Switzerland’s Federal Department ofFinance explains the country’s position

as an attractive location for digital innovations,focussing on blockchain and ICOs

Smart Dubai Office lifts the lid onthe role blockchain technology plays

in Dubai, in this revealing interview

After a stunning rally at the end oflast year, cryptocurrencies have lost

almost two-thirds of their value. This is notnecessarily bad news says Tom Lyons

ISSN 2516-3817 • May 2018

14 22 32

BLOCKCHAIN INNOVATION

REDISCOVERING BLOCKCHAINAND BITCOIN IN EUROPEANTANAS GUOGA MEP SHARES HIS VIEWS ON WHY 2018 IS ANIMPORTANT PERIOD FOR REDISCOVERING BLOCKCHAIN ANDBITCOIN IN EUROPE

IN THIS ISSUE

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Jonathan MilesEditor

Production CoordinatorNick Wilde

DesignersAndrew BosworthBen Green

Avery warm welcome to thisexciting May 2018 BlockchainInnovation publication.

We are honoured that Antanas GuogaMEP heads up this edition, indeed, Ican highly recommend that you taketime to read his insightful article. Weare told that 2018 is going to be thewinning year for everyone in theblockchain industry, as business andgovernments are seeking effectiveways to implement this revolutionarytechnology for the empowerment ofcitizens and the growth of business.

In another piece, we discover that aftera stunning rally at the end of 2017,cryptocurrencies have lost almost two-thirds of their value. This is notnecessarily bad news for theblockchain industry, argues the CryptoValley Association’s, Tom Lyons.

In a special focus, Smart Dubai Officelifts the lid on the role blockchain technology plays in Dubai, including

what the Dubai Blockchain Strategysets out to achieve. The organisationalso explores how this presents anopportunity to deliver more seamless,safe, efficient and personalised cityexperiences.

I trust that you find this supplementuseful and thought-provoking. Do feel free to get in touch with any suggestions for engaging content in thefuture, or if you have any comments onthis journal. ■

Jonathan MilesEditor

@Jonathan_AdjDig

CONTENTS

Rediscovering blockchain andbitcoin in Europe. Antanas Guoga MEPshares his views on why 2018 is an importantperiod for rediscovering blockchain and bitcoinin Europe

Global Cannabis ApplicationsCorporation

P2P Models project

EUROPEAN CRYPTO BANK Project

ORS GROUP

Crypto winter, or blockchainspring? After a stunning rally at the end oflast year, cryptocurrencies have lost almosttwo-thirds of their value. This is not necessarilybad news for the blockchain industry, says theCrypto Valley Association’s Tom Lyons

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Tieto18

Aalto University20

Blockchain and initial coinofferings: Switzerland as anattractive location for digitalinnovations. Switzerland’s FederalDepartment of Finance (FDF) explains thecountry’s position as an attractive location fordigital innovations, focussing on blockchainand initial coin offerings (ICOs)

B3i

UCL Centre for BlockchainTechnologies

Regulation within cryptocurrencymarkets. Alexander Larsen from theInstitute of Risk Management (IRM) provides anin-depth look at the state of play concerningregulation within cryptocurrency markets

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The role of blockchain technologyin Dubai. Smart Dubai Office lifts the lid onthe role blockchain technology plays in Dubai,in this revealing interview

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YOUR OPINIONMATTERS

BLOCKCHAIN INNOVATION

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Rediscovering blockchain and bitcoin in Europe

Beyond the power of Bitcoin, 2018 is an importantperiod for rediscovering blockchain technologybeyond the massive craze over bitcoin and other

cryptocurrencies. Beyond the race of ICO projects, thisis going to be the winning year for everyone in theblockchain industry as business and governments arelooking for effective ways to implement this revolution-ary technology. The falling cryptocurrencies market willcool down those who are looking only for profit andwill reveal the real hard-workers. This is where bothnational and European, governmental, business andnon-profit players can step in and embrace the inno-vative technologies for the growth of business and theempowerment of citizens.

Europe should invest moreHere, at the European Parliament, we are having seriesof discussions on innovative technologies, especiallyartificial intelligence (AI) and blockchain technology. Itis now obvious that Europe wants to lead the way inthese areas, however, today we are far behind others,even Asia. These innovations create enormous oppor-tunities for many traditional industries. However, weneed to separate the bitcoin madness from otherpotential applications of blockchain technology. I trulybelieve in it and the goals behind it, including trans-parency, decentralisation and security.

Although the technology has many future-orientedapplications, there is speculation about it. I do not sup-port the latter. For blockchain investors, I would alwayssuggest considering the projects that create value. I amhopeful we will allocate enough resources and fundingfrom the governmental level for research into and themassive application of blockchain. To the maximumextent – I believe that this is essential for our future –that is the synergy of artificial intelligence (AI) andblockchain technology. This is where the major invest-

ment needs to go, starting from the government up tothe corporate level. I believe that everybody in Europeshould invest. Moreover, everybody should invest inboth knowledge and skills to become successful.

Clear signs from the European CommissionI strongly support the European Commission’s directionto consider the usability of blockchain technology. Inthis vein, the Fintech action plan has already been presented. The European Blockchain Observatory andForum – have just been launched. I hope that this isgoing to be a very progressive engine that is going totake blockchain to new European heights. In addition,it is a clear sign from the European Commission thatthey care about blockchain in Europe. I strongly support,and I hope to contribute towards this. I encourageeverybody to contribute their expertise, sharing eventsand other initiatives via http://eublockchainforum.eu.

Status quo: self-regulation I have noted that one of the most popular discussiontopics in Europe concerns the question of regulation –or lack of it, to be more precise, particularly related toICOs and cryptocurrencies. We see regulatory measuresin China, South Korea, the US and by some Europeangovernments and central banks – all of whom aretaking a cautious approach towards the technology. Asa member of the European Parliament, my policyobjectives are to have a wider viewpoint, before decidingon whether regulatory measures are necessary, espe-cially when it comes to innovation.

Every European will be using blockchain and willunderstand its benefits and opportunities in thefuture, in spheres such as national registers, healthinsurance, financial projects and so on. The enablingof a regulative approach is taking the lead now and thisis how we can attract innovative investment into

Antanas Guoga MEP shares his views on why 2018 is an important period for rediscovering blockchain and bitcoin in Europe

BLOCKCHAIN INNOVATION

7

Europe. The longer we have non-restrictive regulation –the better. I think the status-quo is self-regulation. Wesaw Google, Facebook, Twitter taking down ads aboutcryptocurrency, ICOs and in the end, I think, this areawill self-regulate.

Education – a priorityEducation in blockchain technology is crucial for every-one to succeed and benefit from what the technologyoffers. It is important to unite our efforts and investour knowledge into changing the world for good. Significant actions have already been taken with the firstinternational Blockchain hub in Europe – BlockchainCentre Vilnius – in January.    These are some of the reasons for founding the Blockchain Centre Vilnius.

It is the first facility of its kind on the continent. Theglobal network of blockchain centres includes Mel-bourne, Shanghai and now, Vilnius. It is a not-for-profitknowledge-hub, co-working space and incubator forblockchain technology companies. The chain startedwith Australia’s Melbourne Blockchain Centre. Drawingon the experiences of the Melbourne location – whichbrands itself as a community of more than 2,000blockchain technology entrepreneurs, experts, men-tors and investors – the new facility’s founders say theyhope to benefit from Lithuania’s favourable climate fordigital businesses. Lithuania is a great place to investin and there is a growing recognition in Europe that thecountry has gained an edge in terms of financial anddigital innovation, as well as an innovation-friendly regulatory climate.

The first mover advantage As a Lithuanian MEP, I am glad that the Australian andAsian blockchain communities selected Lithuania asthe network’s first location in Europe due to its politicaland economic stability and relationship with the Euro-pean Union, as well as having favourable business andregulatory environments. It is in line with the overall

positive attitude of the European Union institutions,who are all ready to embrace the new technology.

Here in Lithuania, we are pulling out the stops to bringthe world’s top blockchain talent, ideas, investors andregulators together to create value for both the privateand public sectors. Lithuania, for the last three years,has strengthened its reputation in this area – in ourcentral bank and our investment community has beenactively developing fintech industry, introducing LBChain,a sandbox to test blockchain initiatives. This has providedus with a lot of information and know-how.

I think Lithuania has many opportunities to bring different businesses and start-ups into the blockchainarea. And initiatives like the blockchain centre in Vilniuswill help people to deliver on projects and promises. Ithink we are delivering and empowering. I hope thatLithuania is going to lead the forefront of blockchainprojects because we have the first mover advantage.

Witnessing the future In conclusion, we are witnessing a completely newtechnology emerging that will revolutionise the waygovernments, companies and people access informa-tion. It has demonstrated how trust is created on amassive and global scale – so, blockchain technologyenables people to feel safe, secure and confident. It isa very transparent system. Moreover, it just keepsexpanding. I believe that several world-changing start-ups will emerge. I know there will be much activitycoming from the blockchain centre in Vilnius, the firstinternational blockchain centre, connecting both Asiaand Australia. ■

MEP A. Guoga was elected for top 200 fintech influencers. You can findout more at www.lattice80.com/top-200-fintech-influencers-europe/

Antanas Guoga MEP, Blockchain Centre Vilnius and the diplomatic rep-resentations to the European Union cordially invite blockchain industrystakeholders to a high-level Intercontinental Blockchain Conference:“Blockchain - The Game Changer of the 4th Industrial Revolution”, onthe 24th May, at the European Parliament, Brussels, Belgium. Admis-sion is free. Register at: https://goo.gl/Lykwo2 .

Antanas Guoga MEPGroup of the European People’s Party (Christian Democrats)Tel: +32(0)2 28 45522antanas.guoga@europarl.europa.euwww.antanasguoga.ltwww.twitter.com/TonyGuoga

Antanas Guoga MEPGroup of the European People’sParty (Christian Democrats)

Jane Carter is an active youngwoman in her 30s who works as asoftware engineer, likes the out-

doors and is planning to raise a family.Jane also has epilepsy.

As someone who has dealt with thecondition her whole life, Jane is accus-tomed to maintaining control over herseizures. However, when her usualmedication started to feel less effective, Jane confessed her concernsto a friend, who suggested medicalcannabis as a potential treatment.Jane had never considered this possi-bility, but when she tried to learnmore about it, she struggled to findtrustworthy sources. Therefore, sheturned to her physician, Dr Lisa.

Dr Lisa told Jane that although the ben-efits of cannabis have been discussedamong doctors for a few years, sheherself hadn’t yet seen any evidencefrom reputable studies showing clinicalbenefits of cannabis. The doctorexplained that as a practitioner and ascientist, she liked to have solid evi-dence and clinical experience beforeshe prescribed medication to herpatients; therefore, she would not pre-scribe cannabis to treat Jane’s epilepsy.

Jane’s story is not unique and illustratesthe medical cannabis paradox.

The medical cannabisparadoxThe medical benefits of cannabis –including pain management, seizure

remediation, muscle spasms manage-ment and others – have been wellknown for centuries. However, overthe past century, cannabis hasbecome a proscribed substance and treated as a law-enforcementchallenge. As a result, it has becomedifficult for researchers to getapproval and funding for properlycontrolled cannabis studies and usersare unable, or unwilling, to share theirexperiences. Consequently, doctorsand other practitioners lack trustedinformation on which to base clinicaldecisions.

Altogether, these factors have led to significant under-prescription of medical cannabis, there has been alarge, unfilled demand for qualityresearch, new product delivery meth-ods and consumer information on theuses and effects of this substance.

The Citizen GreencommunityIn an effort to bring together theglobal medical cannabis communityand motivate its members – includingpatients, practitioners, scientists, cultivators and manufacturers – toshare their knowledge of and experi-ences with medical cannabis, GlobalCannabis Applications Corporation(GCAC) has developed the CitizenGreen platform. This cutting-edgeplatform will facilitate the sharing ofinformation between consumers,caregivers and researchers, as well asregulators and members of other

industries, such as healthcare andcosmetics.

The Citizen Green platform is poweredby the following technologies: Can-naCube database, artificial intelligence(AI), mobile apps and blockchain.

AI, Chatbot and CannaCubeArtificial intelligence provides GCACwith the ability to bring to life all of thedata collected and managed.

AI is used for multiple applications inour platform: chatbot, advanced ana-lytics, predictive analysis and machinelearning tools. And its capability tointegrate observational and clinicalresearch findings allows us to offerdeeper insights and better outcomesfor patients and the entire community.

The AI models the relationshipbetween patients’ demographics andmedical conditions, medical cannabisfeatures and treatments effectiveness,thereby closing the loop between“pain and strain”. (TM pending)

Sanna, GCAC’s proprietary chatbot,facilitates stronger engagement withits adaptive user experience and per-sonalised recommendations via ourapps, CannaLife and Prescriptii. Thechatbot will grow smarter over time asit will bridge missing information inusers’ profiles.

CannaCube is GCAC’s medicalcannabis database. Equipped with

Bradley Moore, CEO of GCAC discusses how artificial intelligence and blockchain (trusted data)solve the paradox of limited medical cannabis data and anecdotal user information

How trusted data is helping to liberatethe power of medical cannabis

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world-class data encryption and storage, this database curates ‘noisy’data aggregated from CG apps, doctorreferences, social listening and vari-ous industry inputs against thousandsof clinical study reports for validationand expansion of the data sets.

Mobile AppsThe client-facing components of CitizenGreen are two easy-to-use mobile apps:CannaLife and Perscriptii. Connected bythe CannaCube database, these appscollect and share 360-degree data relating to medical cannabis production,research, prescription and usage.

CannaLife is an app for networking,sharing peer-to peer-feedback andsearching experiential user datarelated to cannabis consumption andconsumer behaviour. Using screencapture technology, users can findinformation on medical cannabis,create a post and share it with otherlike-minded users. Then, when seek-ing information, users can call uponCitizen Green’s chatbot, Sanna, who,coupled with the world’s firstcannabis-specific Google searchengine, helps them find answers tospecific health and cannabis queries.

Prescriptii is the first consumer-facing app for medical cannabislicense holders. It takes users throughan ailment-related questionnaire and

based on CannaCube analysis, recom-mends the appropriate products tothe condition described. An interac-tive map helps users to find nearbyretailers that offer the recommendedproducts.

Sanna, the chatbot, encourages usersto evaluate their experience with thecannabis prescription. Fed back toCannaCube this information optimisesfurther recommendations and canhelp patients and their practitioners to assess.

BlockchainThe GCAC blockchain gives medicalcannabis users ownership over theirdata in a secure and encrypted envi-ronment. Unlike centralised applica-tions, blockchain uses a distributed,decentralised digital ledger to record alltransactions. GCAC recently released aWhite Paper discussing the digitaltoken it is introducing on theblockchain to incentivise users.

How CannaLife ChangedJane’s LifeWhen Jane saw a news report aboutthe CannaLife app, she was intriguedenough to install it and as she famil-iarised herself with the Citizen Greencommunity, she found many storiesfrom other epilepsy sufferers. Thismade her reconsider how cannabismight help her own condition.

Jane presented Dr Lisa with CannaLife,showing her the large database ofanecdotal patient information, as wellas research studies and manufactur-ers’ results. After reading a largenumber of consumer testimonials andsome of the research, Dr Lisa felt confident enough to prescribe Jane amedical cannabis license, using thePrescriptii app as a guide. Threemonths later, Jane’s epilepsy symp-toms had decreased considerably, andshe very rarely had seizures.

As she works with Jane on her progressin Prescriptii, Dr Lisa is getting a feel forwhat other treatments work best withmedical cannabis. She will definitely beusing the app as part of her diagnostictoolkit going forward.

Jane, meanwhile, has returned to amuch-improved quality of life. She isback to coding, rock-climbing and considering with her husband whetherit is time to try for a baby.

Bradley MooreCEOGCACTel: +1 514 561 9091bmoore@cannappscorp.comcannappscorp.comwww.twitter.com/GlobalCannApp

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The collaborative economy is notwhat we were promised.Inspired by Wikipedia, it

emerged from the idea of a peer-to-peer networks of citizens, sharing andcollaborating for the common good,in every field. However, today we canobserve how digital monopoliesconcentrating data, resources andpower are the new normal. Instead ofdecentralizing the power of traditionalinstitutions, we can see how theplatform economy is creating largerthan ever monopolies: Uber is largerthan any taxi company, Airbnb thanany hotel chain, Google than thetraditional providers of infrastructureand Facebook governs more than 2billion users.

This market dominance has, ofcourse, some benefits of the servicesthey provide, but it is not withoutserious drawbacks, in a context wherescandals are common. For example,the terrible labour practices in Uber orDeliveroo, privacy-hindering servicesby Google, regular collaboration inmass surveillance programmes bymost major companies as revealed byEdward Snowden, or Facebook’sCambridge Analytica mess. Evenworse, any new start-up aims to eitherbe absorbed by these giants orbecome the new monopoly in a non-platformed field. Is this science-fictionpseudo-dystopian scenario all we canexpect? What would it take to changethe rules of this nasty game?

The P2P models visionA new research project has theambitious aim of facilitating theemergence of a different ecosystem.P2P Models has a simple yetchallenging research question: can webuild online platforms in a differentway? Can we build collaborativeeconomy platforms which aredecentralised, so there is not a singleowner of the whole infrastructure?Can we build platforms where thedecision-making is democratic,involving their users, which maybecome empowered? And yet, can wemake such platforms in a way inwhich the profits are distributedacross the users?

The project will harness the potential ofthe blockchain to tackle these issues.However, instead of focusing on financeand crypto-currencies, the project willexplore the potentials of DecentralizedAutonomous Organizations (DAOs). Theidea is to replace the traditional onlineplatforms like Airbnb, which rely on acentralised server infrastructurecontrolled by a single actor, with theserverless DAOs hosted and executed

in a decentralised blockchain network.Such DAOs may embed the rules for theusers to interact with each other in apeer-to-peer manner.

Thus, we can easily imagine adecentralised Airbnb developed inthat way. Moreover, users could votefor which changes they would like tosee in their DAO-platform, thusempowering them in the process.Then, we could see an ecosystem ofmultiple decentralised Airbnb’s, withdifferent features depending on whattheir community has decided, forexample, some totally anonymous,others with a high insurance in casesomething goes wrong, or othersadapted to a local culture.

Without the strong dependency onplatform owners, profits could bemore distributed, and users rewardedin multiple forms (for example,cryptocurrency, votes, reputation,shares). In such an ecosystem,interoperability provides a competitiveopportunity, since the users and eventheir reputation, are shared across the ecosystem (sharing the same

The ERC research project P2P Models aims to use blockchain-driven Decentralized AutonomousOrganizations (DAOs) to boost a collaborative economy which is decentralised, democratic andwhere profits are distributed, as the university’s researcher, Professor Samer Hassan reveals

Reinventing the collaborativeeconomy with blockchain

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P2P Models is a €1.5 million, five-year interdisciplinary research project,funded by the European Research Council (ERC) and awarded to SamerHassan, a researcher at both the Berkman Klein Center for Internet andSociety at Harvard University and GRASIA at the Universidad Complutensede Madrid in Spain. The growing Madrid team comprises of computer scientists, social scientists, activists and hackers.

blockchain), instead of locked in asingle platform… allowing new start-ups to reach a faster critical mass,sharing users and even componentswith other companies. In such anecosystem, barriers to entry are lower,competition is higher and dominantpositions are harder to maintain.

New governance & economicmodelsIf that vision is to be realised, at leastpartially, the building of DAOs is critical.Thus, the project will build both aframework and tools to enable themodular construction of DAOs,especially those providing collaborativeeconomy features. Therefore, theproject will build “lego’s” or buildingblocks, embedding different features,so that developers may combine themto deploy their new platform. By beinga fully free/open source platform,anyone could build their own buildingblocks for their specific needs and ifdesired, contribute them for others to use.

In the same way, other series ofbuilding blocks will embed governancemodels and economic models, focusingon democratic and redistributing

approaches. The characteristics ofblockchain and smart contracts enable the automated execution andenforcement of rules in a decentralisedcontext. Thus, the project will allow usercommunities to be governed, at leastpartially, by explicit rules embedded inthe code. This may allow democraticrules that make these communitiesmore inclusive and equal, for example,considering gender, minorities or low-income profiles.

Furthermore, blockchain, through its tokenization, facilitates thedistribution of value. However, tokensmay be much more than crypto-currencies, alternatively representingequity, decision-making power, non-transferable reputation, or evenproperty ownership digital certificates.This may enable the emergence ofnew business models, where userparticipation is rewarded.

P2P Models will perform socialresearch, codesign pilots withcommunities, build a testbed forresearchers… all with the aim ofmoving from an ecosystem controlledby Silicon Valley centralised monopolies– to an open interoperable ecosystem.

Today, with the help of blockchain,there is a window of opportunity tochange the rules of the game. Will theproject manage to avoid the dystopia?

Samer HassanFaculty Associate Berkman Klein Center, Harvard University

Associate Professor Universidad Complutense de Madrid

Principal Investigator P2P Models projectTel: +34 91 394 7599samer@fdi.ucm.eshttp://p2pmodels.euhttp://twitter.com/samerP2P http://twitter.com/P2Pmod

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EUROPEAN CRYPTO BANKlaunched its Initial Coin Offering(ICO) on the blockchain on

February 15th, 2018 to build the firstbank and trading platform protectingits investments in the bitcoin and cryp-tocurrencies market. Faced with theobservation of a lack of regulation,financial and tax specialists, computerscientists, mathematicians, blockchainengineers have partnered to build aEuropean bank and thus meet theexpectations of investors by providingbanking and trading services, secure,flexible and scalable. The ArtificialIntelligence Research Laboratory willbe in Paris, the tax assistance depart-ment in Milan and the exchange andtrading platform in London.

Today, one of the biggest problemscrypto investors face is the difficulty inconverting their investments into tra-ditional assets. And clearly, the bankingsystem is hostile and unfriendly.

Cryptocurrencies look like the seriouscompetitor to the traditional process ofbanking and a lot of financial institu-tions stop accepting crypto exchangemoney and try to give a hard time tocrypto owners and investors.

European Crypto Bank wants to replyto the growing requirements of Cryptoholders and the market that we wantto disrupt is a massive one, with over€8 trillion being circulated daily in thefinancial sector alone. If you considerthe close to $500+ billions that make

the cryptocurrency market, you realisethat the first fintech ICO that will havea viable product has an immenseopportunity. Today, most of coins andtokens holders need to declare theirprofits and need assistance to managetheir wallet with financial advisors whomaster markets volatility.

From the investment side of our busi-ness, ECB will include an exchange andtrading platform and leveraged ser-vices on cryptocurrencies and FIAT.Furthermore, ECB will provide portfoliomanagement, wealth managementand financial analysis on crypto-cur-rencies, will help people for life planifi-cation with crypto-assets and finallywill create gateways to all investmentsuniverse (real estate, art, gold, tradi-tional financial assets (stocks, bondsand managed funds), private equityand alternative investments…)

From the tax side of our business, ECBwill provide services to calculate thebenefits people will have to declare totheir tax administration and will give tothem a tax reporting and a tax guide.

Furthermore, we will carry out taxoptimisation and will provide a cryptoexpert tax lawyer in their country incase of tax litigation.

In that case, the blockchain will helpECB to transfer a payment in ECBTokens to lawyers, in respecting the right to stay anonymous when acustomer need lawyer assistance (a worldwide human right).

The team behind European CryptoBank already has the KYC and AMLsoftware and they’ve been using it forthe past nine years in their wealthmanagement business. ECB will be

Olivier Forgues, CEO of the EUROPEAN CRYPTO BANK Project explains the first bank andtrading platform protecting its investments in the bitcoin and cryptocurrencies market

The bitcoin and cryptocurrenciesmarket

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the platform that allows anyone in theworld to make crypto investmentsand benefit from the same servicestraditional banks offer for fiat money.

The approach taken by EuropeanCrypto Bank is quite unique. Indeed,the token associated with the project(ECB) is a swap between two differenttokens: One for investing and one fortax defending.

ECB TOKEN I, is for investments(access to the research, trading, etc…)and private bank services. Token I isnon-anonymous. Token holders willenjoy, every year, a buy back with 6%of ECB annual turnover. Token I will betradable and convertible to token S orusable.

ECB Token S for tax services and taxlitigation on cryptocurrencies andanonymous. Token holders will get,every year, 5% reward program. TokenS is tradable and convertible to ECBtoken I or usable.

All ECB Tokens selected by the tokenholder at the end of the ICO will betradeable and listed in severalexchanges.

ECB’s main target is to become a fullyregulated Crypto Bank in Europe overthe next four years. This will act as agateway between owners that want to exchange crypto and owners of traditional assets (shares, bonds, realestate, art, …) - providing an easy andsecure way to do these conversions.

Since 20th March 2018, EUROPEANCRYPTO BANK partners with ARCHOSto distribute the ARCHOS Safe T miniunder the brand name of EUROPEANCRYPTO BANK. As per the terms ofthis partnership, holders of more than

600 ECB Tokens, whose current ICOfinalised on May 1st, 2018, will receivea hardware wallet, which will then beavailable for purchase at a price of€49.99. In addition, the EuropeanCrypto Bank will transfer 150,000 ECBTokens to ARCHOS, as part of its R&Dinvestments.

“Cryptocurrencies look like the seriouscompetitor to the traditional processof banking and a lot of financialinstitutions stop accepting cryptoexchange money and try to give a hardtime to crypto owners and investors.”

This wallet provides secure manage-ment and storage of crypto-active,safe from cyber threats:

Identification by PIN;•

Offline private key generation;•

Management of operations on the•device, offline;

On-screen display of information•about each transaction for an easyverification before approval;

Physical authorisation with buttons;•

The creation of a recovery code •(consisting of 24 words), essential incase of breakage, loss or theft;

Support for ECB and major cryp-•tocurrencies and;

Compatibility with Electrum,•GreenAddress/Greenbits, MyCryptoand Mycelium.

In addition to these functionalities,ARCHOS will also provide all theEUROPEAN CRYPTO BANK’s multilin-gual platform services, accessible at

the end of its ICO from May 1, 2018:portfolio statements, research notes,investment advice, conversion ofcrypto-assets into traditional curren-cies and generation of correspondingtax declarations according to the var-ious regulations in effect in Europe.

EUROPEAN CRYPTO BANK andARCHOS join forces to facilitate accessto Blockchain’s cryptocurrencies,products and services, by the greatestnumber, whatever the level of experi-ence, in the respect for the rulesestablished taxes.

The easiest way to contribute to theEuropean Crypto Bank ICO sale is topay directly to cryptocurrencies. Youcan also purchase via wire transferand by sending a cheque. For detailson what information to put whendoing a wire transfer/check visit theirsite: www.europeancryptobank.io .

Olivier ForguesCEOEUROPEAN CRYPTO BANK ProjectTel: +33 6 58 24 63 21of@europeancryptobank.ioeuropeancryptobank.io www.twitter.com/EuropeanCryptoB

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BLOCKCHAIN INNOVATION

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Crypto winter, or blockchain spring?

What a difference a few months make. In 2017,we experienced a rally in the value of cryptocurrencies the likes of which had

rarely been seen before. Bitcoin, which began the yeartrading at $1,000 ended it close to $20,000. Ether, thesecond-largest cryptocurrency by market cap, wentfrom just under $8 to nearly $1,300. The story was similar for many, if not a majority, of the other 1,500or so cryptocurrencies currently in existence.

This rally meant huge windfalls for anyone luckyenough to have bought in early. For those of us whowork in blockchain – the technology that makes Bitcoinand other cryptocurrencies possible – it was hard notto see the rally as a validation of what we were doing.

For example, one of the factors driving the crypto rallyhad been a concurrent boom in initial coin offerings,or ICOs – a way for blockchain-based projects to raisemoney by creating their own cryptocurrency or tokenon a blockchain and selling it directly to investors. In2017, more than 300 ICOs had come to market raisingsome $5 billion for projects covering a vast array of usecases, from financial services, health records andsupply chains to aiding refugees and combattinghuman trafficking.

As we popped the champagne on New Year’s Eve, wecould be forgiven for interpreting the ICO boom as apublic vote of confidence in this nascent industry.

Yes, there were problems – as in any endeavour involvingsignificant sums of money, ICOs have had their share ofscams and cons – but overall it seemed clear that notonly the ICO model, but the basic blockchain paradigm,was working. Then overnight, it seemed, the windchanged.

Reversing courseThrough the end of March, bitcoin had lost almost two-thirds of its value, dropping back down to $6,000. Etherdipped to around $400. The market capitalisation of allcryptocurrencies shrank from $800 billion to just under$250 billion.

And while the ICO market continues its impressivegrowth, with a number of headline successes, behind-the-scenes we were seeing increasing numbers oftoken sales failing to meet their targets, or simply failing.Among investors and others, a general sense of doubtand unease set in. What happened?

One factor has been a regulatory clampdown on ICOsin several important jurisdictions, particularly the US.That has sent a chill through the industry. You couldalso rationally argue that the dramatic price spikes of2017 were simply not sustainable. As crypto naysayershave maintained, this did look like a classic bubble thatwas bursting.

Whatever the reason, the icy winds of the ‘cryptowinter’ have been bracing. Suddenly, we could wonderif the price of bitcoin, as some had predicted, might not just fall to zero. Perhaps crypto, in general, wasdestined for the same fate as past bubbles like tulipsor the South Sea Company – a wild speculative ridebased on little of sustainable value.

Just as wellSuch a view, of course, is as irrationally pessimistic as theview that bitcoin would never correct was irrationallyexuberant. While blockchain-based cryptocurrenciesget all the headlines, as many of us have been at painsto point out, blockchain has many other importantuses besides money. The price of bitcoin is therefore

After a stunning rally at the end of last year, cryptocurrencies have lost almost two-thirds of their value. This is not necessarily bad news for the blockchain industry, says the Crypto Valley Association’s Tom Lyons

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not a very good proxy for the overall health of theindustry.

Quite the contrary, the frothy speculative phase wehave just been experiencing can be taken as a sign ofprogress: just think of the dotcom bust of the early2000s, which seemed like a death knell at the time butin hindsight proved to be the starting bell for the riseof the global Internet and all the wildly successfulenterprises associated with it.

We can see something similar at play today. Despitethe crypto bust, for instance, governments remainlargely committed to blockchain technology. Here inSwitzerland, the regulator recently published ICOguidelines designed to foster innovation by providingsome regulatory and legal clarity for blockchain projectsand the Swiss Economics minister reiterated the coun-try’s determination to become “crypto nation”.

In Europe, the EC just started a major two-year initiativecalled the EU Blockchain Observatory and Forum tosupport this technology throughout the bloc. And eventhe US regulators, while taking a tough stance oncrypto-speculation, have made it clear that they arekeen not to squash innovation in this space.

Perhaps more importantly, all over the world develop-ment of blockchain technology and its application to awide number of problems goes on, a sign that a majorindustry is indeed coming to life here.

A necessary updateThis is important not just for business but, in my opinion,also for the world.

A technology for creating consensus on informationamong large groups without the need for centralauthorities, blockchain supports trust, fairness andtransparency while also protecting privacy. With it, wecan build what many are calling the Web 3.0 – an Internetin which information can be trusted and individualscan better control and protect their data.

Considering the major data and propaganda scandalswe are experiencing in today’s Internet, this would be

a radical – and highly necessary – improvement. It isalso likely to mean big business.

As in many other locations, at the Crypto Valley Association in Switzerland, we are working hard to look beyond the cryptocurrency hype to foster the sustainable industries, as well as jobs, that will growout of blockchain.

On this, we remain quite bullish. If we have learnedanything from the bracing winds of the crypto winterit is that this work will be difficult and will likely takelonger than many had originally thought. But that too,as Amara’s law reminds us, is typical of truly transfor-mative technologies.

I, therefore, like to think of the present moment not asa crypto winter, but as more of a blockchain spring.

Even if we look at our somewhat flawed cryptocur-rency bellwether, the forecast looks bright enough. As of this writing, the price of bitcoin seems to havestabilised in the $6,000-$7,000 range and ether in the$300-400 band.

A disappointment perhaps compared to the headydays of last November and December, bitcoin stillreturned 600% over the past 15 months. Ether, closeto 5,000%.

By any measure that’s a remarkable achievement. Forme, it is also a sign of rude health. ■

Tom Lyons Chair, Communications Working GroupCrypto Valley Associationtom.lyons@cryptovalley.swisshttps://cryptovalley.swiss/

In its simplest terms, a blockchain isa new means of structuring anddistributing data. The technology

enables financial companies and otherinstitutions to create a digital ledgerguarded by cryptography, which canbe shared among participants duringtransactions. This allows authorisedparticipants to alter the ledger withoutawaiting approval from a centralauthority, often resulting in faster andmore secure transaction that savesfinancial institutions time and money.Since the mysterious origins of Bitcoinin 2009, numerous cryptocurrencieshave been thrust upon the market-place, allowing transactions to takeplace directly between users and canbe exchanged – as regular currencycan be – for goods and services.

So why is there such on-goinghype around cryptocurrencyand is it masking the powerbehind blockchain technology?This year has commenced with a lot ofturmoil in the cryptocurrency world.However, that has been necessary topreserve the long-term health of themarket. Bitcoin is already amidst thethrow of a turbulent year, with therecent ban on cryptocurrency adver-tising from the world’s biggest searchengine Google and social media platform Facebook to proceed in June 2018. There are also rumours thatTwitter will soon follow suit. Despitethe industry currently in overdrive, key

observers of the blockchain say thetechnology is bound to not only survive but thrive.

The general outlook for blockchain in2018 looks to be increasingly positive:Fiat service provider, Robinhood, ofwhich over 1 million people havesigned up for, announced their zero-fee crypto trading on February 22nd;March 15th saw the official release ofLightning Network’s first beta imple-mentation for the Bitcoin mainnet,securing $2.5 million in seed funding;and one of the most important Polishcryptocurrency exchanges, Bitbay, hasdecided to add support for Ripple (XRP)and Infinity Economics Token (XIN),impulsing the internet of things (IoT)to the mass market. It is clear that theproduction of mass-market-focusedproducts will finally be launching thisyear, making it a lot easier for thewider public to start building on andusing the blockchain.

What does this imply about the future of work? As widely proposed in recent news,the future is autonomous. We arealready moving towards a workforcethat could be purely operated with thecombined use of artificial technologyand robotics. The study of 46 countriesand 800 occupations by the McKinseyGlobal Institute found that up to one-fifth of the global workforce willbe affected by robot automation.

According to the report, 39 to 73 mil-lion jobs may be eliminated by 2030 inthe US alone, but about 20 million ofthose displaced workers may be ableto easily transfer to other industries.

But what if there was a way that theinevitable influx of automated work-forces didn’t have to affect the world’srate of human employability? What ifthere was a solution that could effec-tively convert the masses into fullyequipped entrepreneurs, by applyingone straightforward concept?

Meet the man on a mission tochange the world, oneentrepreneur at a time President and Executive Chairman ofORS GROUP, a leading Artificial Intelligence software company, FabioZoffi is on an incredible mission toempower 1 billion small entrepreneursby the year 2040.

In the words of Fabio Zoffi: “The futuredoesn’t have to be dystopian.”

How will he do it? By making the algo-rithms his company currently uses forthe world’s largest companies (whichuntil now have been extremely pro-tected) available to small businessesand entrepreneurs by connectingthem with the blockchain technology.

ORS GROUP’s innovative new conceptof Hypersmart Contractswill provide

The ORS GROUP explains to us their expertise in delivering sophisticated AI-basedoptimisation software solutions to a large international client base, including howAI & blockchain will empower 1 billion entrepreneurs by 2040

AI & blockchain to empower 1 billion entrepreneurs by 2040

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PROFILE

the mechanism by which they will dothis: connecting Artificial Intelligenceand blockchain together to make useof big data and powerful algorithmsfor turning businesses of all sizeshighly competitive on a global scale.

President Zoffi says: “We are creating a global community of like-mindeddevelopers, entrepreneurs and cryptoenthusiasts, who want to embrace thenew digital alphabet “ABC – AI, blockchainand cryptocurrency”, to create and successfully run a business in almostevery possible industry sector.”

The power of algorithmsFounded in Italy, ORS GROUP is aleading global supplier of cross-indus-try software solutions for optimisingand automating business processes.For over 20 years the company hasdelivered sophisticated solutions usingproprietary Artificial Intelligence,machine learning and big data analyticsalgorithms.

ORS GROUP’s large internationalclient base includes that of Fortune2000 enterprises and span industriesincluding retail, energy, finance andmanufacturing. ORS GROUP’s soft-

ware solutions save their clients over$1 billion yearly.

Small entrepreneurs’ newdigital alphabet empowering aglobal decentralised network –it’s easy as ABCImagine the possibility of a futuredecentralised network of small companies on a planetary scale,empowered by technologies whichenable the “little guy” to put their bigideas into action and to be competitiveagainst the “big boys”. For example:

A farmer living in a small village inSoutheast Asia, running a family business that has carried on for generations. In light of increasingcompetitive pressure from globalfarming companies and distributors,the farmer is now struggling to makethe necessary business decisionsneeded to survive and thrive in hisindustry. Thanks to ORS GROUP’s newdigital alphabet, he would be giventhe power to successfully competeand grow his business:

Hypersmart contracts can act as intel-ligent connectors, which activate AIalgorithms (off-chain) to solve com-

plex efficiency/optimisation problemsutilising data stored on-chain. Theycan also release instant crypto pay-ments. Together, these technologiescan lead to significant improvementsin global value chains, which evensmall farmers can benefit from. Forexample, algorithms can be used topredict crop yields and for dynamicprice optimisation, blockchain can beused for providing transparencyabout the whole food chain and cryptocurrency used for receivingimmediate payments. As an end result,small farmers can regain negotiatingpowers against distributors and compete globally.

Individual entrepreneurs will becomeempowered once they are providedwith the technology to educate them-selves, resulting in the establishmentand growth of fully optimised and successful businesses. ORS GROUPcontinues to dedicate itself to ensurethat any entrepreneur with a dreamwill be able to compete on a globalscale and in an autonomous world.

Fabio ZOFFIPresident and Executive ChairmanORS SAinfo@orsgroup.ioorsgroup.ioORS SA Twitter @ORS_ICODr. Zoffi Twitter @ORS_Fabio

ORSGROUPCONNECTING A.I. & BLOCKCHAIN

010101110100101001010110 0010101101010011010101101010001110101010010101101010101100101011010101110101011001010110101101010111010010100110010101101110010111010101100 101101010111010010100 010101110101011010

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Any thriving economy dependson the availability and freemovement of skilled labour,

products and services. Data has forcenturies been an integral element infacilitating the movement of theseassets. For the casual observer, it mightseem that – thanks to the internet, APIeconomy, cloud services and data plat-forms – we have largely managed tosolve the issue of free movement ofdata. But as the EU Commission initia-tive, “Building a European Data Econ-omy” illustrates, this is not the case.There are still major barriers to freemovement of data and competition,due to localisation restrictions and lackof rules for data portability.

The European Commission has soughtto remove these barriers by issuingregulations such as GDPR and therecent proposal for a regulation on aframework for the for the free flow ofnon-personal data. Whilst these initia-tives are major steps in addressing theissue of data portability, they fail totackle one of the biggest challengesprevalent in the modern internet: theverifiability of data.

Trusted interactions requireverifiable dataAs anyone who has ever bought any-thing online knows, the main issue withdata is not its availability, but instantaccess to trusted data. Can I trust the

merchant to deliver the purchasedgoods? Can I trust that the goods arenot counterfeited? These are just someof the concerns for consumers and e-commerce is but one of many usecases. The W3C Verifiable Claims Work-ing Group has identified many more indomains such as finance, educationand healthcare. As more and more ofour personal and business activitiesmove to the internet, we need to makevarious kinds of claims as part of oureveryday activities in transactionalinteractions. For example, we use adriver’s license to prove that we arecapable of operating a motor vehicle, auniversity degree to prove our educa-tion status and government-issuedpassports to grant us travel betweencountries.

From centralised platforms to adistributed trustAs the amount of digital data hasexploded, new platform-based busi-ness models have emerged. Due tonetwork effects, this has led to a situ-ation where a relatively small numberof platforms control our data, as wellas continue to grow and gain moreinfluence. European Union initiativesrelated to data portability aim toaddress some of these concerns. Yetwhilst doing so, the European Com-mission takes the former network,infrastructure and trust models asgiven. The trust and data sharing

paradigms present in platform-basedbusiness models rely on the existenceof trusted counterparty (”the platform”).

As instant access to trusted informa-tion is becoming increasingly vital forour everyday interactions, a new typeof approach for exchanging the datais needed. During the past couple ofyears, a new network and trust modelbased on distributed infrastructure –namely blockchain – has emerged.One of the reasons why blockchaintechnology has received significantinterest is that it has the potential totransform existing trust models –including how personal data can behandled. Instead of relying on cen-tralised trust platforms, we now havethe means to establish new types oftrust infrastructures without vendorlock-in.

Decentralised identity helpsguard personal data whilstimproving customer insightUntil recently, the prevalent way toshare identity information has beenthrough a centralised platform with asingle point of control. The problemwith trusted middlemen is that whencompromised, they pose a massivesecurity risk to a large number ofpeople.

As global digitalisation moves forward,we have witnessed a tremendous

Markus Hautala, Head of Blockchain Solutions at Tieto argues that the public sectorholds the keys to building a digital Europe, including why seamless access to data isessential for a thriving economy and the role of blockchain technology in the region

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Building a digital Europe: Seamless access to data and the role of blockchain technology

increase in hacks and personal databreaches that cripple businesses.Recent examples include the Equifaxbreach, where more than 145 millionpeople were exposed to identity theftand the Facebook leak in which morethan 50 million user profiles werehanded to Cambridge Analytica.

Handling customer data is clearly ahuge risk for organisations, but at thesame time, it is the cornerstone ofcustomer relationships and businesscritical operations. How can organisa-tions then maintain a holistic view oftheir customers without exposingthemselves to increasing risks andregulatory pressures? This is actuallyone of the goals of GDPR: to makeorganisations rethink how to handlecustomer information. And this isexactly what solutions decentralisedidentity networks, such as Sovrin,allows them to do.

Decentralised identity networkscan deliver the internet’s missingtrust layerIn decentralised identity networks, theidentity holder forms secure digitalconnections with entities (organisa-tions, individuals or things) that canprovide information about the identityholder. This information can literally beanything such as a name, governmentID, address, power of attorney, driverslicence, health information, universitydegree etc. This verifiable data can thenbe shared by the identity holder to aparty that requires these proofs. Thisprovides for all kinds of rich digitalinteractions: Know-Your-Customer,contract and transaction signing (B2B,B2C, G2C), permits, insurance claim, jobapplication and so on. Storing identitydata on blockchain would naturally beproblematic for various reasons,including adherence to GDPR compli-ance and risk of data hacks. In a decen-tralised identity network, actual identity

data is not stored on the ledger.Instead of identity data, the decen-tralised ledger only contains pointers tothe data. These uncorrelatable piecesof information are related to an identityholder and stored on the ledger toallow entities access, share and verifyidentity data when authorised.

What should the Europeanpublic sector do?Whether we realise it or not, technol-ogy choices always also carry choicesof ideology. This is rarely as evident asin the context of identity data. By supporting centralised platforms, weare essentially supporting a businessmodel which leads to a situation wherea relatively small number of operatorsremain in control of our data and – dueto network effects – continue to gaineven greater influence over our lives.

The European public sector holds thekeys to changing the course of thispath. In the context of verifiable data,public administration maintains baseregistries such as citizen, company,land, vehicle and others. Due to thetrust held in public authorities, theseare the most reliable sources of basicinformation. Seamless access to thisdata is essential in digitalising not onlythe government but in all interactions(B2B, B2C, G2C). To drive the adoptionof distributed identity networks, privateand public sector participants shouldjointly and iteratively prototype, pilotand develop new distributed infrastruc-ture concepts to demonstrate theirvalue for citizens.

ConclusionCompetitive economies depend on theavailability and free movement oflabour, products and services – anddata is the fuel that drives the move-ment of these assets. Despite the ubiq-uity of the internet and relatedtechnologies, barriers remain in access

to verifiable data needed in transac-tional interactions. EU initiativesrelated to data portability aim to tacklesome of the problems concerningaccess to data and the dominance ofdata platforms. These initiatives, how-ever, fall short in responding to issuesrelated to instant access to dataneeded in transactional interactions.The cause for this is that these initia-tives do not address trust, data sharingand infrastructure issues caused byplatform-based business models.

During the past couple of years,blockchain-based distributed platformshave emerged, providing us means toestablish new types of trust infrastruc-tures without vendor lock-in. The publicsector has a pivotal role in digitalisingsociety, as it maintains the base reg-istries containing verifiable identitydata needed by both public and privatesectors in transactional interactions.The public sector needs to activelydrive the adoption of the new dis-tributed platforms in collaboration withthe private sector to ensure a widemarket take-up. It is now time to timeto make the EU’s single market fit forthe digital age and ensure that theEuropean economy remains globallycompetitive – bringing benefits to bothbusinesses and consumers.

Markus HautalaHead of Blockchain solutionsTietoTel: +358 40 1824 299markus.hautala@tieto.comwww.tieto.comwww.twitter.com/MarkusHautala

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In a forward-looking research pro-ject at Aalto University’s BusinessSchool in Helsinki, we are studying

blockchain technologies and how they will impact our society. Muchmedia attention is given to blockchainand its best-known use case, Bitcoin.However, the most impactful businessand societal implications of blockchainare still in their early stages or yet tocome. One of the important industriesthat will be disrupted by blockchaintechnology is healthcare.

“Different types of blockchaintechnologies and other decentralisedledger technologies are importantbuilding blocks of our future. Whenthey are combined with AI, AR/VR, IoTand Robotics they provide completelynew ways to set up the societies welive in.”

The future of health and wellnessThe number of people aged 60 yearsis now 962 million and by 2050 it isprojected to reach 2.1 billion. Therising life expectancy, together with anageing population is creating highdemands on our health care systems.Not only is there a strong need forrapid innovation in the biopharma-ceutical industry, but also the wayhealthcare is delivered in our societieswill need to change. Thus, the health-care sector is under rapid innovationcycles to embrace new therapies(such as immuno-oncology, gene ther-

apies, personalised medicine) andemerging technologies (for exampleartificial intelligence (AI), augmentedreality, wearable technologies andblockchain).

To provide affordable quality care foran ageing population, healthcare systems will need to focus on effec-tiveness, and home and preventivecare. Wearables and different types ofsensors will monitor your genealogi-cal weakness points already beforeyou fall ill and artificial intelligence (AI)applications will analyse the datastreams together with your doctor.You will be guided by an application,which generates a personalisedpatient path for you. The enabler ofthis disruptive change will beblockchain technology.

New ways of healthcareBlockchain technology will enableplacing the patient at the centre of the

healthcare ecosystem. It will increasethe security, privacy and interoperabil-ity of health data and it will makehealth records more efficient, disinter-mediated and secure. Also, it will allowfor the addition of wellness records(such as a fitness tracker data stream)to supplement your health records forthe AI systems to more accuratelyanalyse your health.

Some examples of how exactlyblockchain is changing healthcare:

Value-based care Blockchain-based smart contracts areused for focusing on patient out-comes. The patient pays for the resultand not for the medical process(Robomed Network).

Patient wellness motivation A user of the wellness platform isrewarded with crypto tokens for engag-ing in healthy activities (Clinicoin).

Distributed and open technologies are bringing new business models, personalisation,prediction, motivation, collaboration and trust in healthcare, in the view of Sari Stenforsfrom the ReCon Blockchain Research Project, at Aalto University in Finland

How is blockchain disrupting health and wellness?

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Provider collaboration audit trail Providers are reimbursed for caredepending on how extensively theyworked with other providers (Con-nectingCare).

Prescription medicationprovenance Bringing together competing pharma-ceutical manufacturers and whole-salers to improve traceability ofmedicine (MediLedger Project).

“The number of people aged 60 yearsis now 962 million and by 2050 it isprojected to reach 2.1 billion. The risinglife expectancy, together with an ageingpopulation is creating high demands onour health care systems. “

Why is blockchaintechnology so powerful?Blockchain technology is a new type ofa data-architecture and that makes itpowerful as we live in the data-drivenera. The most important businesses,such as Google and Amazon, areabout data. Blockchain technologystores data in a decentralised way in

multiple computers to make sure it isnot tampered with. There are hun-dreds of different decentralisedledger technologies today and theirgovernance structures ensure that asingle computer cannot decide whatdata are stored. This way, we can trustthat the stored information will not becorrupted by a party that would benefit from the change. The systemcreates programmable trust.

Different types of blockchain tech-nologies and other decentralisedledger technologies are importantbuilding blocks of our future. Whenthey are combined with AI, AR/VR, IoTand Robotics they provide completelynew ways to set up the societies welive in. They hold the potential to dis-rupt not only the Internet but the wayour societies are governed and whatwe know of as the current way ofdoing business. The impacts could bevast. Blockchain technologies are alsobeing applied to the fields of finance,government, energy, accounting,logistics, insurance, education, recordkeeping and governance.

Our researchThese are the types of questions we atthe ReCon research project are elabo-rating and experimenting on. Weengage in pilot projects, hackathons,studies, workshops and keynotes. Ourmission is to describe, analyse andexperiment on the potential societalimpact and new business models ofblockchain-like technologies. Moreinformation regarding the ReConresearch team and our partner organisations can be found athttp://recon.site/ .

Sari Stenfors, PhDReCon Blockchain Research ProjectAalto University, Helsinki, FinlandTel: +358 50 496 7134sari@aulead.com http://recon.site/

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22

Ablockchain/ICO working group in Switzerland isinvestigating the legal framework for the provi-sion of corresponding services and pointing out

any need for action. The focus is on financial sector-specific applications using blockchain technology.

As a small and open economy, Switzerland is dependenton continuous innovation if it wants to maintain itsappeal as a business location in the longer term.Blockchain technology1 has great innovation potentialand applications based on it can be used in many eco-nomic sectors. Aside from the financial sector, examplesinclude energy trading, supply chain management andland register management. Switzerland has excellentconditions for playing a leading role internationally in this

area. These include the strong financial centre, leadinguniversities, an existing Fintech and blockchain ecosys-tem and stable framework conditions. Consequently,Switzerland is an attractive location for digital innovationsalready today.

However, blockchain technology also raises questionsabout risks and the legal framework. Due to the rapiddevelopments in recent times – including those inSwitzerland, for example, around initial coin offerings(ICOs)2 – the clarification of such issues has becomevery important and urgent, especially in the financialsector. The industry has a considerable and under-standable need for a greater legal certainty: it wants toknow which activities are possible under which condi-

Blockchain and initial coin offerings:Switzerland as an attractive location for

digital innovationsSwitzerland’s Federal Department of Finance (FDF) explains the country’s position as an attractive

location for digital innovations, focussing on blockchain and initial coin offerings (ICOs)

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tions. However, any risks must also be addressed. Theintegrity of the Swiss financial centre may not beadversely affected by the new technology.

In the short term, the Swiss Financial Market SupervisoryAuthority (FINMA) is tasked with applying the existingfinancial market law considering technological develop-ments. In February 2018, for example, it publishedguidelines on the practical design of ICOs. In addition, itconducts strict enforcement in the case of fraudulentprojects.

However, blockchain technology also gives rise to funda-mental legal issues concerning both financial market lawand general pieces of legislation (Code of Obligations,

Swiss Civil Code, etc.). In the longer term, the legislatoror regulator will be responsible for making legal adjust-ments, if necessary, to ensure a competitive frameworkand technology-neutral regulation, as well as to addressany risks.

“As a small and open economy, Switzerland isdependent on continuous innovation if it wants tomaintain its appeal as a business location in thelonger term. Blockchain technology has great

innovation potential and applications based on it canbe used in many economic sectors.”

The FDF has established a working group (together withthe FOJ and FINMA, among others) for this reason. It isto report to the Federal Council by the end of 2018 andpoint out any requirements for action. The sector shouldbe consulted and involved in this process. The aims ofthis work are to increase legal certainty for companies inthe blockchain area, maintain the integrity of the finan-cial centre and ensure technology-neutral regulation. ■

References

1 Blockchain is a decentralised register in which all types of transactions

are processed in a network of distributed computers.

2 With this special type of crowdfunding, bitcoins, ether tokens or other

cryptocurrencies are collected under the term “ICO” (initial coin offering)

for project financing and new, project-specific tokens are issued. These

tokens are designed differently. Some contain only rights and values on

the blockchain (e.g. bitcoin), others represent values (e.g. gold) or rights

(e.g. shares) in the real world. Depending on distribution and accept-

ance, all these tokens can also have characteristics of a currency.

Federal Department of Finance (FDF) Tel: +41 (0)58 469 79 47info@sif.admin.chwww.sif.admin.ch

BLOCKCHAIN INNOVATION

Mexico City, 1968. The SummerOlympics. And the scene isthe men’s high jump final.

The whole stadium was stunnedwhen a 21-year-old lanky Americancalled Richard Douglas Fosbury tookGold that day with a record-breakingjump of 2.24 meters. That in itselfwasn’t so much the point but themanner in which he did it was. Fos-bury jumped with his face to the sky.Until then, everybody did what wascalled “straddle” jumping facing theground. His technique has since beenfamously called the “Fosbury flop”.

The athletics coach for the Americanteam announced at the time that

those who followed Fosbury’s methodrisked breaking their necks. The onlythings that were broken were highjump records and the Fosbury flophas been almost universally adopted.

Uniquely, Fosbury challenged thestatus quo and adopted a style thatcontradicted the established conven-tion. Decades later, his innovation isstill discussed. And yet all he did, infact, was to seek a better way of jump-ing over a high bar.

Fast-forward to January 2009 when apeer-to-peer electronic cash systemcalled bitcoin network came into exis-tence. This offered a unique way of

moving currency from point A to Bwithout any intermediaries. It demon-strated that “trust” could be generateddigitally from within the system. Itcontradicted the traditional process ofbuilding trust externally through inter-mediaries such as correspondentbanks, clearing houses and sidesteppedlegal and regulatory oversight.

Much like the Fosbury flop,blockchain, the underlying technologybehind bitcoin, challenged the statusquo by offering an alternative thatwas fundamentally opposed to thetraditional way of building trust. After over nine years the market capitalisation of Bitcoin continues to

Jags Rao, from Swiss Re explores how a maverick mentalitycan turn the tables on tradition and have a global impact

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Blockchain – a “Fosbury flop” forthe insurance industry?

soar to billions of US dollars, while theunderlying blockchain technologycontinues to unravel its latent poten-tial for the financial services industryand beyond.

So, what can blockchain do for insur-ance? In fact, the industry is financiallyhealthy, but could operationallyimprove. It relies on multiple layers ofcounterparties generating “trust”, butwith high frictional cost through theirinteractions. Over time, counterpartieshave improved operational efficiencies,but gains have been confined to“silos”. And the reality is that there stillexists noise, friction, duplication,excessive paperwork and bureaucracy,with shared and common businessprocesses leading to huge reconciliationcosts and contract uncertainty. It is no surprise that this has contributedto the insurance industry’s not-so-customer-friendly reputation!

However, with the advent of cryptog-raphy, smart contracts and distributedledger technology (blockchain), thereare clear opportunities to tackle inef-ficient processes. The potential existsfor commercial entities to track alltheir data-driven interactions securelyon a smart-contracts resident on ablockchain without having to build dif-ferent systems. Blockchain can enablethe transaction flow across multiplelayers of counterparties from originalinsured to brokers to reinsurers andall the way to capital markets. It couldfeasibly redefine the standard for dig-ital transaction processing and deliversignificant efficiency gains.

There are a number of experimentsgoing on in the industry to test thehypothesis, validate the benefit and

convert prototypes into production-ready states. B3i, the BlockchainInsurance Industry Initiative, remainsat the forefront of approaching thisinnovative technology with a clearpurpose to bring real business changeto our industry. This spirit aroundrethinking insurance is brought to lifeby some B3i members and capturedon video.

The formation and success to date ofB3i is in itself breaking moulds.Formed initially by 15 insurers andreinsurers and later expanded to 38market participants including brokers,the project has shown that wherethere is a common sense and purposeacross the whole value chain, genuinecollaboration is possible.

The project is an innovation and notjust a dream. It has delivered hardresults. In its first year, it moved fromsmall in-house prototypes to an indus-try-wide global proof of concept andon to a market-tested property catas-trophe excess-of-loss application inthe largest industry-wide distributedledger network to date. In 2018, B3iaims to transfer this into a self-sustain-ing entity to further develop and runthe platform to settle legally bindingcontracts.

Nevertheless, there are a number ofchallenges ahead. Key issues such ascollective standardisation, systemsintegration, legal and regulatoryframeworks, privacy and confidentialityneed to be addressed. However, theexpected benefits in the form ofreduced cycle time, cost and friction,as well as enhanced transparency, arehard to ignore as they are expected tocreate significant material savings.

Sharing these savings with the ulti-mate insured could help to drasticallyreduce the global protection gap.

The fact that over 7.5 billion people onour planet have no or limited accessto insurance or cannot afford it, asmuch as anything else, provides anincentive to close this gap especiallywhen the untapped premium couldbe as much as USD 800 billion. So, itis not just about increasing margins orimproving service but providing anopportunity for social good and for ajust cause. Let’s not forget that ourrole is to share the misfortune of thefew across the many.

Much like the Fosbury flop, blockchaintechnology is once-in-a-generationkind of innovation, which if appliedwith clear sense and purpose as postulated in a blog by Paul Meeusenof Swiss Re, can make insurance moreaffordable, accessible and attractivefor millions of underprivileged acrossthe globe and make our world moreresilient.

Ken MarkeChief Marketing OfficerB3iTel: +44(0)7766 202 832ken.marke@B3i.techwww.B3i.techwww.twitter.com/B3i_tech

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Regulation within cryptocurrency markets

According to Reuters: “Japan’s financial regulatorsaid on 2nd February it had ordered all crypto -currency exchanges to submit a report on their

system risk management, following the hacking of overhalf a billion dollars of digital money from Coincheck.”

Whilst the whole premise of blockchain technology andcryptocurrencies revolves around it being essentiallyunhackable, the exchanges that trade these currenciesare vulnerable. The introduction of system risk man-agement (which we assume to be risk management ofthe software/operating systems and servers) checks isa step forward for the cryptocurrency space, althoughit only covers one area of exposure linked to the cryptocurrency market.

History of incidentsCryptocurrency has been a booming market withincreases in some major coins in the high 1000’s of percent during the last year. This rise, coupled with alack of regulation, has seen the cryptocurrency worldbeing hit with a number of negative incidents fromPonzi schemes to fraud, scams and hacking incidents.

Bitconnect, which as of the writing of this article, istrading at roughly $8.60, a huge fall from its height ofover $300 in January, is an example of a potentialmajor Ponzi scheme which has lost $2.4 billion worthof value over 10 days.

The subpoena by US regulators of crypto exchange

Alexander Larsen from the Institute of Risk Management (IRM) provides an in-depth look atthe state of play concerning regulation within cryptocurrency markets

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27

Bitfinex and its relationship with Tether is another con-cern to the cryptocurrency market, with many claimingTether to be a scam. Tethers are tokens backed by USdollar deposits, with each tether always worth onedollar. These tokens should be backed by dollars, butthus far the company has yet to provide evidence of itsholdings to the public and has not had any successfulaudits as of yet.

There have also been a large number of Initial CoinOfferings (ICO’s), used to raise money for start-ups byissuing tokens/coins, which have raised vast sums ofmoney only for the owners to disappear with all themoney, whilst others have been less deliberate but havebeen just as devastating to investors. A cryptocurrencycalled Tezos, raised $232 million last year, but sufferedinternal power struggles which have left the project indisarray.

This brings us to the current concern in Japan of cyber-attacks of exchange platforms. Cyber-attacks and hackingattempts of exchanges have been frequent withBitfinex, coinbase and kraken amongst others havingbeen closed down for days at a time during 2017 dueto a number of hacking attempts. It is the successfulhacking incidents which are the most worrying, however,with successful hacks such as MT Gox, which costalmost 350 million and two attacks on Youbit which ledto its bankruptcy. The most recent Coincheck hackingwas worth 500 million, a record, and it is this which hascaused Japan to act.

RegulationLast year, China took a definitive stand on regulationon cryptocurrencies which sent shockwaves throughthe market. Some feel it was perhaps heavy handedwith ICO’s being banned, bank accounts being frozen,Bitcoin miners being kicked out and nationwide banningon the internet of cryptocurrency trading related sites.Others, however, believe that it has been a positivestep and has encouraged other governments to takeregulation seriously and hopefully take a more balancedapproach. It certainly isn’t in the interest of governmentsto stop ICO’s, which provide many positives includinginnovation, but they should certainly regulate themfrom a consumer protection, taxation and organisedcrime standpoint.

Implementing regulation also removes uncertainty forinvestors as well as the companies who are involved inICO’s. Uncertainty is the source of many risks and oftena negative certainty is better than uncertainty as itallows a focus within set parameters. It’s importantto remember that too little regulation doesn’t offerprotection and too much stifles innovation.

How to regulateThere are a number of ways to regulate cryptocurrenciesand the following are just some examples:

1) Framework for ICOsNew ICO’s are currently not subject to much in termsof regulation globally. One of the problems is deter-mining how they should be treated with some beingconsidered securities. As a fund-raising vehicle, therecould certainly be a framework that lays out keyrequirements of an ICO such as a company needing tobe registered in order to issue a token, transparency interms of individual members of the registered companyas well as perhaps introducing a few requirements thatregular IPO’s require such as implementing risk man-agement. Currently, in the USA, ICOs are expected toadhere to Anti Money Laundering (AML)/Know YourCustomer (KYC) practices.

2) Regulate exchangesExchanges, which is where much of the transactionstake place in terms of trading coins, is a logical area offocus when it comes to regulations.

South Korea’s financial services commission, forexample, has stated that trading of cryptocurrenciescan only occur from real-name bank accounts. Thisensures KYC and AML compliance. According to theFSC, the measures outlined were intended to: “Reduceroom for cryptocurrency transactions to be exploitedfor illegal activities, such as crimes, money launderingand tax evasion.”

Regulators should, therefore, focus on regulation thatencourages transparency and minimises anonymity.

3) Tax lawsClarity needs to be brought into the tax laws in termsof when investors should pay capital gains. The USA

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28

has been quite quick to ensure that crypto-to-cryptotransactions are now taxable and not just crypto to Fiatcurrency transactions. This is not the case in the UKhowever, where things are less clear and will becomeeven more so, once cryptocurrencies start to introducedividend like behaviour.

4) Reserve requirements of exchangesMost banks and stock exchanges are required to holda certain amount in reserves in order to survive anymajor downturn or crash. This should most certainlybe the case for cryptocurrency exchanges too espe-cially considering the volatility which sees crashes of60% several times a year, with some cryptocurrenciesfalling 90% before recovering. This is also known in partas a systemic risk, which could be what the Japanesefinancial regulator defines as system risk.

5) System risk managementAs we have seen from this Japan story, one way ofensuring more protection and reliability is by ensuringthere is regulation around system risk management onexchanges. There should be minimum requirementsprotecting against hacking, phishing and other cyber-related attacks. The requirements could be scaledagainst the value of the exchange and the number ofusers or number of daily transactions.

It’s important to note that much is being done to reducethe risks of hacking incidents such as the concept of adecentralised exchange. This would essentially be acryptocurrency exchange on the blockchain, much likethe cryptocurrencies themselves. This would reducehacking significantly and whilst it is not currently prac-tical, it could be the standard of the future.

Self-regulationThe cryptocurrency market gets a lot of negative publicityand much of this could be rectified if there was moreself-regulation. It would also reduce volatility within themarket and bring about positive change. This refers toboth exchanges and ICO’s alike.

The Japan Blockchain Association (JBA) for example hasestablished self-regulation standards which include theuse of cold wallets amongst its 15 crypto exchangemembers (of which Coincheck was one of them) and

are now looking to strengthen the standards further,following this recent incident.

Risk management in the cryptocurrency spaceRisk management, as with all organisations, plays avital role in meeting and exceeding objectives whilstproviding resilience and stakeholder confidence.Exchanges and companies that are raising/have raisedICO’s should ensure that risk management is a part oftheir business. Identifying risks and opportunities,assessing them and implementing response plansshould be standard. Cyber risks, reputational risks,operational risks, system risks and strategic risksshould all be considered and prepared for, whichwould minimise market disruption and reduce the likelihood of financial ruin. At the very least they oweit to the investors who have funded them.

For investors, with volatility so high, the rewards aregreat but so are the risks. Investors should ensure thatthey only invest what they can afford to lose, do theirdue diligence on their investments which includesunderstanding the technology, the team and look fora prototype rather than a wild concept. Additionally,investors should always be on the lookout for phishingscams and suspicious emails.

Finally, even the most optimistic investor should atleast consider that cryptocurrencies are a speculativebubble that could burst. ■

You can find out more about IRM’s Strategic Insights into Cyber Risk

Course and much more at: https://www.theirm.org/training/all-courses/

strategic-insights-into-cyber-risk.aspx

Alexander Larsen, CFIRMPresident, Baldwin Global Risk ServicesSubject expert (IRM)

Institute of Risk Management (IRM) Tel: +44 (0)20 7709 9808enquiries@theirm.orgwww.theirm.orgwww.twitter.com/irmglobal

29

PROFILE

Digital technologies offer greatpotential for the marginalisedpopulations of the world in

many dimensions of their lives, includ-ing communication, commerce, finan-cial inclusion, disaster recovery andthe delivery of aid. However, digitaltechnologies can also play a divisiverole. By enabling the powerful whocan access key information and whohave the capability to develop infras-tructure, it often penalises those whocannot, especially the most disadvan-taged. This is consequently increasinginequality and marginalisation. In thisrespect, technology is not neutral, andits design can strongly influence andshape our future society.

We argue that distributed ledger tech-nologies present an opportunity formarginalised populations, by empow-ering them to manage their data andbusiness practices and achievedemarginalisation by involving thecommunity in a decentralised manner.Distributed ledger technologies allowcooperative actions for marginalisedpopulations to refocus away from themost powerful gatekeepers and easethe conflicting interests between governments, non-government organ-isations and entrepreneurs. Here wepresent fundamental design con-straints for digital technology servicesin a human rights context. We also

discuss an approach for decentraliseddigital identity that complies withthese fundamental design constraints.

Centralised infrastructure is economi-cally efficient and may create value,both financial and political, for thosegroups who authorise, build, operateand oversee the systems that use it.Often, the interests of such groups arenot aligned with the populations theyserve. Some service providers aredrawn by the promise of operating acentral hub that everyone must use,thus allowing them to collect economicrents on an indefinite basis. Otherbusinesses are drawn by the promiseof collecting, aggregating, analysing, orselling data about individuals for profit.State actors are drawn by the opportu-nity of controlling the behaviour oftheir constituent populations throughsurveillance.

Infrastructure with decentralised gov-ernance, by contrast, affords no suchincentives for its development andrelies on local actors to see the benefitof its value. Deploying infrastructurewith decentralised governance is aparticularly challenging task becauseit impacts existing business modelsbased on asymmetry of informationand disrupts local incumbents thatmay already benefit unfairly fromexisting centralised control points. To

create decentralised infrastructure,we must activate a multi-stakeholderprocess aiming at an agreement onstandards and the mechanisms bywhich different participants can interact. A bottom-up process fordeployment of infrastructure achieveslegitimacy by rightfully involving thepopulations that it serves, each actingin their own self-interest.

Design constraints for digitaltechnology servicesLet us first identify eight key con-straints that can serve to guide ourthinking about information services ina human rights context. These foun-dational constraints set a base for thedesign of ethical digital technologiesthat respect fundamental humanrights and promote social virtue:

1. Minimise control points that can be used to co-opt the system. Asingle point of trust is a single pointof failure and both state actors andtechnology firms have historicallybeen proven to sometimes abusesuch trust.

2. Mitigate architectural characteris-tics that lead to surveillance.Surveillance is about control, asmuch as it is about discovery:people behave differently whenthey believe that their activities are

Tomaso Aste and Geoff Goodell from University College London’s Centre for BlockchainTechnologies share their views on why blockchain technology is for the public good and aboutthe fundamental design constraints and digital identity protocols in a human rights context

Blockchain technology for thepublic good: Design constraintsin a human rights context

30

PROFILE

being monitored or evaluated.Incentives defined by powerfulactors do not always serve thepublic interest and the opportunityto discover misbehaviour oftendoes not justify such mechanismsof control.

3. Do not impose non-consensualtrust relationships on beneficiaries.If a direct trust relationship with athird-party platform provider orcertification authority is required,then that counterparty is facilitatingcoercion. Such coercion should berecognised for what it is and not tol-erated in the name of convenience.

“By enabling the powerful who can ac-cess key information and who have thecapability to develop infrastructure,technology often penalises those whocannot, especially the most disadvan-taged. This is consequently increasinginequality and marginalisation. In thisrespect, technology is not neutral, andits design can strongly influence and shape our future society.”

4. Disincentivise economic rent-seeking on the part of solutionproviders. These models providethe opportunity to achieve status asde-facto monopoly infrastructure,with network effects that shut outprospective competitors and allowextraction of value over the long-term. Such opportunities are funda-mentally abusive to the users of theinfrastructure.

5. Empower local businesses and communities to establish their owntrust relationships. The opportunityto establish trust relationships ontheir own terms is important forbusinesses both to compete in afree market place and to act in amanner that reflects the interestsof their communities.

6. Empower service providers toestablish their own business prac-tices and methods. Providers of keyservices must adopt practices thatwork within the values and contextof their communities.

7. Empower individual users tomanage the linkages among theiractivities. To be truly free andautonomous, individuals must beable to manage the cross sectionsof their activities that are seen byvarious institutions, businesses andstate actors.

8. Resist creation of potentially abu-sive legal processes and practices.Infrastructure that can be used toabuse and control individual per-sons is problematic even if thosewho oversee the infrastructure aregenuinely benign. Once the infras-tructure is created, there is only amatter of time before it is used forthe wrong purposes.

Establishing meaningful credentialsfor individuals and organisations is aproblematic task, even in developedeconomies with strong rule of law. Inan environment in which the incum-bent actors are widely accepted asunscrupulous, this presents an evengreater problem challenging the via-bility of services based on hierarchicaltrust networks, such as all-purposeidentity cards. In many parts of theworld, legitimate trust relationshipsare not hierarchical, and a top-downapproach will not work.

Decentralised design for digital identityModern digital technology infrastruc-ture relies heavily on services thatoften require their users to establishaccounts and assert their identities asthey make use of the services. For thisreason, the collection, aggregation and

analysis of personal data have becomepolitically contentious issues, as thebusinesses that operate on such data often have little or no publicaccountability with respect to how thedata is gathered and used. Whenmarginalised communities are involved,the problem is exacerbated as weakpublic institutions are ill-suited todefend the interests of individuals andsmall businesses against the interestsof those who seek control.

The current state-of-the-art in identitysystems for social protection andfinancial inclusion impose non-consen-sual trust relationships on their users,including both the ultimate beneficia-ries, as well as local authorities, serviceproviders and others. Such trust rela-tionships expose users to powerfulcentral authorities with potentially cor-rupt or unscrupulous operators, poorsecurity practices and the potential forcoercion by politically or economicallypowerful actors. Identity systems thatrely on a single technology, a singleimplementation, or a single set ofoperators have proven unreliable atbest and in many cases, they representa threat to human rights as well.

The alternative to imposing new trustrelationships is to work with existingtrust relationships. Distributed ledgersallow for system-level approaches thatmake it possible for existing busi-nesses, community groups, coopera-tives and service providers to continueto exercise self-determination, withoutforcibly requiring them to cooperatewith central authorities (including gov-ernments, NGOs, operators and otherinstitutions or service providers) or withspecific platforms or implementations.

For users to retain control of theiridentities and to avoid the possibilitythat others might abuse their data, itmust be possible to:

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PROFILE

1. Generate identifiers on hardwarethat users own and trust. Conversely,general-purpose authenticationtokens issued externally, such as all-purpose identity cards, as well asinalienable tokens such as biometrics,can be used to track the behavioursof users against their wishes.

“Modern digital technologyinfrastructure relies heavily onservices that often require their usersto establish accounts and assert theiridentities as they make use of theservices.”

2. Ensure that authentication infras-tructure operators never learn mean-ingful identity information abouttheir users. Infrastructure operatorsare naturally positioned to exploitthe data that they carry. To minimisethe potential for abuse, such operatorsmust not receive or carry exploitableinformation in the first place.

3. Separate operators of authenticationinfrastructure from service providers.Users must be able to exerciseautonomy in making use of services,free of the concern that their variousactivities might be tracked and linked.

The figure above shows how such anidentity system might work. An individ-ual user can establish a credential rep-resenting an attribute or token by

writing to a distributed ledger. Later,the individual can use the distributedledger to verify the credential andassert it when requesting a service orconducting a transaction.

The best way to eliminate controlpoints is to decentralise control. Thedistributed ledger would serve as alayer of indirection between the pro-cesses of establishing and assertingidentity, without itself being owned oroperated by any single party. As longas the community of operators of thedistributed ledger remains sufficientlydiverse, there would be no particularpoint of control to be abused withoutestablishing many separate controlrelationships.

By applying cryptography and commu-nity validation to remove third-partytrust from business transactions, distributed ledgers hold promise aspart of the solution. By facilitatingdecentralised control of a transactionalsystem, their use can mitigate thethreats to human rights posed by powerful intermediaries and, their usecan empower the less powerful partic-ipants, such as small businesses, local cooperatives and the individualbeneficiaries themselves.

It may not be easy to convince stateactors and incumbent businesses toaccept the development and use of

technology that disrupts current busi-ness and power models. However,with the rise of coercion and controlthrough platform services and dataaggregation, now is a fine time forthose who believe in human rights totake a stand in favour of individualautonomy and dignity.

Dr Geoff Goodell*Professor Tomaso Aste

UCL Centre for Blockchain Technologies Dep. Computer ScienceUniversity College London http://blockchain.cs.ucl.ac.uk/

*also: Oxford Centre for Technology and Global Affairs

Ledger User Service

ESTABLISH

VERIFY

ASSERT

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Smart Dubai Office lifts the lid on the roleblockchain technology plays in Dubai, in this special interview, including their thoughts on the

Dubai Blockchain Strategy and what it sets out toachieve. In addition, they explore how this aims todemonstrate an opportunity to deliver more seamless,safe, efficient and personalised city experiences.

Smart Dubai Office also explains how blockchain tech-nology is shaping the future of the Internet withsimple, safe and secure transactions. Finally, we aretold about the role blockchain will play in the country’sgovernment, to be an example to the rest of the world,as well as driving Dubai’s economy.

Firstly, can you introduce and outlineyour thoughts on the Dubai BlockchainStrategy? What is it and what does it set out to achieve?The Smart Dubai Office launched the citywide “DubaiBlockchain Strategy” in October 2016, with the objectiveof executing all applicable government transactionsusing blockchain by 2020.

The strategy establishes a roadmap for the introductionof blockchain technology to Dubai and the creation ofan open platform to share the technology with citiesacross the globe.

“In May 2017, the Smart Dubai Global BlockchainChallenge saw 21 start-ups fly into Dubai from 19cities – to pitch their best and brightest blockchain

ideas – several of which are now being pilotedaround the city. We are running the challenge for asecond year in 2018 and will be announcing this

year’s winners in May.”

We designed it essentially around three pillars thatconnect government, the private sector and the globalcommunity because of our strong belief in the power ofcollaboration. These three pillars – efficiency, industrycreation and global leadership are detailed below.

Efficiency: To implement blockchain technologyacross all applicable government services.

Dubai aims to use blockchain to enable a paperless

BLOCKCHAIN INNOVATION

The role of blockchain technology in Dubai

Smart Dubai Office lifts the lid on the role blockchain technology plays in Dubai, in this revealing interview

33

digital layer for all city transactions, converting millionsof documents – covering everything from visa applica-tions to bill payments to license renewals – into digital,blockchain-secured form.

In 2017, over 20 government use cases have beenidentified and designed, with many progressing intoproof-of-concept phase. These cases include daily lifeexperiences such as purchasing or renting a property,registering a student in school, obtaining medical treatment, and more. Dubai intends to first pilot theseuse cases on blockchain, before it proceeds to fullimplementation later in 2018 and beyond.

Industry creation: Support the creation of a blockchainindustry by providing an enabling ecosystem thatempowers start-ups and businesses.

In May 2017, the Smart Dubai Global Blockchain Challenge saw 21 start-ups fly into Dubai from 19 cities– to pitch their best and brightest blockchain ideas –several of which are now being piloted around the city.We are running the challenge for a second year in 2018

and will be announcing this year’s winners in May.

Global leadership: The strategy aims to position Dubaias a global thought leader in blockchain, through bothformal and informal cross-border collaboration.

“In short, we want to give people back time andmoney they would have otherwise spent on fillingpaperwork and travelling to government service

centres. More importantly, at the core of this visionis a belief in the profound power of emergingtechnologies to dramatically improve city

experiences. This is a belief we have put into motionwith the launch of the Dubai Blockchain Strategy.”

How does this aim demonstrate anopportunity to deliver more seamless,safe, efficient and personalised cityexperiences?To answer this, we need to look at the traditional gover-nance model and the extent to which Dubai is different.

Traditional governance model: To understand why we are embracing blockchain and other emergingtechnology, we’ll first state that governments have longexisted to manage societal growth through the provi-sion of trusted public services.

Historically, the delivery of these services involved frequent and time-consuming interactions betweenpublic sector agencies and constituents. If one wishedto buy a property, the government’s role would be toauthenticate the transaction and record it for futurereference.

The purchaser in this scenario would, therefore, berequired to fill out and present several documents toensure the government can do its “authentication andrecording” role properly. The relationship between thetwo – government and individual – is purely transac-tional: Give and take.

Governments around the world have believed for cen-turies that they are achieving their objective by fulfilling

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BLOCKCHAIN INNOVATION

34

these traditional transactional roles – though this hasbeen done through heavy reliance on manual processesand unnecessary labour work.

How Dubai Is DifferentThe Dubai government differs from others around theworld in that it aims to make Dubai the “happiest cityon Earth.” We aspire to touch the life of every individualto ensure that their everyday city experiences and inter-actions are efficient, seamless, safe and personalised.

In short, we want to give people back time and moneythey would have otherwise spent on filling paperworkand travelling to government service centres. Moreimportantly, at the core of this vision is a belief in theprofound power of emerging technologies to dramat-ically improve city experiences. This is a belief we haveput into motion with the launch of the DubaiBlockchain Strategy.

How is Blockchain technology shaping thefuture of the Internet with simple, safeand secure transactions?Fundamentals of blockchain: Due to the underlyingfundamentals of how Blockchain functions, it acts asself-authenticating technology, guaranteeing the accu-racy of the data on it, including transactions that havetaken place. For this reason, blockchain is cutting offmiddlemen who act as ‘verification agents’ in today’sworld.

Several industries will be disrupted once blockchaingoes global including banking, insurance, government,transport, healthcare. This is the reason Dubai isembracing blockchain and other emerging technologiestoday, so the residents and visitors of Dubai canembrace the technologies benefits first and the city canact as a global benchmark for other cities around theworld.

With Dubai planned to be the firstblockchain powered government, drivingthe future economy, what example willthis set to other countries?This takes us back to the Industry Creation pillar. Weare proud to say that due to our ambitious mandate,the world has recognised Dubai as a global hub forblockchain implementation and blockchain specialistsfrom around the world such as ConsenSys and BitFuryare setting up offices in this city. This is further backedby our recognition at the Barcelona Smart City ExpoWorld Congress, where we received the City Award forour efforts towards blockchain implementation.

“The Dubai government differs from others aroundthe world in that it aims to make Dubai the

“happiest city on Earth.” We aspire to touch the lifeof every individual to ensure that their everyday cityexperiences and interactions are efficient, seamless,

safe and personalised.”

Dubai is host to at least one blockchain conferenceevery month, as the world has acknowledged Dubai forblockchain knowledge exchange as well. The SmartDubai Office is hosting a major blockchain festival inMay called the Future Blockchain Summit, where weare inviting global blockchain experts to share theirexperiences with all. ■

Smart Dubai OfficeTel: +971 4 559 9999 info@smartdubai.aesmartdubai.ae www.twitter.com/smartdubai

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