to-jurisdiction. Inconsistent policy guidance Consensus this year, eager to hear what new
each of us. However, we need to come up will create confusion and hesitancy, stifling developments are on the horizon.
with systems and products that are more innovation by firms interested in exploring
adaptable and bring joy to users these new and emerging technologies.
We were here one year ago to ask the Blockchain We’re seeing OTC desks, the establishment
community to collaborate around the hard of new exchanges, decreased volatility, What obstacles do you think
conversations, to join us in addressing these rollout of futures trading, and clearer remain for bitcoin?
blockers with other businesses, with regulators, guidance from a number of U.S. states.
Find us online and let us know:
and with each other as we all work toward While current solutions are largely
solutions. imperfect, these are all signs of progress @fidelitylabs
that provide both encouragement and
Many responded to our invitation to collaborate frustration to those of us who are working in @HadleyStern
and discuss ideas to overcome these challenges. this every day.
Fidelity Labs is a Fidelity Investments company. Fidelity Labs provides innovative products, services, content and tools, as a service to its affiliates and as a subsidiary of
FMR LLC. Based on user reaction and input, Fidelity Labs is better able to engage in technology research and planning for the Fidelity family of companies. 841201.1.0
16 Consensus 2018
Consensus 2018 17
networks can’t rely upon a central ascribe all authority to the block- For example, a blockchain can accu-
authority. Traditional means to assert chain, we believe IoT applications rately record the transfer of access
and verify participant identity and must achieve a balance of authority. rights to a piece of information that
integrity fail, because participating asserts that a container was shipped
Things are made by different manu- Technology across town. However, a blockchain
facturers, run different operating Requirements is unable to assert the authenticity
systems, communicate with different Establishing trust in the information of the GPS readings captured in the
protocols, and act on behalf of shared among Things creates new shipping record.
different owners who have different requirements for blockchain tech- Purists from the cryptocurrency
motives. The answer may well lie in nologies. Generally, blockchain tech- world will argue that a “permis-
the emerging technology that has nologies operate as an authority for sioned blockchain” is an oxymoron;
become known as “blockchain.” well-defined, deterministic systems. however some form of identity
verification is required for partici-
pants who join the network so they
can trust the information the Thing
MEW Connect
This is a nice ad. The uncluttered design makes you feel comfortable. The conservative fonts
and soothing colors make you feel secure, right? The person behind this ad is probably pretty
responsible. A firm handshake kind of person. A socks and sandals at the beach kind of person.
Just the kind of person you want securing your funds. But glossy paper and elegant fonts can’t
provide security. Only blockchain technology in the hands of savvy users can do that. MEW,
Ethereum’s original and most trusted wallet interface, now brings you MEW Connect. With
secondary verification and a clean user interface, MEW Connect allows you secure your funds
as never before. As it turns out, that responsible person behind this nice ad was you all along.
Take your socks off. Enjoy the beach.
www.myetherwallet.com
20 Consensus 2018
© 2018 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates,
and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
www.pwc.com/structure for further details. This content is for general information purposes only, and
should not be used as a substitute for consultation with professional advisors.
Consensus Agenda
441581-2018-PwC FINAL.indd
Blockchain 21
Conference Ad.indd 1 4/4/2018 5/9/18 9:10 AM
8:46:02 PM
ADAPTING BLOCKCHAIN FOR IoT
there is a strong purchaser at one incumbent entity to set up the infra- Finally, we will likely see commen-
end of a supply chain, there is every structure to distribute orchestration. suration of data generated at the
reason for that entity to simply set Blockchains are uniquely suited to edge—not just across autonomous
up a distributed database (that it micro-transactions, so scale may Things or organizations, but across
autonomous ecosystems. At this
point the blockchain will be more
efficient than centralized systems
Devices will autonomously at managing the complexities of
non-linear supply chains, managing
form communities, exchange identity, provenance, shared data
sets, and running smart contracts.
information and present us While we will be trusting machines
to make some decisions and take
with options some actions on our behalves,
businesses in IoT will always want
to retain the ability to revoke or
reverse the actions taken by a smart
manages centrally) and require all help solve this problem. The IoT contract, since humans are noto-
vendors participating in its supply community has seen a few subscrip- riously bad at contingency plan-
chain to enter their data into it. Until tion models and nonprofit models. ning or future prediction, and the
we enter the realm of multiple over- However, until there emerges a equipment that will be acting on our
lapping ecosystems and complex clear, repeatable, compelling busi- behalves will also often be respon-
non-linear, dynamic supply chains ness model, adoption of blockchains sible for keeping us safe.
(think: distributed manufacturing for IoT will be slow.
with over a dozen contributors to Over the next couple of years Recommendations
any given Thing printed, each with we will likely see an increasing We often talk about a blockchain as a
unique IP, equipment, and certi- number of pilots and small scale replacement for a trusted third party
fications), it is difficult to find an deployments using the technology for interactions within a community;
economically compelling use for in sub-optimal usages, e.g. stan- that is, the community ascribes to the
truly decentralized ledgers. dard supply chains with a dozen or blockchain ultimate authority about
However, the competitive envi- so participants to improve speed “truth.” For applications built around
ronment in which these incumbents of asset tracking or provenance a network of Things, however, the
operate in is rapidly changing, with and reduction of disputes through blockchain must be situated within
3D-printing enabling distributed audit—all important advances in IoT. a much larger context that incor-
manufacturing, and barriers to In these early trials, industry and porates institutional relationships,
entry around machine learning and ecosystem leaders will seek to prove legal requirements, and regulatory
other fast-developing technologies cost savings or incremental revenue. control.
lowering. To compete, enterprises We will then witness the evolu- There is a very real danger for
may be forced to adopt more open tion of standards that allow for cross those deploying blockchain-based
systems. The IoT industry is inevi- organizational device identity and solutions for IoT to believe that the
tably expanding into more complex configuration, with early methods tamper proof nature of the block-
ecosystems. As a result, we expect for partitioning workloads across the chain provides assurances about
compelling use cases for blockchain variety of IoT devices, and protecting the integrity and trustworthiness
will become more apparent. data or its meta-inputs via linked of information (and about actions
Herein lies a conundrum. Single trusted execution engines or reten- driven by that information). A more
strong purchasers orchestrate tion of encrypted states as data realistic view is that the role of the
ecosystems around a supply chain moves across edge, fog, and cloud blockchain transitions from a source
because they accrue revenue by nodes. Devices will autonomously of “shared truth” about the state
doing so. Distributed collabora- form communities, exchange infor- of a system to a log of “decisions
tion results in distributed value, so mation, and present us with options and actions” that might need to be
there is little incentive for any single, for action based on their interactions. adjusted in the future.
24 Consensus 2018
• Conducting transactions involving ICOs and cryptocurrencies (including Bitcoin and Ether);
• Managing and investing in funds that transact in blockchain projects (such as smart contracts) and digital asset
initiatives that have resulted from ICOs;
• Regulatory and enforcement matters subject to federal, state and self-regulatory organization requirements and
authorities; and
up prices), a boom-bust cycle (which clearly the problem that is being There may be scams or weak
can even bring down the financial addressed—it is relatively hard to governance or just bad ideas—we
system and have broader delete- raise early stage capital, and under have seen plenty of each in every
rious macroeconomic effects). the existing venture capital model it previous investment boom. And,
We responded over the following helps to be located in one of a few to be clear, in any such emerging
century or so with various “soft” or places (e.g., Silicon Valley broadly market situations, you really can
institutional innovations that started defined, Boston, and New York). lose everything you risk, without
in the private sector but ultimately What about all the people with recourse or recompense.
acquired the backing of govern- good ideas who live elsewhere? And Picking up on some of these risks,
ment. Dangerous behavior was what about investors who would like Mark Carney, governor of the Bank
constrained through the award of to take some well-considered risk of England, and Agustin Carstens,
legal damages and through the but who are not considered qualified head of the Bank for International
protections demand by trade unions. under the existing, rather antiquated Settlements, weighed in recently
The predatory pricing behavior of rules (which are based entirely on against crypto-currencies, including
trusts was limited by law and by how much “investable” wealth you but not limited to Bitcoin. Their
speeches are quite different but
both are wonderfully erudite and
to be quite revolutionary.
way of raising capital today is rather
like hearing about the properties of
radium in 1898 and remarking, “is
that all it can do?”
the executive—Teddy Roosevelt’s have). Or what if you have an idea Now, it’s true that anyone who
first antitrust action was against that, for whatever reason, is not on was concerned about the health
a regional railroad monopoly. A the current wish list for the people implications and other unintended
central bank was created because, who run VC funds? consequences of discovering radio-
following the panic of 1907, no one If there are barriers to entry into active elements was exactly right—
was confident that purely private venture capital, as seems plausible, and should have been listened to
mechanisms could prevent collapses it is fairly straightforward to reason more carefully. Carney and Carstens
in a severe panic, and securities that there are very high returns make some good points in this
regulation emerged because the to capital in this sector, at least on regard.
consequences of the Crash of 1929 average and over a sufficiently And—this is a point nailed by
proved so devastating. David Moss’s long period of time. Who is able to Wells—any sufficiently profound
compelling book on the rise of the participate in those opportunities, development in technology cannot
U.S. federal government is aptly i.e., invest in a VC fund? Not most avoid having major effects on the
titled, When All Else Fails. people who are reading this column. structure of society, including the
Seen in this context, how should To be sure, there are many prob- value of firms and who has (and
we see ICO—joint stock compa- lems to be solved along the way to keeps) a good job. All such effects
nies, or railroad ventures, or some ICOs—or anything that descends are inherently hard to predict. To
combination of both? We don’t know from them—allowing for a more those who wish to hurry change—be
yet for sure, but we can see more democratic approach to risk-taking. careful what you wish for.
Still, it is sudden change that much the process could speed up We should probably also rethink
generally proves most difficult to once the resources of a well-run what kind of investment portfolios
handle, and there are good reasons country were applied to a problem are recommended at different stages
to think we have some time before with single-minded concentration, of life. Who should be regarded as
the full implications of ICOs (and their i.e., the Manhattan Project. an accredited investor, for example
institutional grandchildren) are upon Wells also thought—and this is in a technology they know well—and
us. The SEC will apply existing rules interesting for the ICO context—that when they are in their early twenties
in a judicious manner—investors
really do need protection, and there
is actually bipartisan support on It is hard to think of an
this point. The Commodity Futures
Trading Commission may well weigh instance of technological
in regarding how particular instru-
ments should be traded. The lead-
change in modern America
ership of both organizations seem,
at this time, to be paying close and
that has not gone through some
sensible attention to developments. phase of exuberance, followed by
It should not surprise us if, in our
usual empirical and haphazard way, consolidation and—sometimes—
we find a path along which regula-
tion can support more decentral- eventual impact.
ized and lower cost ways of raising
capital. Gate-keepers in the financial once one country had acquired (so there is plenty of time to ride the
world, who do well by controlling destructive nuclear technology, cycle)? Investors need protection,
various bottlenecks, will come under almost all countries in the world but against what and through what
increasing pressure. would follow suit. He was wrong methods exactly?
Whatever happens, we should about that. Similarly, with economic None of this means that utopia is
always expect a boom-bust cycle. and financial innovations, there are around the corner or that produc-
It is hard to think of an instance of plenty of reasons why some coun- tivity growth is about to jump
technological change in modern tries will struggle to emulate the upwards. In The World Set Free, H.G.
America that has not gone through leaders—typically because local Wells was too optimistic about the
some phase of exuberance, followed oligarchs prefer the status quo. future of benevolent government,
by consolidation and—sometimes – In the end, some relatively and we would do well to avoid that
eventual impact. prosperous countries—this could mistake.
include the U.S. or perhaps smaller But the way capital finds and
What We Can Prepare countries with less of a stake in the supports opportunities around the
for existing global financial system— world is not just changing—it has
If better access to risk capital lies in will end up with a better way of already changed. Spend some time
our future, what can we say about raising capital and, most likely, an thinking through the implications.
when this might happen? associated change in how corporate ICOs offer a more direct route
This is the hardest question, and governance operates. Fundamental for both tapping and deploying
likely not a good idea to take (or bet issues surrounding the protection funds, for matching founders with
on) a strong view. With regard to the of privacy will need to be dealt with investors. That turns out to be
future of power generation, trans- along the way. A host of related quite revolutionary.
portation, and warfare, H.G. Wells issues to be addressed include It is hard to think of an instance
was right on the natural course of the precise nature of disclosure, of technological change in modern
science—he picked the 1930s as key what meaningful reporting through America that has not gone through
decade for applications to emerge financial accounting means, and some phase of exuberance, followed
from the theory of atoms—but he how markets obtain and respond by consolidation and—sometimes—
completely failed to anticipate how to information. eventual impact.
High growth is matched by high Despite piling up 500 million users processions of the prominent were
volatility and even higher expec- in six years, in 2010 people were trotted out to denounce the heresy.
tations, leading to hype cycles and still calling the company a bubble Hundreds of obituaries and dozens
periods of apparent overvaluation, that would never live up to the of “bans” later, of course, Bitcoin is
until eventually the technology is outlandish $33B valuation that now worth many billions of dollars. It
globally ubiquitous. Then the new people had placed on it. This narra- hasn’t just survived but has thrived,
critique is no longer about faddish- tive still held as late as August 2012, and has given rise to Ethereum and
ness or lack of utility but about ines- as Facebook’s stock plummeted dozens of other coins and chains.
capable monopoly, until the next after the IPO and it was an open But it’s far too early to declare
disruption appears on the horizon question as to whether they’d be victory. No longer dismissed as a
and the cycle begins anew. able to monetize on mobile. By 2017, passing fad, and not yet attacked as
a dominant monopoly, today’s argu-
ment against the blockchain sector
with transaction fees and wait times obvious how many people are using tech know of Kickstarter, Indiegogo,
(already partially obviated via Light- Ethereum in this way, it is obvious and GoFundMe. But when consid-
ning), the technical advantages that it’s far better than wires for ered internationally, the sector is
vis-a-vis gold are obvious and at those that are. To gauge how wide- even bigger than you might think. It
this point well-nigh indisputable. spread this use case is, we spoke to was estimated to be in the billions
The gradual replacement of gold by Peter Smith, CEO of Blockchain for annually and growing fast even
Bitcoin on many balance sheets and this article, who noted that “a signif- before January 2017. And then came
in a wide variety of financial contexts icant fraction of our tens of millions the year of ICOs and token sales.
is now just a matter of time and insti-
tutional inertia. Given that the total
value of gold is estimated to range
into the trillions of dollars, scaling
the digital gold application alone
The sheer speed of the transaction
can justify the total market cap of the increases the velocity of
blockchain sector.
business and the trust between
A Better SWIFT
Second, consider international wire geographically distributed partners.
transfers. If two startups or contrac-
tors on either side of the world want Forget same-day transfer; this
to transact and if both parties are
aware of cryptocurrency, Ethereum
is same-minute transfer.
is increasingly their medium of
choice. The reasons for this low-pro-
file revolution in global money trans- of users are using the Blockchain With almost nine billion dollars
mission are simple: Ethereum settles Wallet to enable large, fast cross- worth of token sales and ICOs
in roughly 14 seconds, works 24/7 in border transactions. We may publish consummated within the span of
any country, allows instantaneous statistics on this in the future.” about a year, we have entered a
generation of receiving addresses, In theory, this use case will soon completely new age for crowd-
and is now fairly well known in the face competition from banks, who funding. To put this in perspective,
tech community. Thus, if you can will adopt SWIFT gpi and bring just three years ago Ethereum itself
email someone, you can send them settlement times down. But in prac- raised about $15 million in what
$50,000 in Ethereum about as tice international wires still take was then one of the largest crowd-
quickly and easily as you can send multiple business days to clear funders of all time. But the advent
them an attachment. while Ethereum reliably clears within of ICOs and token sales completely
This allows medium-scale inter- seconds—and has for years. Ethe- demolished all previous records.
national deals to close in realtime. reum also saves both parties a trip As with gold and international wire
The vendor emails over an Ethereum to the bank during business hours, transfers, the use of blockchain
address, and the customer Docu- as ETH transactions can be sent technology empirically introduced
signs a contract and sends the Ethe- between any pair of devices at any a 10X improvement, allowing inter-
reum. Receipt is confirmed over the time of day. In this case, the real national crowdfunders on the scale
phone as both parties hit refresh on world utility of a blockchain-based of hundreds of millions of dollars to
Etherscan. The sheer speed of the technology has actually been unde- occur for the first time. And thanks
transaction increases the velocity rhyped. It is already 10X faster than to the blockchain, tens of millions
of business and the trust between SWIFT, and has been for some time. of dollars from all around the world
geographically distributed partners. could now be sent and settled within
Forget same-day transfer; this is A Better Crowdfunder 30 seconds.
same-minute transfer. As a third example of what the Please note: remarking on these
We’ve personally seen this exact blockchain has already done for us, totals is meant to offer neither praise
use case many times. While it’s not consider crowdfunding. Most folks in nor criticism of the specific projects
which have raised these funds. It is the claim that “nobody has come up regulatory issues surrounding ICOs
simply important to note that block- with a use case for blockchain after and crypto-crowdfunding, we’ll have
chain-driven improvements in crowd- 10 years”, as the number of parties to spend time with policy makers
funding technology have enabled that can benefit from these three and heads of state.
financings of an unprecedented use cases includes every entity with But these kinds of objections miss
scale and speed, literally 10X larger gold on the balance sheet, every the forest for the trees. A new tech-
and faster than what came before. business with transnational trade, nology is typically not mildly superior
And while many regulatory issues and every organization raising to an existing technology in every
respect, but is instead 10X better
on one key axis. That 10X improve-
ment draws customers and provides
A new technology is typically the capital and rationale for fixing
the other defects. The early iPhone
not mildly superior to an camera is a good case in point—
while far worse than a dedicated
better on one key axis. That led to a rapid rise in use and a
concomitant rapid investment in the
feature set of network-connected,
phone-based cameras. We’re seeing
still need to be worked out to fully money online. While scaling the a similar phenomenon with block-
mainstream ICOs and token sales, it blockchain-driven 10X advantages chain-based technologies, where
is quite possible that the blockchain out to all these entities will doubt- their 10X advantages mean they are
will go on to transform not just crowd- less take some time, it will also reli- gaining ground despite their largely
funding, but venture capital itself. ably generate billions in value. remediable flaws.
the globe estimate an increase in 2025. Fleet management in trans- hackable – both your own and those
revenues of 10% or more per year portation, security and surveillance of your business partners -- which
in the next five years, according applications in government, inven- means your business is still at risk.
to Industry Week. Thirty percent tory and warehouse management There’s a dire need to find additional,
of manufacturers expect revenue applications in retail and industrial comprehensive enterprise solutions
growth between 5 and 10%. The asset management in primary manu- to security, ones that go beyond
problem is that this growth comes facturing will be the hottest areas simply building an ever bigger wall
with major challenges, especially in for IoT growth. All of this will require to keep the attackers out.
the face of resource shortages and faster, more transparent processes Blockchain technology seeks
environmental and efficiency imper- and transactions throughout the to address these problems via a
atives. Companies are catching on supply chain. common data architecture that lets
to the fact that their SCM must be Today, manufacturing compa- non-trusting parties more securely
share information. Blockchains are
designed to permanently record
be updated instantly to a block- this workflow is then triggered when made possible, giving lenders and
chain that is transparent and trust- a producer submits the packing list big companies the confidence to
worthy. For the potential benefits for whatever commodity or good inject financing and other forms of
consider just one problem facing is being delivered to the shipper. liquidity into supply chains. This
the global economy: that of pirated As subsequent steps in the supply could in turn help smaller suppliers
goods, which the Organization for chain are sequentially completed, overcome their persistent working
Economic Cooperation and Devel- the documents are obtained and capital challenges. In a related
opment (OECD) estimates account distributed, allowing all participants field, blockchain systems could also
for nearly half a trillion dollars a year. in the process to see what has been enhance predictive analytics, by
In the automotive industry alone, it submitted, who submitted it, and which firms can collect data, model
has been estimated that counter- when it was submitted. No one it, generate statistics, and then use
feiting costs $12 billion dollars in participant can alter a record without those statistics to make data-driven
lost sales annually, impacting up to consensus from other parties on the business decisions. Since block-
200,000 jobs.1 And in pharmaceu- network. chains record each point in a process,
ticals, there’s an epidemic of drug Another exciting supply-chain they can provide verifiably accurate
overdoses that is in part attributed advantage of blockchains lies in data to determine statistical patterns
to counterfeited drugs. how businesses can manage ever- in anything from customer behavior
But the potential benefits go more-valuable data. In today’s 4th to risk exposure.
beyond provenance. Blockchains Industrial Revolution, where data When combined with rapid devel-
may also become a vital enabling is becoming the true gold, it will opments in IoT, this technology will
component of moves to enhance increasingly need to be exchanged eventually lead to full transactional
automation along supply chains, in efficient and collaborative ways. autonomy for machines. They will
since they can directly help to
automate the agreements upon
which automated transactions “Data collateralization” could give
will be based. Here the answer is
likely to lie in blockchain-based lenders and big companies the
“smart contracts,” which ensure
that pre-agreed obligations can be confidence to inject financing into
executed in an entirely program-
mable manner. Under a smart
supply chains. This could help
contract, all parties to an agree-
ment can be satisfied that payouts
smaller suppliers overcome
are delivered legitimately without their persistent working capital
the adjudication of a time- and
cost-consuming middleman. And challenges.
since blockchain-secured smart
contracts trigger transactions only
after prescribed criteria are met by Much of it will be generated by manage their own digital wallets,
signatories to the agreement, they automated devices, ensuring that loaded with cryptocurrency or
can mitigate the risk of relying upon the Internet of Things will need an specialized supply-chain tokens—
other parties to deliver on their accompanying “Ledger of Things” something I got GE to do in a pilot
commitments. to keep track of machine-to-ma- during my tenure there. Consider
In one example, the shipping chine exchanges of valuable infor- this scenario: A machine could run its
company Maersk it testing a block- mation. In other words, it will need a own predictive analytics, conclude
chain-based approach through a blockchain. that a replacement part is needed
partnership with IBM to put all docu- When information is protected by a certain time and then auto-
ments involved in bulk shipping into through this secure, multiparty matically place an order and pay for
a single template based on workflow; system, “data collateralization” is the part through a pre-established
1 Ford website
smart contract with a parts supplier. So, regardless of what evidence We should also note that block-
Imagine the cost and time savings the pilots provide, a challenge will chains, which depend upon
that would afford. continue to lie in enticing firms to use multi-computer networks, are inher-
it. Several practical considerations ently slower than centralized data-
Adoption? Not So Easy will dictate how quickly companies bases. As such, some argue that a
So far, much of the potential for adopt this technology and trans- distributed ledger that feeds into
blockchain solutions for SCM form their processes. It is easier to a centralized database is all that is
remains theoretical. The jury is still implement blockchain for intangible needed to maximize a supply chain.
out on whether blockchain tech- goods than for material ones, for This overlooks the public verifi-
nology actually is the fix it promises. example. And for tangible goods, it’s ability, integrity and transparency
We’re awaiting the results of pilots relatively easy to apply the technol- that blockchain provides, but it also
by IBM, Maersk, GE and others. ogy’s provenance-tracking where a argues for nuanced decision-making
around technology choices.
The bottom line is is that block-
chains are best suited where robust-
In reality, the problem is that ness, disintermediation, security,
proof of source, and proof of the
innovation is difficult for chain of custody are priorities. If
2 According to a recent report published by Tractica, enterprise applications of blockchain across the globe will see growth in annual revenue from
$2.5 billion in 2016 to $19.9 billion in 2025.
2015 World Economic Forum Report a more secure environment for and quality and if not received, they
stated that approximately 10 percent communicating with each other, will go somewhere else? Blockchains
of GDP will be stored on blockchain greater cross-business collabora- have significant potential to help busi-
technologies by 2025.3 Are these tion and engagement become nesses comply with those demands.
forecasts too optimistic? Too pessi- possible, which accelerates inno- By deferring questions of trust to a
mistic? It is, of course, impossible to vation and opens up new business decentralized algorithm that no one
answer those questions in a multi- opportunities. party controls, [blockchains] promise
polar world that makes it ever harder What’s also certain is that there is to both advance transparency along
to predict the future. an unprecedented speed of change existing supply chains and allow for
What we can say is that wide- in this and other technologies aimed more fluid, dynamic supply chains in
spread adoption of blockchain at the manufacturing industry. The general.
ledgers could have widespread question for any company leader When information is protected
benefits for the global economy, confronting this environment is: through this secure, multiparty
especially if it helps establish new how to ignite urgency within their system, “data collateralization” is
standards in trade and manufac- organization and incentivize their made possible, giving lenders and
turing. We could achieve much employees to be entrepreneurs big companies the confidence to
higher levels of security protection within, so that they keep up with inject financing and other forms of
for sensitive data, with a model technological and business changes. liquidity into supply chains. This
that’s superior to both firewalls Customers today are requiring could in turn help smaller suppliers
and non-disclosure agreements. faster, safer delivery, consistency, overcome their persistent working
And, by extension, if we can create security, reliability, accountability capital challenges.
3 A 2015 World Economic Forum Report states that approximately 10 percent of GDP will be stored on blockchain technologies by 2025.
the 65-plus countries involved in actually administered by Coin- “opt-in” approach inspired by the
China’s “Belt and Road Initiative.” Desk, Inc., the US company, and not Internet Corporation for Assigned
The Belt and Road Blockchain someone else. Names and Numbers (ICANN), which
Consortium, as our group came to As for the data validity issue, we successfully managed a similar
be known, recognized that as supply found that it was useful to borrow global policy endeavor for domain
chains evolve into highly automated, some of the thinking behind tradi- names.
data-driven ecosystems, they will tional finance notions of security, Other standards will also need
need the transparency, immutability
and accountability that blockchains
provide.
We felt the history of the
Verifiability and
Validity Internet’s development offers a
Already, large-scale enterprises like
Walmart, IBM and Maersk are deep in useful framework for addressing
blockchain-for-supply chain research
and a clutch of exciting startups the question of legal verifiability.
such as Provenance and Skuchain
are building blockchain-based tools
for the supply-chain management
industry. But the consortium recog- specifically the KYC, or know-your- to emerge in related industries to
nized two important barriers to the customer concept. The intersection ensure all parties have confidence
widespread adoption of a global of IoT with blockchains drives a need in the data being shared in a block-
blockchain-based trade architec- for hardware integrity, which we call chain environment. Of particular
ture. The first concerned the desire KYM (know your machine). The need value was the foundation last year
for legal certainty, and independent for a mechanism for online dispute of the Global Smart Container Alli-
verifiability, of unique blockchain resolution (ODR), one that lies ance in Shenzhen to drive standards
identifiers, which are currently often outside of the blockchain in ques- both for smart shipping containers
represented as QR (Quick Response) tion, also became apparent to us. that record and report the ambient
codes. The second concerned the In that case, the blockchain would state of their cargo and for “E-locks,”
liability and validity of data written provide initial evidence to lower the which are used to electronically seal
to an immutable blockchain, specif- cost of establishing “matters of fact.” the container for faster customs and
ically what to do in the case of erro- Any new, blockchain-based duty clearance. Since March 2016,
neous—let’s call it #FakeData. governance system for the Belt and E-locks have been successfully
We felt the history of the Inter- Road community will need a reliable, used between the customs author-
net’s development offers a useful trusted jurisdictional home. And for ities of Hong Kong and Shenzhen,
framework for addressing the ques- that we highlighted a key role for China’s Silicon Valley. By combining
tion of legal verifiability. We saw Hong Kong, with its access to the legal certainty with cryptographic
that verifying a blockchain address free and open Internet, its common certainty, the Belt and Road Block-
is conceptually similar to resolving law heritage, and a business credo chain will not prevent trade disputes
cross-border accountability issues of “public governance/private busi- from occurring—they will—but when
with Internet Domain Names, which ness.” Thus we argued that resolving they do the cost and complexity
identified a need for a Blockchain the “verifiability and validity” issues of having them will be dramati-
Naming Service (BNS), with common could be addressed by developing cally reduced. And that’s good for
business identity standards to inter- open standards for online dispute business.
face with sovereign company regis- resolution of blockchain identifiers
tries. Under this model, if coindesk. under HK Law, with legal certainty Toward “Pull” Demand
com wanted to operate a bitcoin provided by its Electronic Trans- Chains
wallet, anyone should be able to actions ordinance (Cap 553). We One exciting, highly disruptive
verify that a bitcoin address was adopted an open “bottom-up” outcome of blockchain integration
into global manufacturing and trade “pull-based” Demand Chains used in is relatively inexpensive to stock
is the prospect that businesses will e-commerce. digital bits on computers compared
move from “push” supply chains to Demand chains optimize “made- with stocking analog atoms in ware-
“pull” demand chains. This is the idea to-order” manufacturing, and houses. As such, it makes sense to
that production will be configured in customer fulfillment, to maximize offer an overwhelming variety of
response to—or pulled by—customer product “variety not volume.” To products. The assumption is that any
demand rather than pre-configured get an idea of how this alters the logistic complexity can be managed
on anticipation of what customers current logic of trade rules, imagine through computerized automation,
want and then pushed onto them. we are fully immersed in the era of throwing in more computers and
More than anything, it is going to 3D-printing and IoT-driven manu- software as needed to scale. More
make trade spats like that of the U.S. facturing and a footwear maker importantly, products offered can be
and China redundant. gets a Request for Quotation (RFQ) “pulled” into production only after
Blockchains’ role in this is to for a batch of customized cleats for they have been sold.
help market participants break up Brazil’s national soccer team that There are several commer-
must cial benefits to this approach. For
Demand chains are b
rushed
e suppliers, there’s an immediate
gain in that they get the money up
particularly useful when in time front. Secondly, because they now
f o r know real-time sales demand, they
accurate sales forecasts are n e x t avoid the common “bullwhip effect”
problem encountered in traditional
unavailable and demand is “made-to-stock” supply chains. This
occurs when errors in forecasting
variable. demand are amplified up the supply
chain, leading to increased waste
long value chains into shorter ones, month’s World Cup. The cleats might the higher upstream you go. With
with financial exchanges acting be “Designed In China”—the home demand chains, suppliers see
as bridges between them. This of the intellectual property—but “effective demand,” not forecasted
should result in greater liquidity “Made in Brazil” by a trustworthy 3D demand.
and enhanced price and market printer somewhere in Rio to produce One can view demand chains
discovery. I call this “packetizing risk” the product and fulfill this order. with packetized risk as an evolution
as the system can automatically Demand chains are particularly of “just-in-time” manufacturing, as
dispense fine-grained rewards that useful when accurate sales forecasts they add in the important element of
can be traced back to the original are unavailable and demand is vari- automated “just-in-time” financing.
rights holder based on the presen- able. Unfortunately they are fragile; This wouldn’t be possible without
tation of appropriate cryptographic any unexpected supply disruption a blockchain, since it can automati-
evidence. A model like this could, for risks stopping the whole manufac- cally reward participants without the
example, have allowed businesses turing process, leading to dreaded risk of funds being stolen or unduly
waiting on the delivery of goods “stock-outs.” By packetizing risk withheld.
trapped on the creditor-seized ships and increasing a pool of potential Another potential benefit: saving
of the bankrupt Hanjin Shipping KYM-ed suppliers, blockchain may the environment. This stems from a
Company in 2016 to liquidate their finally enable demand chains to rather non-obvious feature of “pull”
positions by selling tokenized rights scale beyond their traditional trust demand chains and the exchange
to those immobilized goods. It’s a limits and challenge traditional long- markets that power them: the
demonstration of how finance can standing trust relationships. concept of “reverse logistics,” which
be unfrozen at intermediate stages Demand chains exploit that covers all operations involved in
along the chain, breaking them up, fact that digital trade dramati- the return or reuse of products
and facilitating more flexible and cally changes cost equations and and materials. One might create
efficient means of aggregating the economics. A key reason why an exchange for a product’s reuse,
kinds of suppliers that operate in the e-commerce thrives is because it recycling or upcycling. Doing so
might incentivize the creation of the now trace and cascade back any economic relevance, relative to the
“circular economy,” greatly improving royalties to the appropriate benefi- impact of digital innovation. Already
the resource usage with potentially ciaries, forging a powerful new way the root cause of labor disruption
huge environmental benefits. In this
model, products are not optimally
priced for the point of sale, but for There is an opportunity for a
one step beyond the sale—the point
of reuse. Taking this idea further, grand bargain between the world’s
manufacturers might be encour-
aged to make a market in their own two great trading powers to establish
products where it is cheaper to
design a product for durability, and
rules for trading in Intangible
buy it back, rather than design for
planned obsolescence that exter-
Property using a global blockchain-
nalize the environmental costs.
Since 2017, the Europeans have had
based trade architecture.
a bold plan to kill “planned obso-
lescence” and encourage products to reward the creative process. MIT worldwide, digital automation will
that are end-user serviceable. A researcher Prema Shrikrishna calls have an accelerating impact on
blockchain-based model of demand this “IP over IP” (Intellectual Property people’s lives and livelihoods.
chains, with the added kicker of over the Internet Protocol), where The real danger for policymakers
tokenized incentives, could help manufacturing “supply” moves adja- lies in not recognising when a tech-
them get there. cent to market “demand.” nical innovation is fundamentally
Thus the very nature of trade changing the underlying archi-
Trade == IP Exchange changes from shipping tangible tectural assumptions, and brings
Cryptocurrency exchanges, which property in containers (atoms) to with it changes in market structure
now cover more than 10,000 unique intangible property in packets (bits). and competitive landscape. Rarely
digital assets, can be thought of This has huge ramifications for the does a bell ring to tell you it’s
as providing a market mechanism international trade policy regime. underway. That’s what the onset
for pricing intangible property, (IP). It’s unclear how the existing trade of blockchain technology portends.
(Note: I am deliberately applying the rules under the World Trade Organ- Governments must have their eyes
acronym “IP” to a wider definition isation’s Rules of Origin will apply and ears open.
of assets beyond “intellectual prop- in such cases or whether countries As for the immediate future there
erty” since most cryptocurrency will strategically hoard raw materials is certainly a risk of a US-China
technology is based on open-source such as rare earth elements. Given trade war, with Hong Kong possibly
software). the glacial rate of WTO negotiation caught in any crossfire. Yet there is
We now have an opportunity to rounds, measured in multiple years, also an opportunity for leadership
extend this approach to on-demand it is hard to see how the existing and for a grand bargain between the
Industry 4.0 manufacturing technol- regulatory regime will adapt to a world’s two great trading powers
ogies such as 3D-printing. Here, the world where manufacturing, trade to identify a common interest in
only element that is “shipped” is a and retail are “all digital,” even establishing new rules for trading in
digital design, whose provenance less so to a world where smart Intangible Property using a global
can be tracked to the original author containers and packages automati- blockchain-based trade architecture.
of the work using a blockchain (e.g. cally route themselves to their most Of the two outcomes, it’s clear to me
ascribe.io). A blockchain might also profitable market. that a trade war is not only power-
act as a market, one that functions This emerging paradigm suggests less in the face of a dramatically
like an efficient collecting society that divergences in manufac- changing economic architecture but
since the monetization event occurs turing processes and costs—and even more dangerous than ever to
long after the original creation was the nation-state-led trade wars common wellbeing. So to all you
made. With a blockchain, we can they trigger—will have decreasing trade war warriors … “Ding Dong!”
7:00am - 8:30am
BREAKFAST
Americas Hall 1 & 2 (3rd Floor)
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
7:00am - 8:30am
BREAKFAST
Americas Hall 1 & 2 (3rd Floor)
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
Sponsored by Accenture
Consensus 2018 53
TRIANON BALLROOM MERCURY BALLROOM GRAND BALLROOM EAST GRAND BALLROOM WEST
7:00am - 9:00am
BREAKFAST
Americas Hall 1 & 2 (3rd Floor)
Consensus 2018 57
4:15pm - 4:25p
VERTALO DEMO
11:00am - 11:10am
WAVES PLATFORM DEMO
Concourse Map
Second Floor
Third Floor
Fourth Floor
Americas Hall I
Americas Hall II
56 2nd Floor
48 2nd Floor
Concourse E Concourse
36 2nd Floor
68 Consensus 2018
28 2nd Floor
21 2nd Floor
Color: #575afa
Used on white or light background
228 2nd Floor
Concourse A Concourse
An initiative of the
BLOCKCHAIN RESEARCH INSTITUTE
60 2nd Floor
66 2nd Floor
11 2nd Floor
Consensus 2018 69
14 2nd Floor
23 2nd Floor
17 2nd Floor
13 2nd Floor
Concourse H Concourse
26 2nd Floor
Concourse F Concourse
70 Consensus 2018
44 2nd Floor
30 2nd Floor
6 2nd Floor
8 2nd Floor
Consensus 2018 71
46 2nd Floor
38 2nd Floor
40 2nd Floor
Concourse D Concourse
Concourse B Concourse
19 2nd Floor
72 Consensus 2018
20 2nd Floor
34 2nd Floor
58 2nd Floor
Concourse C Concourse
50 2nd Floor
Consensus 2018 73
42 2nd Floor
54 2nd Floor
32 2nd Floor
27 2nd Floor
25 2nd Floor
15 2nd Floor
22 2nd Floor
5 2nd Floor
68 2nd Floor
52 2nd Floor
7 2nd Floor
64 2nd Floor
62 2nd Floor
74 Consensus 2018
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Coming November 27, 2018 in NYC