Deloitte Digital Template · 2020-05-13 · The Danish Business Authority has the power to...

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2 | Copyright © 2019 Deloitte. All rights reserved.

Blockchain, myths and usages

Deloitte Denmark blockchain cases and proposals

Where are we on the road to mass adoption?

3 | Copyright © 2017 Deloitte Development LLC. All rights reserved.


Example within shipping



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29-12-2013 29-12-2014 29-12-2015 29-12-2016 29-12-2017

10-day moving average ”Blockchain”10-day moving average ”Enterprise blockchain”

2014 2015 2016 2017 2018 2019

• The hype around Bitcoin

and other

cryptocurrencies have

probably contributed to

an increasing interest in

enterprise blockchain

too.

• Yet “blockchain for grown-

ups” sees continued

interest as the hype

around cryptocurrencies

have come down to earth.

Cryptocurrency ≠ enterprise blockchain

7 | Copyright © 2019 Deloitte

B L O C K C H A I N & D L T I N T R O D U C T I O N


Infrastructure layerBlockchain as a services (BaaS)* or in-house infrastructure operates the nodes

Network and protocol*Network participation requirement, base protocol and method of consensus

Service layerBlockchain services to enable operation of the application and connection to other technology

Application layerCustomer interaction, business logic, and user interface design


Luca Pacioli


We will need four of you on stage…

…to create our own blockchain

network


User A(Benjamin)

User B

User C

User D

User E

“Be your own bank”


→ Lets add some funds

User A(Benjamin)

User B

User C

User D

User E

100 BTC

0 BTC

100 BTC

200 BTC

300 BTC


→ Lets add some funds → And see the ledger

User A(Benjamin)

User B

User C

User D

User E

100 BTC

0 BTC

100 BTC

200 BTC

300 BTC

User D send 75 BTC to User A

User C send 100 BTC to User E

User E send 25 BTC to User C

User A send 50 BTC to User E

User F send 100 BTC to User C

User C send 25 BTC to User F

User A send 25 BTC to User C


User E send 25 BTC to User F

The ledger for User A (and everyone else)


→ Lets add some funds → And see the ledger →With a new transaction

User A(Benjamin)

User B

User C

User D

User E

100 BTC

0 BTC

100 BTC

200 BTC

300 BTC




User A send 50 BTC to User E

User D send 100 BTC to User C


User A send 25 BTC to User C



User A send 50 BTC to User B

The ledger for User A (and everyone else)



Satoshi Nakamoto launches BitcoinP2P open network for digital cash

2009

Same technology is applied to other currencies, documentation and proof of ownership

Vitalik Buterin launches Ethereum: fundamentally same technology but Turing complete, thus more opportunities

2015

Fully decentralized economies and markets linking much larger groups of buyers and sellers

B L O C K C H A I N & D L T I N T R O D U C T I O N


Bu

sin

ess

Ap

plica

tio

ns

Audit trailImmutable history of events e.g. medical history, ownership transfer of currencies, stocks, securities etc.

Identity & data storageBlockchain can be used to store digital identities of individuals, organisations, assets, titles, voting rights and essentially everything that can be represented digitally: Digital ID, Votes etc.

AutomationSmart contracts enable automated execution of specified actions based on contractual conditions as validated by all parties such as lease contracts with automated rental payments, loan contracts with transfer of asset ownership in case of default

Value transferBlockchain can execute peer-to-peer transactions without a trusted third-party intermediary, reducing clearing and settlement times and related costs.


Deloitte tracks clients’ adoption of blockchain within each of the 4 use case categories by industry to better understand how each industry will be impacted

% o

f h

igh

le

vel u

se c

ase

s

Source: Gartner







Automatic Business Reporting

Audit trailImmutable history of events e.g. medical history, ownership transfer of currencies, stocks, securities etc.

Identity & data storageBlockchain can be used to store digital identities of individuals, organisations, assets, titles, voting rights and essentially everything that can be represented digitally: Digital ID, Votes etc.

AutomationSmart contracts enable automated execution of specified actions based on contractual conditions as validated by all parties such as lease contracts with automated rental payments, loan contracts with transfer of asset ownership in case of default

Value transferBlockchain can execute peer-to-peer transactions without a trusted third-party intermediary, reducing clearing and settlement times and related costs.

Verified DanishUNCHR


Digital identity for refugees


24 | Copyright © 2017 Deloitte Development LLC. All rights reserved. 24

OVERSIGHT PROVIDER

USER ISSUER

ID systems built for

organizations, not refugees.

Insufficient data privacy

practices.

Inefficient processes.


Federated Self-managedSiloed

“To open a bank account I’ll need you to verify your citizenship by sending X and Y…”

“Because of data sharing rules I can’t request these documents. Contact organization XX and sign to have them send to me…”


Self-managed

Standardization of data and

practices.

The ability to own and build

trust in ones digital identity.

To provide verifiable claims

to organizations.

Benefits


Enables refugees to prove who they are, to anyone, anywhere, at any time.

Create

your Identity

Transact

with others

Gain

Endorsement

against verified

attributes

Send & Verify

them with

trusted entities

Add

Attributes

representing

who you are

Would you like

the university to

verify your most

recent diploma?

Yes No

Verification

Request

Access

scholarships

Download

and verify eligibility

+

2019 (pilot) 2020 2021 2022 2023

Example of credential reusability use case implemented in the pilot

Example of offline paper-based identity wallets

Animal icons used for those who are illiterate


Lowering administrative burdens on Danish companies while increasing productivity and competitive edge.

Jonas SveistrupSoegaardManager, Blockchain PhD

Lasse HerskindBlockchain developer


V I D E O


The Danish Business Authority leads the initiative “Automatic Business Reporting” with focus on lowering the burdens on Danish companies while also increasing productivity and competitive edge.

1 . S E T T I N G T H E S C E N E

“Automatic Business Reporting” aims to reduce administrative burdens

The DBA drives the cross institutional initiative ”Automatically business reporting” (ABR) which aims at automating “annual reports, other financial reporting, and financial accounting statistics”.

The over all aim is to reduce the administrative burdens of the ~300.000 companies in Denmark

Involved parties:• Danish Business Authority (chair)• Danish Tax Authority• Agency for Digitalization• Statistics Denmark

325

1.311

19.390

2017

DK ES US

71

82

79

71

55

62

79

58

71

80

62

65

77

64

71

DK

ES

US

Avg. 76

Avg. 63

Avg. 67

ConnectivityDigital public services

Digital skillsBusiness digitalization

Internetusage

Denmark is the most digitized country in world

GPD per country, mUSD

I-DESI Index, 2018

Danish Business Authority’s vision is to create the best conditions for growth

The Danish Business Authority has the power to implement and enforce legislation upon Danish companies.

VisionTo create the best conditions for growth in Europe.

MissionIn partnership with others we make it easy to attractive run a business in Denmark.

Easy meaning that rules and regulations are understandable, easy to administer for the businesses, and that all communication with our customers is done digitally and in an effective manner.


By using Design Science Research (Hevner et al., 2004) , we developed an IT artefact on Microsoft Azure Workbench with an Ethereum Parity implementation that proved it possible to let a Smart Contract hold VAT of invoices.

2 . T H E P R O J E C T

How can a DLT-enabled IT artifact be designed for financial reporting automation and VAT settlement with a specific focus on an open-book invoicing platform offered by the Danish Business Authority to trading partners in the SME segment?

MethodologyResearch question Contribution


Architecture of permissioned DLT

Two-way invoice authentication ensures tuned transaction base, minimizes VAT fraud and creates common truth. It builds on ontology from McCarthty, Blums, Weigand and Kruijff, VAT from Ainsworth & Hyvärinen, and Blockchain and Continuous reporting literature from Wang, Rozario, Zhang, and Dai.

2 . T H E P R O J E C T

• Two-way invoice authentication ensures tuned transaction base, minimizes VAT fraud and creates common truth

• Every company is identified with national electronic ID (NemID)

• Exploiting the existing e-Invoicing standard Denmark has had since 2004 by law and PSD2 for bank information

Platform value and assumptions

• Ontology McCarthy, 1982; Blums, 2016-2018; Weigand, 2018; Kruijff, 2017

• VAT Ainsworth, 2016; Hyvärinen, 2017

• Blockchain and Continuous reportingWang, 2018; Rozario, 2018;Zhang, 2017; Dai, 2016-17

Theoretically nexus

Buyer SellerBuyer and seller agree on invoice

Bank

Authority

Authorities monitor and approve VAT amounts

Revision revises transactions

Auditor

Bank verifies that buyer has

purchasing power

Bank secures payment to seller

by agreement

Bank also transfers VAT

Smart contracts

Wallet

Validating node


The Danish

company

ecosystem

E-krone


Company registry →Companies are automatically

put on the blockchain platform as a wallet

Monitoring and control

New public services provided by state-authorized private players

that connect to the Danish enterprise universe through open

APIs.

Trans national tradeStandard apps for the Danish company ecosystem.

3rd party apps for the Danish company ecosystem

Instant audit

Internationalvalue chain management

Managing of standards Managing of stakeholdersManaging of standards Managing of stakeholders

The government’s role

Business Intelligence

Micro lending Credit scoring


What would be a more ambitious

solution?


Useful to evaluate risk of doing business with payee


Get score from some trusted third party, hope that it is somewhat updated


Company BCompany A

Trusted C

Is company B a good payee?

It was in 2015


Automatic Business Reporting, we can evaluate directly on the public

blockchains values.


Blockchain

Company A

Sender Receiver To Pay Paid Timely

B C 7999 7999 DKK Yes

B D 7999 7499 DKK No



Zero-Knowledge proofs enable a prover to convince a verifier that he knows a

fact, without telling…


Evaluate payee behavior on transaction level, without learning anything but his

behavior


Commitment to values, think hash we can perform math on


Blockchain

Company A

Sender Receiver To Pay Paid Sig Msg Valid

B C X Y S1 Paid in total Verify(X-Y, S1)

B D Z W S2 Paid in total Verify(Z-W, S2)



We can hide senders, by using partialknowledge from trusted parties


Demo


Traditional reporting methods will evolve as the understanding of the possibilities is shaped by the introduction of new technologies, including blockchain.

Current paradigm The paradigm of the future

Sporadic investigation of fraud

Standalone times and "snapshots" Real-time data

Sample-based analysis of transactions Analyzes of all transactions

Individual inspections Ongoing insight

Retrospective Instantly and predictively

One-way communication Multi-Directional Communication

Asset Oriented Accounting Transaction-based accounting policies

System Supported Identification of Fraud


Industrialized profit model

Re-imagined value chain

Data silos Distributed networks

Best practice process flow

Network economy

Verified Danish

UNCHR









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Stove Telephone Electric power ICE Automobile Radio

Washing Machine Household Refrigerator Color TV Microwave Microcomputer (PC)

Cellular Phone Internet Social Media Smartphone


Fitting the diffusion data with the s-curves reveals technology adoptions generally seem to be speeding up, but some technologies buck this trend: Refrigerators, radio and TV where quickly adopted quickly while their contemporary washing machines and dishwashers where slow.

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Stove Telephone Electric power ICE Automobile Radio

Washing Machine Household Refrigerator Color TV Microwave Microcomputer (PC)

Cellular Phone Internet Social Media Smartphone


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1900 1907 1914 1921 1928 1935 1942 1949 1956 1963 1970 1977 1984 1991 1998 2005 2012

Source: http://disruptiveinnovation.org/discuss/matching-collaboration-and-conformity


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Microcomputer (PC)


Business

• Ecosystem-driven digital

transformation

• Emerging industry

cooperation

• Maturing advisory support

Technology

• Tools (MS Workbench)

• Collaborative code sharing

(Code repository)

• Exponentially increasing

scale (TPS speed)

Adoption speed(existing infrastructure) (limited users demands)


Benefits

• Simplifies development

• Get’s a project going faster

• Makes it easier to scale thanks in part to cloud solutions on top



Demo: Code sharing repository

Jason SpasovskiSenior Blockchain developer


As we move from earlier generations of the technology we see transaction output increase exponentially. Higher output means more possible blockchain use cases.

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(2009-2013)

2nd gen

(2013-)

3rd gen

(2015-)

4th gen

(Late 2019-)

Transactions per second (TPS) among major blockchain providers

5 15-20140 - 2.250

Ca. 50.000


Anthony Day, COO, Deloitte Lab Ireland (Deloittes blockchain centre of excellence)

Blockchain as a platform for

cooperation within industries.

Requires a multidisciplinary approach.

Transforms processes across

organizational boundaries.

What role does blockchain play in digital transformation?

62 | Copyright © 2017 Deloitte Development LLC. All rights reserved.Credits to Business Insider, Andrew Meola (2017)https://www.businessinsider.com/blockchain-technology-banking-finance-2017-9?r=US&IR=T&IR=T

Post-trade management platform

https://www.theblockcrypto.com/2018/12/12/mapping-out-enterprise-blockchain/

https://www.businessinsider.com/blockchain-technology-banking-finance-2017-9?r=US&IR=T&IR=T


2018

Today


Year 0

Comparing the history of the internet to blockchain reveals that while the impact of blockchain on industry configuration (network effects) is comparable, adoption of blockchain faces serious obstacles in relation to ecosystems (consortium formation) and existing infrastructure (lacking protocols and standards)

Internet

Blockchain

1969: ARPAnet delivers its first messages “LOGIN” and crashes the whole system

1974: A Protocol for Packet Network Interconnection," which details the design of TCP is published (IP!)

1982: TCP/IP is implemented and still used today

1983: The Domain Name System (DNS) establishes .edu, .gov, .com, .mil, .org, .net, and .int system for naming websites, easier than 123.456.789.10. IPs

1990: HTML is developed, setting std. for how to navigate and view internet

1991: World wide web is introduced to the public

1965: Two MIT computers commmunicate

2018: 55,1% of world population has internet access

Year 0

Year 40 Year 83Year 10

Year 10

2008/9: Satoshi Nakamoto paper

2010: First genesis transactions

2014/15: Ethereumfounded and released, unlocking new functionality (Dapps)

2017: Hedera Hashgraph founded, claims to be a future global Blockchain infrastructure

2019: Blockchain consortia are on the rise in almost all industries and sectors

2022: Cryptocurrency blockchain usage forecasted on-par with 1992 internet adoption – decentralized business models in use

1995: Netscape launches first commercial browser

1995: Bill Gates internal memo on “The Internet Tidal Wave”

Protocol change that betterleverages of existinginfrastructure

Dominant protocolestablished



Anthony Day, COO, Deloitte Lab Ireland (Deloittes blockchain centre of excellence)

Technology delivery is 20% of the

challenge. 80% is the people.

Requires a mindset change and the

right partners to do something new.

It’s a journey that requires dedication

when there are other (incremental)

business needs.

What has held blockchain back?


Deloitte Studio, Copenhagen

Is there a shared, interconnected,

problem in my industry?

Does this problem (or opportunity) have

at least some digital element to it?

Does my stakeholders have a shared

interest to go on such a journey?

Start by learning about blockchain and ask…



Melodi: Re-Sepp-Ten

1) Fra cryptopenge til din stemme Blockchainen vil aldrig glemme Der er revision-og-log-på-det-hele Data`en vi alle må dele

2) Det kan bruges til en masse Forretningsmodellen den skal passe Mulighederne er mange Skal vi alle være bange?

Omkvæd (x2)Pro-to-kollenhar kontrollen fælles ledgeren teknisk fætter


Melodi: Re-Sepp-Ten

3) Når vi alle ser det samme Får vi endnu bedre ramme Til at handle, bytte og deleUden mellemmanden tar’ det hele

4) Samarbejde med hinanden, Giver ofte sved på panden.Vores fælles store problemer,løses bedst i økosystemer!



Melodi: Re-Sepp-Ten

5) Data deles i kopierDet er dumt, og compliance stigerDele viden uden kopiDet’ den virkelige magi



Articles in leading danish newspapers

Whitepaper: Inclusive deployment of blockchain with WEF

Whitepaper: Blockchain interoperability with MIT Media Lab

Blockchain for public sector in

publicperspectives.dkN3x7G3n


W R A P - U P

Electronista 19/9 2018 Block21 – Episode 6 &7 LinkedIn articles

Rasmus Winther MølbjergDirector, Blockchain Lead

Jon Brandt JacobsenSenior Consultant


Benjamin BertelsenConsultant

Jesper Mathias NielsenManager

Benjamin MoesHoejsboManager, IoT & Quantum

Jason SpasovskiSenior Blockchain developer

Stig Hammeken Director, Blockchain Architect

Lasse HerskindBlockchain developer

Sigrid EffersøeSømodSenior Consultant




Recognized as a global leader in digital and innovation consulting by ALM, Forrester and IDC and awarded by Central Banks for our work with blockchain

https://www.centralbanking.com/awards/3948486/advisory-services-deloitte


Deloitte has received the Central Banks award for its work with blockchain. We are thought leader in Blockchain technology and provide a broad assessment of the benefits and threats of the technology

Taking Blockchain LiveThe 20 questions that must be

answered to move beyond proofs of concept

(2017) | Link

Over the HorizonBlockchain and the Future of

Financial Infrastructure(2016) | Link

Blockchain in Public Sector: Potential and Barriers

(2018)

IoT powered by BlockchainHow Blockchain technologies

facilitate the application of digital twins in IoT(2018) | Link

Applying Blockchain in Securitization:

Opportunities for Reinvention (2017) | Link

Blockchain – Legal implications, questions, opportunities and risks

(2018) | Link

Banding Together for Blockchain

Does it make sense for your company to join a consortium?

(2017) | Link

Project Ubin: SGD on Distributed Ledger

(2017) | Link

The Future of Bankingis Here

(2017) | Link

Blockchain @Rethinking Banking

A view on how Blockchain can change banking (2017) | Link

Is the Financial Services Industry ready for the

explosion of Internet of Things?

(2017) | Link

Investment management firms getting started with Blockchain

(2017) | Link

https://www.centralbanking.com/awards/3948486/advisory-services-deloitte

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-taking-blockchain-live.pdf

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Financial-Services/gx-fsi-blockchain-deloitte-summary.pdf

https://www2.deloitte.com/content/dam/Deloitte/de/Documents/Innovation/IoT-powered-by-Blockchain-Deloitte.pdf

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/regulatory/us-sfig-report-applying-blockchain-in-securitization-opportunities-for-reinvention.pdf

https://info.deloitte.com/rs/231-YWE-658/images/Blockchain WP March 2018_.pdf

https://dupress.deloitte.com/content/dam/dup-us-en/articles/3769_Signals-for-Strategists_Aug2017/DUP_Banding-together-for-blockchain-consortia.pdf

http://www.mas.gov.sg/Singapore-Financial-Centre/Smart-Financial-Centre/Project-Ubin.aspx

https://www2.deloitte.com/content/dam/Deloitte/in/Documents/strategy/in-innovation-future-of-banking-noexp.pdf

https://www2.deloitte.com/content/dam/Deloitte/de/Documents/Innovation/Blockchain-Banking-Whitepaper-Deloitte-2017.pdf

https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/lu-fsi-ready-explosion-internet-things-102015.pdf

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-im-firms-getting-started-with-blockchain.pdf

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