Bitcoin, Bockchain and the Future of Payments Leiani Doye SVP Product Management Apri 2016 doye@usdataworks.com 1
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WHAT EXPERTS SAY A word with different and new money wi be a different and new word. We are headed there more rapidy than most suppose. The ives of citizens and centra bankers aike wi be profoundy atered... Lawrence H. Summers, President Emeritus of Harvard University, former Secretary of the United States Department of the Treasury 2012 Source: Breaking Banks by Brett King and Amazon Review of The End of Money by David Woman 3
AGENDA Bitcoin Basics Uses of the Bockchain Future of Payments 4
What is bitcoin? A form of eectronic currency Socia in nature and no one contros it Bitcoins are mined by soving increasingy compex mathematica probems Transfers can be made without a third party https://bitcoin.org/en/bitcoin-paper 5
Key Payers Satoshi Nakamoto Coud be Craig Steven Wright, Michae Cear, Martii Mami, Jed McCaeb Miners mint bitcoins by soving increasingy compex mathematica equations Bockchain pubic edger of a bitcoin transactions requiring distributed consensus Addresses bitcoins are transferred from address to address Private Keys sign individua transfers 6
Basic Diagram 7
Bitcoin Bockchain https://bockchain.info/ 8
Bitcoin Vauations MtGox Sik Road VC Investment Greece 9
Current bitcoin price http://www.coindesk.com/price/ As of May 12, 2016 10
Sampe Bitcoin Checkout 11
Benefits of Using Bitcoin No foreign exchange fees or compexity Push payment by design no cardhoder data Connects payment directy with the receivabe/purchase https://www.youtube.com/watch?v=brrxp1tp6kw 12
Consumers and merchants recognize the benefits of using bitcoin! Cost savings! Security! Convenience! New uses! 1% effective processing Persona information is not 2-cick transaction Onine tipping is possibe fee required for transactions process through microtransactions De and Overstock offer No additiona PCI Eiminates chargebacks Cross-border transactions discounts for bitcoin concerns and fase positive are faster and cheaper purchases rejections 13 13
How To Buy bitcoin 14 14
Bockchain uses 15
Bockchain News http://www.coindesk.com/deoitte-bockchain-ach-2025/ http://www.coindesk.com/deoitte-bockchain-ach-2025/ http://www.finextra.com/news/fustory.aspx?newsitemid=28356 16
Proof of Concepts Pubic vs Private bockchains ( or distributed edgers ) Panning/testing phase Cross border payments (Rippe Labs) Securities trading (SEC approved pan, Japan and IBM) Rea time payments Nasdaq and Estonia eresidency for stock voting 17
Bockchain Patents Bank of America has fied 15 patents reated to Bockchain use and has another 20 in the works 18
THE FUTURE OF PAYMENTS
FUTURE OF PAYMENTS Greater Transparency Faster Internationa Data Rich Accessibe to a (Ubiquitous) Less Expensive Transactions More Opportunity for Vaue-Added Services Lower Individua and Systemic Risk More Secure 20
The Cearing House s Rea-Time Payments Initiative TCH is buiding an industria strength cearing and settement system to support Rea-Time Payments for the US The system is designed to ensure that payments are not ony faster, but safer too, consistent with the CFPB s consumer protection principes and the criteria set forth by the Federa Reserve Faster Payments Task Force This system wi aow consumers and businesses to send and receive payments instanty, directy from their accounts at financia institutions This system wi aso support the sending and receiving of data and non-payment messages to support the deveopment of innovative products and services by financia institutions TCH s Rea-Time Payments system wi be avaiabe to a US financia institutions A US financia institutions wi have access to TCH rea-time payments TCH s goa is to achieve ubiquity rapidy; we are working with partner organizations to achieve that goa TCH Rea-time Payments architecture is moduar for adaptabiity to changing needs The system s moduar architecture aows TCH and participating FIs to everage best-of-breed technoogy for routing directories, anti-fraud, AML, network connectivity, security, settement and vaue-added services https://www.thecearinghouse.org/payments/rea-time-payments 21 TCH CONFIDENTIAL 21
Rea-time payments provide particuar vaue for business payment appications Confirmation of Payment Immediate notification of successfu transfer to end users, providing certainty for both senders and receivers No Returns receivers have certainty of good funds Request for Payment deivered through the payment system to support receivabes products such as e-invoicing and e-biing, whie reducing remittance errors Fufiment Messaging Abiity to provide confirmation by the receiver that they have received funds, combined with fufiment information (e.g. invoice paid or goods shipped, tracking info http//ups.com/293jdxg55228ww ) Compete Payabes/Receivabes Messaging Abiity to ink mutipe messages associated with the same transactions (e.g. request for payment, confirmation, separate remittance) through a common reference Consistent User Experience robust rues that estabish requirements for avaiabiity of funds, timeiness of notification, deivery of non-payment messages (request for payment, receiver confirmation, separate remittance) and other eements that support independent deveopment of vaue-added products by banks Goba Ready ISO 20022 is a goba standard that immediatey simpifies processes for muti-nationa banks and companies, and wi support cross-border payments in the near future 22 TCH Confidentia 2
Lessons earned from UK Faster Payments Service Faster Payments Services (FPS) offers 24/7 rea-time credit transfers to virtuay any UK account. FPS is the most mature nationa rea-time payment network, aunched in 2008 and now processing 1 biion transactions per year. Legacy Payments and rea-time payments co-exist after 7 years, FPS has grown to ~20% of BACS (conventiona ACH) voume Usage is driven by more than just ow-vaue P2P transfers average transaction vaue is 821 and neary haf of FPS transactions are schedued or deferred payments to or from businesses Rea-time payments require enhanced onine banking security The UK saw a significant rise in retai onine banking fraud foowing the introduction of FPS UK Faster Payments Service 2014 Average Vaue UK Faster Payments Service 2014 Payments Voumes 1,809.79 Future Dated/Buk 14% 845.48 FPS Avg. 820.94 294.43 Standing Orders 30% Singe Immediate Payments 56% Singe Immediate Payments Standing Orders Future Dated/Buk 23 TCH CONFIDENTIAL 23
THANK YOU 24