INTRODUCTION TO BLOCKCHAINinfo.hktdc.com/dm/smartbiz/2018/pdf/Lawrence_Ma.pdf · •Convergence of...

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INTRODUCTION TOBLOCKCHAIN

INNOTECH FOR BRANDING – JOURNEY TO OUTSTANDING BRAND

Hong Kong Blockchain Society

SmartBiz Expo 7 December, 2018

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TODAY’S TOPICS

What is Blockchain

•

Use Case & Applications

2

What is Blockchain • Use Case & Applications

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BLOCKCHAIN ≠ BITCOIN

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Bitcoin uses

blockchain

Blockchain has uses

beyond money


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BRIEF HISTORY OF BLOCKCHAIN

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1988 20092008

Subprime Crash

Governments bail out

the “Too Big to Fail”

Cypherpunks: personal privacy protection

1980s 1990s 2000s


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BRIEF OVERVIEW OF BLOCKCHAIN TECH

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Shared ContractCryptographyShared Ledger Consensus

Ensuring secure,

authenticated &

verifiable

transactions

Business terms

embedded in

transaction

database &

executed with

transactions

All parties agree to

network-verified

transaction

Append-only system

of record shared

across business

network

Broader participation, lower cost, increased efficiency and transparency


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RECONCILIATION PROBLEM

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1.Everyone has their own records

2.Duplication leads to inconsistencies

3.Reconciliation is continuous

This is costly and error-prone

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CENTRALISED DATABASES

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Who runs this?

Is it even scalable?

What jurisdiction(s)?

How is it governed and

managed?

Problems with a

Centralised Database

Approach

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DISTRIBUTED LEDGERS

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D E F I N I N G C H A R A C T E R I S I T C S O F B L O C K C H A I N / D L T

PRIVACY AND MUTUAL VERIFICATIONFacts and shared only with those directly

transacting together, and verification

consensus is achieved between them only

“I KNOW THAT WHAT I SEE IS WHAT YOU SEE”Records of shared facts and commercial

agreements are consistent across entities, and

enforceable through a legal framework

IMMUTABILITYAll transactions and ledger records are

chained together cryptographically to assure

lineage and resistance to tampering

SMART CONTRACTSLedger updates are controlled by business logic,

encapsulated and executed in a deterministic,

tamper evident manner

WHAT IS BLOCKCHAIN?

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IN SUMMARY…

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Blockchains [and DLTs] enable parties

who don’t fully trust each other

to form and maintain consensus

about the existence, status, and evolution

of a set of shared facts

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011

D I F F E R E N T B L O C K C H A I N / D L TWHAT IS BLOCKCHAIN?

Public

Private

PermissionedPermissionless

Access

Validation

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BLOCKCHAINwill not destroy

OLD JOBSbut rather shift them into

NEW JOBS

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Credentials Reference Check

Credentials include:

• Attendance and completion of the Programme

• Academic Transcript

• Graduate Certificate

• Awards

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Current Reference Check Process Issues

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Issuer (College)

Credential Holder (Student / Job Seekers)

Enquirer (Employers / Agencies)

• Repeated requests from

Employers/Agencies

• Large volume of request within

a short period of time

• Long-term storage needs

• Time-consuming process

• Manual retrieval of credential

records

• Time-consuming process

• Manual process

• Concerns on credential’s

authenticity


Benefits of Decentralized Credential Verification

• Verified Once ! You own your Credentials !

• Provable

• Permanent Immutable Record

• Connect to the World

• Secured and Privacy Preserving

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Potential

Potential

use cases

Potential

use cases with

smart contracts

Key benefits

Product

development and

distribution

Pricing /

underwriting

Payment &

collectionsClaims

Policy /

administration

and back

offices

Risk capital &

investment

management

• Use DLT as a reliable

registry for on-

demand / usage-

based insurance or

micro-insurances

• Using DLT as payment

infrastructure

(especially across

multiple countries)

• Leverage DLT for

information about

insured goods and

events in order to fight

fraud

• On boarding of new

customers and

verification of policy-

holder identity using

DLT

• Make data available for

re-insurers or other

parties in a controlled

way

• Offer P2P

insurance via DLT

for customers to

customer

promotion and

sales, and

automated ops with

smart contracts

• Use DLT for P2P

insurance

underwriting, include

external data, smart

contacts and peers

(human) to determine

tariff

• Automate payments

through smart

contracts evaluating

conditions for paying

out claims

• Automate claims

triggering and handling

with smart contracts,

and e.g., with sensors

(IOT)

• Use smart contracts to

automatically

determine payouts –

e.g. triggering process

of catastrophe swaps

and bonds

• Reduce cost

related to

commission and

sales and

operations

• Increase trust of

customers due to

open, distributed

system

• Reduce cost of

operations

• Re-use platform for

other types of

insurances

• Include external data

for (semi-) automatic

pricing

• Reduce cost and

increase speed for

payments

• Reduce average

claims cost related to

1. Claims administration

2. Damage from

multiple claim fraud

and fraud detection

• Improve identification

of claim events

• Reduced admin cost

and speed-up process

for onboarding

• Reduce admin costs

• Automate and increase

reliability auditability

and speed for financial

instruments

transactions based on

defined events

B L O C K C H A I N H A S P O T E N T I A L I M PA C T A C R O S ST H E W H O L E VA L U E C H A I N O F I N S U R A N C E


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CURRENT CLINIC CLAIM PROCESS


1.Insurance OwnerGoes to clinic & submits personal information & payment.

2. ClinicClinic provides patient with invoice , diagnosis & medical certificate, and receives payment.

3. Company HRHR collects insurance claim form from employee. Sends batched documents to I.C at the end of a month.

4. I.C Claim DepartmentPuts all paper work through verification process. Accepts or rejects claims.

A lot of paperwork

accepts dispute

Verification process

Long Manual Claim Process Multiple Claim Fraud

Proof of Identity Issue Over Claim Health Record not portable

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accept

PATIENT CLINIC INSURANCE COMPANY POLICY

1. Patient opens mobile

app, submits medical &

insurance info to clinic.

2. Patient receives treatment,

clinic prepares claim template

with billing information.

3. Patient and insured

employee (for group policy)

digitally signs claim & billing

information.

5. Receives claim, request

policy information from policy

oracle.

6. Use smart CorDapp to

check if claim is valid

7. If claim is valid,

automatically approved &

status is updated for the

patient & clinic.

reject 9. If claim is invalid, patient

can raise dispute to the

regulator.

BENEFITS TO INSURANCE COMPANY

Reduces

Manpower

Automate

Claim Process

Reduces Paperwork

& Due Diligence

Reduces

Fraudulent Risks

4. Clinic submit claim

to insurance company

via CorDapp .

8. If claim amount

exceeds billing

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8a. Patient can claim

with another

insurance policy,

process restarts &

new claim is created 8b. Patient bares the

exceeded amount

FUTURE STATE & BENEFITS


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AUDITING USING BLOCKCHAIN


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VERIFYING THE INTEGRITY OF RECORDS

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TOKENIZATION OF LOYALTY POINTS


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TOKENIZATION OF ASSETS


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TRADE FINANCE STAKE HOLDERS


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BLOCKCHAIN TRADE FINANCE


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PROVENANCE


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• Scarcity of blockchain talents is still a major challenge of the industry

- HKBCS is working with universities in HK, China and Malaysia to offer blockchain certified and credit courses

- HKBCS is working with Cardano on a global Blockchain Hackathon for both professionals and students

• The time line of commercial adoptions of blockchain technology- Is it 3 to 5 years from now or a decade from now?

• Privacy will be a big challenge for blockchain practitioners; especially for permissionless chain- EU’s GDPR and various privacy initiatives in US, China, Japan, Hong Kong and others.

• Realization of the importance of Self Sovereign Identity and the concerted efforts by a few parties to implement this using blockchain and cryptography.

• Convergence of Blockchain with Big Data, IOT

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LOOKING AHEAD

3030

3131

香港區塊鏈學會 [email protected]

hkbcs.org

THANK YOU

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