Jekyll2023-01-23T07:54:12+00:00/feed.xmlmeyer.todayMy Digital Journey2023-01-23T00:00:00+00:002023-01-23T00:00:00+00:00/2023/01/23/my-digital-journey<h1 id="my-digital-journey">My Digital Journey</h1>
<p><br />
<br />
Looking back at my carreer, I have realized that I have been working on digitalization projects for more than 30 years.
I have tried to describe this <a href="https://philippemeyer.github.io/digitalExperience/digitalJourney.html">journey in a timeline</a> listing the main projects that have paved my professional life.</p>My Digital JourneyStablecoin After The Crisis2022-11-24T00:00:00+00:002022-11-24T00:00:00+00:00/2022/11/24/Stablecoin-after-the-crisis<h1 id="total-value-locked-in-stablecoins-during-the-crypto-winter">Total value locked in Stablecoins during the crypto winter</h1>
<p>Despite the severe drop on the crypto markets, the stablecoin market is resisting quite well, experiencing some downtrun after the Terra/Luna crisis but remaining
now on a plateau, even slightly increasing.</p>
<p>Another amazing fact is the daily turnover: for some coins it is almost equal to the TVL</p>
<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/Stablecoin%20capitalization.png" alt="Stablecoin TVL as of 24.11.2020 - source Coinmetrics.com" /></p>
<p><em>Stablecoin TVL as of 24.11.2020 - source Coinmetrics.com</em></p>
<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/Stable%20coin%20ranking.png" alt="Stablecoin ranking as of 24.11.2020 - source Coinmarketcap.com" /></p>
<p><em>Stablecoin ranking as of 24.11.2020 - source Coinmarketcap.com</em></p>Total value locked in Stablecoins during the crypto winterFrom Automation To Tokenization2022-08-18T00:00:00+00:002022-08-18T00:00:00+00:00/2022/08/18/From-automation-to-tokenization<h1 id="from-automation-to-tokenization">From Automation to Tokenization</h1>
<p><a href="https://www.youtube.com/watch?v=v04GjInRfgU"><img src="https://img.youtube.com/vi/v04GjInRfgU/maxresdefault.jpg" alt="From automation to Tokenization" /></a></p>
<h2 id="introduction---definitions">Introduction - Definitions</h2>
<h3 id="automation">Automation</h3>
<p>From wiktionary:</p>
<blockquote>
<p><em>“The act or process of converting the controlling of a machine or device to a more automatic system, such as computer or electronic controls.”</em></p>
</blockquote>
<h3 id="digitization">Digitization</h3>
<p>From wiktionary:</p>
<blockquote>
<p><em>“The conversion of data or information from analog to digital or binary”</em></p>
</blockquote>
<h3 id="digitalization">Digitalization</h3>
<blockquote>
<p><em>“The transformation of a process or system from mainly analogue form to digital form”</em></p>
</blockquote>
<h3 id="tokenization">Tokenization</h3>
<blockquote>
<p><em>“Tokenization is the process of digitally embedding an asset such as a good or a right into a crypto token and storing and issuing it on a blockchain network.”</em></p>
</blockquote>
<p>Automation has been around for a while and has spread tremendously thanks to digitization which has been transforming analog information into digital information.
Digitization examples are, for example:</p>
<ul>
<li>scanning a paper document and transforming this document into a pdf,</li>
<li>transforming a stock transaction into a Swift message,</li>
<li>transforming music in a digital format</li>
<li>…</li>
</ul>
<h2 id="the-journey">The journey</h2>
<p>To ease adoption, most often, companies automate existing processes based on the existing manual processes. This is fine until the volumes are increasing.
When this point is reached, those automated processes start showing some weaknesses as they come from manual processes that have never been designed to
sustain such high volumes. This is where digitalization comes into play.</p>
<p>To illustrate this, let’s look at the Swift network. The messages this network carries origin from the manual telex exchanged between the counterparts. Most of the fields have indeed been normalized but not all. Some text fields are still part of the protocol even for some important information. This makes full automation much more difficult to achieve, requesting a lot of resources such as Natural Language Processing to interpret the content of those un normalized fields.</p>
<p>Digitalization, supported by digitization is about streamlining seamless end-to-end digital information. The aim is to avoid any manual intervention (checks as well as data input) all along the chain.
Digitalization, like automation, is quite disruptive on the existing teams: instead of performing manual tasks, the teams must monitor the digitalized process.</p>
<p>As the reluctance for adopting changes is sometimes quite strong, those digitalization transformations must be supported by a strong change management project.</p>
<p>Successful digitalization brings an increase in volumes which means that the control function is becoming increasingly important and requires more people. Therefore, strong professionals that have been managing manual processes should not fear for their future. They have most likely all the skills needed to control the digitalized process.</p>
<h2 id="moving-towards-tokenization">Moving towards Tokenization</h2>
<p>We still have an issue with those digitalized processes as digitized information is not natively digital: a scanned pdf is not the original document which may be required for some processes. In that respect, tokenization brings together the process, which is coded in the smart contract and the data which is stored in the blockchain. With smart contracts, data become actionable. Data can trigger, in a fully secured way, some processes, benefiting for the trust a blockchain platform gives.</p>
<p>To illustrate this, let’s take the very common example of a process which is triggered when a signed document has been received. With a scanned document, the signature must be verified by an employee to make sure it corresponds to one of the signatures registered for that customer.</p>
<p>With a signed pdf, the process can be further improved as there is no need to have a human verification of the signature. This is good improvement but there is still an issue as the evidence of the approval is on a separate support.</p>
<p>On a programmable Blockchain platform like Ethereum, a smart contract could receive an approval cryptographically signed by the customer which proves the customer’s approval. This creates a transaction which can contain further operations that are all bundled in the same atomic transaction. If some documents have to be attached to the transaction, they can be referenced by a url pointing to the document and the cutomer’s signature will also contain the digest of the signed document.</p>
<p>With this technology, everything is in one place, the smart contracts seal together the process and its associated information.</p>From Automation to TokenizationMigration to github pages2022-03-26T19:23:55+00:002022-03-26T19:23:55+00:00/jekyll/update/2022/03/26/welcome-to-jekyll<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/githubPages.png" alt="github Pages" /></p>
<p>After many years leaving my past blogs posts aside (<a href="https://meyertoday.wordpress.com/">blockchain related</a> and <a href="https://h-si.blogspot.com/">general purpose</a>), I have decided to merge and migrate this content to github pages which offers a very current setup.</p>
<p>Stay tuned!</p>Seamless integration from token to accounting?2019-04-28T18:14:49+00:002019-04-28T18:14:49+00:00/blockchain/2019/04/28/seamless-integration-from-token-to-accounting<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/tokenToAccounting.png" alt="token to accounting" />
<br />
<br /><br />
The so-called <strong>smart contracts</strong> have been around for quite a while with the first global public implementation made available with Ethereum 2015. This technology is a real breakthrough and proved to be very disruptive over several use cases.</p>
<h1 id="smart-contracts">Smart contracts</h1>
<p>By the way do you know what a smart contract is? Well to start with, it is <strong>neither smart nor a binding legal contract!</strong> It is rather a piece of code running on a blockchain which implements agreed business rules between two or multiple parties.
How can this distributed piece of code be useful for a business? One example which has been very popular over the last year is <strong>asset tokenisation:</strong> the sudden emergence of the ICO (which are represented by tokens) phenomenon has enabled start-ups to get funding directly from investors disrupting the venture capital market. Out of this fast development, a categorization of three main tokens depending on their use has emerged:</p>
<ul>
<li><strong>Payment token:</strong> tokens used as a mean of payment. Cryptocurrencies like bitcoin are typical payment tokens.</li>
<li><strong>Security token:</strong> tokens that are like traditional securities, ICO have been the first popular example of this kind of tokens.</li>
<li><strong>Utility token:</strong> those tokens are meant to be used to buy a service provided by the issuer. This is like selling forward goods or services that are going to be provided in the future.</li>
</ul>
<h1 id="utility-token">Utility token</h1>
<p>We’ll concentrate here on the utility token and its potential deep impact on how corporate systems are designed.</p>
<p>In the first place, one could consider a utility token as a <strong>simple mean of exchange.</strong></p>
<p>The customer buys in advance a service he will later use. Conceptually nothing new there: these mechanisms have been used in structured financing.
For example, in large projects like power plans, the banks financing the plans are buying the future power production as part of the structured financing.
Same concept with crowdfunding with platforms like kickstarter where the buyers are paying now for a product or a service they will get (hopefully) some time later.
The token which has been bought can then <strong>be used when</strong> the good or the service is <strong>made available</strong> by the provider.</p>
<p>The breakthrough is not in the concept itself but more in the impact of having these tokens in a digitalised form: those <strong>forward agreements are not any more sitting on piece of paper</strong> but on a public platform like Ethereum stored in normalised way.
The first consequence of the radical difference is that those tokens can be exchanged creating a potential secondary market. Compared to the current world, this would mean that not only commodities but also <strong>all kind of goods or services could made available on a secondary market.</strong></p>
<h1 id="invoicing-tokens">Invoicing tokens</h1>
<p>But an even more interesting impact of storing those agreements in a digital form is that they can be made directly actionable (at least whilst we stay in a pure digital world).
In essence, the details of the services to be provided could be stored in a smart contract and upon the reception of a token the agreed services could be provided without any form of transformation. <strong>No invoicing anymore, no payment recovery…</strong>
Of course, this is not yet possible as most corporations as well as the authorities are expecting regular invoices to be accounted properly. We are not yet ready for a <strong>seamless digital supply chain down to accounting</strong>, but this is coming.</p>
<p>A side point to mention in that respect is that to the contrary of money, <strong>transactions are not fungible</strong>. This means that each type token can embed its own business rules which would be then made immutable.
This is can be a great advantage when business rules change overtime but should not been changed retroactively.</p>
<p>The operational costs of this technology are considerably lower compared to the current solutions. As an example, a <strong>manual invoice costs in average 20 EUR to be processed</strong>, whereas such an automated system costs much less to operate (depending on the complexity of the contract though).
This means that businesses could invoice in a more granular way, limiting the credit risk they take servicing their customers without being paid.</p>
<p>This is also true for pre-paid services: the transaction costs being low and the chain fully automated, the pre-paid tokens may not need to be worth a lot of money.</p>
<h1 id="a-concrete-example">A concrete example</h1>
<p>A data provider company named “MoveData” which is distributing different types of data to its customers decides to automate their whole value chain.
They then create a utility token ‘MDTA’ which is going to be used by the customers to pay for the data they get. The purpose of that token is that it can be <strong>denominated in a fiat currency avoiding the price volatility normally affecting the crypto currencies</strong>.
They setup a straightforward pricing model: 1 MDTA = 1 EUR = 1 Data Point.
“MoveData” has also created a smart contract for each customer which represents the data each customer has subscribed to.
The purpose of storing this information in a blockchain instead of doing this off chain is that this information is made fully transparent and auditable to the customer. The customer then credits this smart contract with the MDTA tokens he has purchased.</p>
<p>At that point the system is basically ready to operate based on the information stored in the blockchain: a scheduler would look on a regular basis at all the contracts to be served, would generate, most likely off-chain, the data files to be pushed to the customers.
A proof of this file generation would be stored in the payment transaction moving the MDTA tokens from the customers to “MoveData”.</p>
<p>In this simplistic example, we foresee how core a blockchain implementation could be for a company, enabling **frictionless interactions with its customers. This basic example could easily be extended to the providers of “MoveData” which could be managed as well thanks to Blockchain based information.
A side note, considering the cost of storing data on a Blockchain we have not considered an on-chain solution for distributing the data which could also be feasible if the volume and the nature of data are appropriate.</p>
<p><strong>As this example like many others show, using the utility token technology, the whole value chain gets seamless and automated from the service description to the payment. A new SAP Blockchain based?</strong>
<br />
<br /></p>
<blockquote>
<p><a href="https://medium.com/@philippe.famille.meyer/seamless-integration-from-tokens-to-accounting-eea4569ed6af">Also published on Medium</a></p>
</blockquote>Philippe MeyerThe so-called smart contracts have been around for quite a while with the first global public implementation made available with Ethereum 2015. This technology is a real breakthrough and proved to be very disruptive over several use cases.Introduction To Blockchain2017-02-08T00:00:00+00:002017-02-08T00:00:00+00:00/2017/02/08/Introduction-to-Blockchain<h1 id="introduction-to-blockchain">Introduction to Blockchain</h1>
<p>I had the honor to be invited by Edinburgh University to introduce the Blockchain technology to their students.</p>
<p>I prepared this material for them that I am happy to share:</p>
<ul>
<li><a href="https://youtu.be/n0OY7l5EgOQ">Course part one</a></li>
<li><a href="https://youtu.be/AtrKLkkNw0I">Course part two</a></li>
</ul>
<p>Enjoy!</p>Introduction to BlockchainLooking for blockchain use cases in our daily life2016-04-10T18:14:00+00:002016-04-10T18:14:00+00:00/2016/04/10/looking-for-blockchain-use-cases-in-our<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/parkcoin.png" alt="Parkcoin project" /></p>
<p>Looking for Blockchain use cases in our daily life, we came across the idea of using Blockchain for parking tickets. To move this idea further we have been presenting it to the GTEC Blockchain contest taking place in Berlin in 2016. We have been very pleased to be among the finalists!</p>
<p><img src="https://PhilippeMeyer.github.io/docs/assets/images/parkcoinF6S.png" alt="Parkcoin at F6S 2016" /></p>
<p>As mentioned by Professor Michael Mainelli in a <a href="http://www.coindesk.com/smart-contracts-need-shrewder-people/?utm_source=CoinDesk+subscribers&utm_campaign=d45766683a-EMAIL_RSS_CAMPAIGNT2&utm_medium=email&utm_term=0_74abb9e6ab-d45766683a-79127377">recent Coindesk article</a> long term smart contracts will take a while to take off:</p>
<blockquote>
<p>At least in the near term “dumb and short-term contracts” will prevail over “smart long-term contracts”</p>
</blockquote>
<p>We had for sure this idea in mind using the <a href="http://www.ethereum.org">Ethereum technology</a> for parking tickets! Difficult to have simpler and shorter term contracts…
Then the next question could be: “… nice but why do you then need a Blockchain technology for a parking ticket? isn’t it an over kill ?”
After exploring the concept, which was to be honest, at the very beginning rather a technology show case, we see a number of benefits using a Blockchain technology. Just to mention a few:</p>
<ul>
<li>
<p><strong>Services provided:</strong> the Ethereum platform comes among many other things with a distributed database (no need to bother about replication), with sealed transactions (no need to implement this ourselves) and is fully hosted with a very granular pay per use mechanism.</p>
</li>
<li>
<p><strong>Trust:</strong> for monetized services and pre paid accounts, trust is an important factor. Ensuring that the technology is proven and trustable and that the accounts are distributed and not owned by a company breaks a large obstacle for customers to trust the service.</p>
</li>
<li>
<p><strong>Eco system oriented:</strong> because of the shared ledger, all stakeholders can equally and transparently interact in an eco system. It is a platform of choice for collaboration. This aspect develops further overtime when the different participants integrate more natively the shared ledger in their own infrastructure.</p>
</li>
</ul>
<p>Through this simple example, we got even more convinced about the Blockchain potential and are now pursing this idea further.</p>Philippe MeyerLooking for Blockchain use cases in our daily life, we came across the idea of using Blockchain for parking tickets. To move this idea further we have been presenting it to the GTEC Blockchain contest taking place in Berlin in 2016. We have been very pleased to be among the finalists!Smart Contracts : a new development paradigm2016-04-10T18:10:00+00:002016-04-10T18:10:00+00:00/2016/04/10/i-am-unfortunately-old-enough-to-have<div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-UfnBwxQRC-E/VwqW0-_T88I/AAAAAAAApNM/72Xl61ZjFtYsNYd52C8kL7wjYaot7erNQ/s1600/AAEAAQAAAAAAAAY7AAAAJDQ2N2E0M2UxLTdlOTctNDlkYy04NDhjLTBmYmZmNWM0MGVhMw.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="366" src="https://1.bp.blogspot.com/-UfnBwxQRC-E/VwqW0-_T88I/AAAAAAAApNM/72Xl61ZjFtYsNYd52C8kL7wjYaot7erNQ/s640/AAEAAQAAAAAAAAY7AAAAJDQ2N2E0M2UxLTdlOTctNDlkYy04NDhjLTBmYmZmNWM0MGVhMw.jpg" width="640" /></a></div><br /><br /><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">I am unfortunately old enough to have lived a number of paradigm shifts. In particular the shift from procedural to object-oriented programming and from monolithic to distributed to name a few. </div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">I remember in particular once looking at the architecture of a Corba project (Distributed objects) and realize to my great surprise that this object oriented technology had been used in a very conservative way. It was not at all taking advantage of the object paradigm, but just using this distribution framework as a regular Remote Procedure Call framework. It was not addressing directly the different object instances but rather rebuilding a layer in charge of dispatching calls to the requested objects.</div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">Looking now at Ethereum I feel the same could happen. People may not realize that the Smart contract are changing deeply the way we will architect software: instead of being data driven code will become process driven with a much finer granularity. Alike object oriented programming which broke monoliths in small pieces, smart contracts will do the same for processing data.</div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">Let’s take a concrete example: a bank will represent a portfolio in a database with a table having multiple columns for the various attributes. Processing a specific event on the portfolio like performing the life cycle of the instruments is currently implemented as a SQL Statement selecting the relevant data, followed by some processing transforming the data as needed. This first process will be then followed by others similar in nature. This computation is data driven : we select the data on which we want to apply the process.</div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">Before Object Oriented programming, we were doing something similar at the model level: in the procedural approach all the different cases were merged into the same program which was handling all possible cases through batteries of switches. Object Oriented programming brought a much more granular approach: all specific cases were handled by specific objects making the code much more readable and easy to maintain. If this granularity was much better from a model point of view, the processes, often run in batches, even if running programs written in an object oriented way were still monolithic from a process point of view.</div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">This is the process dimension that the smart contracts are addressing: those independent pieces of code are handling the life cycle of objects in a same granular way as the objects did for the data model years ago. Instead of grouping the processing of all transactions belonging to a portfolio, the smart contracts representing each portfolio line ie each transaction, will be running independently breaking down in pieces the monolithic approach we still have in writing batches.</div><div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; box-sizing: border-box; color: #232629; font-family: Georgia, serif; font-size: 18px; font-stretch: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;">This will have a major impact on how we implement processes: we will not scan data to find the relevant data which needs to be processed for a particular event, instead we will have autonomous small pieces of code implementing the process logic at the smallest possible granularity making these processes easier to understand and manage as object oriented simplified for ever the way we model software.</div>Philippe MeyerI am unfortunately old enough to have lived a number of paradigm shifts. In particular the shift from procedural to object-oriented programming and from monolithic to distributed to name a few. I remember in particular once looking at the architecture of a Corba project (Distributed objects) and realize to my great surprise that this object oriented technology had been used in a very conservative way. It was not at all taking advantage of the object paradigm, but just using this distribution framework as a regular Remote Procedure Call framework. It was not addressing directly the different object instances but rather rebuilding a layer in charge of dispatching calls to the requested objects.Looking now at Ethereum I feel the same could happen. People may not realize that the Smart contract are changing deeply the way we will architect software: instead of being data driven code will become process driven with a much finer granularity. Alike object oriented programming which broke monoliths in small pieces, smart contracts will do the same for processing data.Let’s take a concrete example: a bank will represent a portfolio in a database with a table having multiple columns for the various attributes. Processing a specific event on the portfolio like performing the life cycle of the instruments is currently implemented as a SQL Statement selecting the relevant data, followed by some processing transforming the data as needed. This first process will be then followed by others similar in nature. This computation is data driven : we select the data on which we want to apply the process.Before Object Oriented programming, we were doing something similar at the model level: in the procedural approach all the different cases were merged into the same program which was handling all possible cases through batteries of switches. Object Oriented programming brought a much more granular approach: all specific cases were handled by specific objects making the code much more readable and easy to maintain. If this granularity was much better from a model point of view, the processes, often run in batches, even if running programs written in an object oriented way were still monolithic from a process point of view.This is the process dimension that the smart contracts are addressing: those independent pieces of code are handling the life cycle of objects in a same granular way as the objects did for the data model years ago. Instead of grouping the processing of all transactions belonging to a portfolio, the smart contracts representing each portfolio line ie each transaction, will be running independently breaking down in pieces the monolithic approach we still have in writing batches.This will have a major impact on how we implement processes: we will not scan data to find the relevant data which needs to be processed for a particular event, instead we will have autonomous small pieces of code implementing the process logic at the smallest possible granularity making these processes easier to understand and manage as object oriented simplified for ever the way we model software.Internal use of Blockchain ?2016-02-18T10:21:00+00:002016-02-18T10:21:00+00:00/2016/02/18/internal-use-of-blockchain<div class="separator" style="clear: both; text-align: center;"><a href="https://2.bp.blogspot.com/-d2DMzyYnmig/VsWa0gmNcUI/AAAAAAAApCI/EAA1dPfxL7I/s1600/Bank%2BNetzwerk2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="291" src="https://2.bp.blogspot.com/-d2DMzyYnmig/VsWa0gmNcUI/AAAAAAAApCI/EAA1dPfxL7I/s640/Bank%2BNetzwerk2.jpg" width="640" /></a></div><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span><div class="article-content" style="border: 0px; box-sizing: border-box; font-stretch: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div class="article-body" dir="ltr" itemprop="articleBody" style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; font-stretch: inherit; margin: 0px; outline: 0px; overflow: hidden; padding: 0px; vertical-align: baseline;"><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; font-stretch: inherit; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="color: #232629; font-family: Arial, Helvetica, sans-serif; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;"><br /></span></span></span><span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="color: #232629; font-family: Arial, Helvetica, sans-serif; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;"><br /></span></span></span><span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="color: #232629; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;">I</span><span style="font-family: Times, Times New Roman, serif;"><span style="color: #232629;"><span style="font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;">t</span></span></span></span> <span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Times, Times New Roman, serif;"><span style="color: #232629;"><span style="font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;">has been mentioned already by some banks </span></span><a href="http://www.coindesk.com/blockchain-panel-standing-room-only-at-finnovasia-hong-kong/" rel="nofollow" style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #8c68cb; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: none; padding: 0px; text-decoration: none; vertical-align: baseline;" target="_blank">like UBS</a><span style="color: #232629;"><span style="font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;"> that they were considering Blockchain technology also for their internal use. </span></span><a href="http://www.coindesk.com/mizuho-blockchain-tech-internal-recordkeeping/" rel="nofollow" style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #8c68cb; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: none; padding: 0px; text-decoration: none; vertical-align: baseline;" target="_blank">Mizuho also a</a><span style="color: #232629;"><span style="font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px;">nnounced following this approach a few days ago. </span></span></span></span></span></div><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #232629; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">This may be s</span><span style="font-family: "arial" , "helvetica" , sans-serif;">trange but it has to be known that large banks operate as a vast network of more or less separate legal entities. As the financial products got more and more complex and as banks have been trying to rationalize their setups, they have tried to centralize product and risk</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> management in few centers around the globe. But they have still to book the trades with the customers locally because a customer may not wish to transact overseas. Therefore they massively replicate trades between their internal entities.</span></span></div><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #232629; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: Arial, Helvetica, sans-serif;">Replicating trades is not straightforward : it does not mean only to copy the trade details, it also means to have the same interpretation of the trades and have the same life cycle for the original trade and its copy.</span></div><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #232629; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: "arial" , "helvetica" , sans-serif;">To ensure this, banks have attempted to share systems (frontoffice, backoffice, sometimes accounting) among geographies in order to not replicate business logic. Nevertheless data is replicated which means that it has to be reconciled...and this all along the trade's life.</span></div><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #232629; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Indeed sharing a global ledger internally between the sometimes 100+ entities could bring a lot savings. Having the same trade representation and life cycle among the different entities which are selling products and managing products will simplify greatly the trade management. </span></div><div style="border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 0px; box-sizing: border-box; color: #232629; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: 32px; margin-bottom: 32px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Blockchain technology will develop by steps : it cannot replace a full ecosystem built over decades overnight. Therefore it will start in areas where there is less existing systems. For sure, using this technology internally is much easier to decide than trying to convince a whole industry to migrate to a complete new system. Banks proceeding that way will gradually increase their expertise and knowledge and will be ready sonner to propose this kind of service to their customers.</span></div></div></div>Philippe MeyerIt has been mentioned already by some banks like UBS that they were considering Blockchain technology also for their internal use. Mizuho also announced following this approach a few days ago. This may be strange but it has to be known that large banks operate as a vast network of more or less separate legal entities. As the financial products got more and more complex and as banks have been trying to rationalize their setups, they have tried to centralize product and risk management in few centers around the globe. But they have still to book the trades with the customers locally because a customer may not wish to transact overseas. Therefore they massively replicate trades between their internal entities.Replicating trades is not straightforward : it does not mean only to copy the trade details, it also means to have the same interpretation of the trades and have the same life cycle for the original trade and its copy.To ensure this, banks have attempted to share systems (frontoffice, backoffice, sometimes accounting) among geographies in order to not replicate business logic. Nevertheless data is replicated which means that it has to be reconciled...and this all along the trade's life.Indeed sharing a global ledger internally between the sometimes 100+ entities could bring a lot savings. Having the same trade representation and life cycle among the different entities which are selling products and managing products will simplify greatly the trade management. Blockchain technology will develop by steps : it cannot replace a full ecosystem built over decades overnight. Therefore it will start in areas where there is less existing systems. For sure, using this technology internally is much easier to decide than trying to convince a whole industry to migrate to a complete new system. Banks proceeding that way will gradually increase their expertise and knowledge and will be ready sonner to propose this kind of service to their customers.Blockchain deploiement2015-12-11T06:31:00+00:002015-12-11T06:31:00+00:00/2015/12/11/blockchain-deploiement<b>A very promising technology </b><br /><br />As mentioned already a few times here, Blockchain is a very promising technology in particular for financial services. In a recent <a href="http://santanderinnoventures.com/wp-content/uploads/2015/06/The-Fintech-2-0-Paper.pdf">study</a> the consulting firm Oliver Wyman suggests that using Blockchain, banks could save per year by 2020 between 15-20B$ in infrastructure costs.<br /><br />In the recent <a href="http://www.finnovasia.com/">finnovasia</a> meeting Stephens from UBS <a href="http://www.coindesk.com/blockchain-panel-standing-room-only-at-finnovasia-hong-kong/">confirmed</a> that blockchain will bring a real disruption <br /><br /><b>But some limitation factors</b><br /><b> </b> <br />This will not be achieved without using the technology at its full scale: the less native is the implementation, the more effort will be needed to ensure consistency with the existing systems. But there are some factors limiting the full adoption: some ecosystems are pretty complex. Securities for example, involves a lot of actors working together (clearer, exchanges, custodians, brokers, ...) which means that a full native implementation requires an agreement among all these actors on one standard. <br /><div class="copy-paste-block">Those ecosystems have been incrementally built over decades if not centuries. As described in a <a href="http://www.meyer.today/2015/11/blockchain-strategy.html">previous post</a>, banks will need to define an integration strategy to gradually expand the blockchain grip.</div><br /><b>Not a global deployment but some starting points identified</b><br /><b><br /></b>If a global deployment of such disruptive technology is quite unlikely (also due to the blooming technology offerings), in the finnovasia session about blockchain, as <a href="http://www.coindesk.com/blockchain-panel-standing-room-only-at-finnovasia-hong-kong/">reported by Coindesk</a> some starting points have been identified : <br /><br /><div style="-qt-block-indent: 0; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; text-indent: 0px;"><ul><li>Stephens for UBS said that blockchain will replace several hundred of internal ledgers. </li></ul><ul><li>Alex Edana form WIP Solutions CEO said : "Australia will be the first market on the blockchain in three to five years," he said. "There, you only have [a small number of] banks and a couple exchanges."</li></ul><br />This reinforcing the idea that the smaller, the easier. Small eco systems like Australia with less legacy will adopt blockchain faster.<br /><br />It also shows that there is a benefit for large organizations to adopt such a technology internally in order to rationalize their internal processes. Remember that large organization do a lot of trades internally in particular between sales and trading center. Those trades are booked in each branch and need to be reconciled all time.<br /><br /> </div><b>Hype curve ?</b><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><img alt="" class="mw-mmv-final-image mw-mmv-dialog-is-open" height="266" src="https://upload.wikimedia.org/wikipedia/commons/b/bf/Hype-Cycle-General.png" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr><tr><td class="tr-caption" style="text-align: center;">Hype curve @Wikipedia</td></tr></tbody></table>This phenomenon in technology adoption is very well known. Blockchain will make no exception: the hype will grow and as first implementations will be partial, returns will be disappointing and hype will drop massively. Then little by little the small scale projects will demonstrate returns and will grow incrementally.<br /><br />"Rome was not built in one day"<br /><br /><b> </b>Philippe MeyerA very promising technology As mentioned already a few times here, Blockchain is a very promising technology in particular for financial services. In a recent study the consulting firm Oliver Wyman suggests that using Blockchain, banks could save per year by 2020 between 15-20B$ in infrastructure costs.In the recent finnovasia meeting Stephens from UBS confirmed that blockchain will bring a real disruption But some limitation factors This will not be achieved without using the technology at its full scale: the less native is the implementation, the more effort will be needed to ensure consistency with the existing systems. But there are some factors limiting the full adoption: some ecosystems are pretty complex. Securities for example, involves a lot of actors working together (clearer, exchanges, custodians, brokers, ...) which means that a full native implementation requires an agreement among all these actors on one standard. Those ecosystems have been incrementally built over decades if not centuries. As described in a previous post, banks will need to define an integration strategy to gradually expand the blockchain grip.Not a global deployment but some starting points identifiedIf a global deployment of such disruptive technology is quite unlikely (also due to the blooming technology offerings), in the finnovasia session about blockchain, as reported by Coindesk some starting points have been identified : Stephens for UBS said that blockchain will replace several hundred of internal ledgers. Alex Edana form WIP Solutions CEO said : "Australia will be the first market on the blockchain in three to five years," he said. "There, you only have [a small number of] banks and a couple exchanges."This reinforcing the idea that the smaller, the easier. Small eco systems like Australia with less legacy will adopt blockchain faster.It also shows that there is a benefit for large organizations to adopt such a technology internally in order to rationalize their internal processes. Remember that large organization do a lot of trades internally in particular between sales and trading center. Those trades are booked in each branch and need to be reconciled all time. Hype curve ?Hype curve @WikipediaThis phenomenon in technology adoption is very well known. Blockchain will make no exception: the hype will grow and as first implementations will be partial, returns will be disappointing and hype will drop massively. Then little by little the small scale projects will demonstrate returns and will grow incrementally."Rome was not built in one day"