How to raise $100M for your healthcare startup via ICO: Breaking the myths of blockchain and bitcoin
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The document provides an overview of distributed ledger technology (DLT), highlighting its evolution from Bitcoin to modern applications and discussing the limitations of traditional public blockchains for industry use. It outlines various use cases for DLT in sectors such as finance and healthcare, emphasizing the potential for significant cost savings and improved operational efficiency. Additionally, the document addresses the process and considerations for conducting initial coin offerings (ICOs) in the context of digital assets.
![Why? What problem are we trying to solve?
Source: www.bitsonblocks.net
Bitcoin and Cryptocurrencies The blockchain bifurcation Industry Workflow Tools
Purpose
A purely p2p version of electronic cash
[which] would allow online payments to be
sent directly from one party to another
without going through a financial
institution.
Maintain and improve on successful
competitive position by keeping customers
happy, increasing revenues, reducing costs,
becoming more efficient.
Problem statement
How do we use technology to create a
financially inclusive system that anyone
can participate in?
How do we use technology to add
shareholder value
Solution Open, decentralised payment networks Private data/sharing networks
Innovation Disruptive Efficiency](https://image.slidesharecdn.com/6-171004093044/85/How-to-raise-100M-for-your-healthcare-startup-via-ICO-Breaking-the-myths-of-blockchain-and-bitcoin-5-320.jpg)
How to raise $100M for your healthcare startup via ICO: Breaking the myths of blockchain and bitcoin
- 1. September 2017 Distributed Ledger Technology 101 DLT Journey - From Bitcoin to Today
- 3. Answering the hard questions Interoperability Identity Scalability Privacy / Security Upgradability Evolution from blockchains to Distributed Ledgers Altcoin Rush Meta Protocols, Colored Coins, and Tokenization Corda prototype “M0” 2009 TODAY Bitcoin Release R3 platform experimentation Hyperledger Project Linux Open Source 2015 R3 Consortium begins Corda open sourced Corda V1
- 4. The dirty secret of the industry is that public “blockchain” technology doesn’t work for industry: ▪ Proof of Work isn’t sustainable / burns tons of electricity ▪ Blockchains are typically controlled by organizations from one country ▪ Probabilistic settlement finality only (forking) ▪ State-of-the-art smart contracts are 3x more buggy1 than average software and programming them is hard: - Remember. They will have to support billions of dollars of value! - DAO attack is case in point (Ethereum) ▪ Doesn’t satisfy financial services non-functional requirements - Privacy, scalability, etc. We have to fix all of the above to make this useful for Financial Services. 1. http://vessenes.com/ethereum-contracts-are-going-to-be-candy-for-hackers/ “Blockchain” – The Dirty Secret
- 5. Why? What problem are we trying to solve? Source: www.bitsonblocks.net Bitcoin and Cryptocurrencies The blockchain bifurcation Industry Workflow Tools Purpose A purely p2p version of electronic cash [which] would allow online payments to be sent directly from one party to another without going through a financial institution. Maintain and improve on successful competitive position by keeping customers happy, increasing revenues, reducing costs, becoming more efficient. Problem statement How do we use technology to create a financially inclusive system that anyone can participate in? How do we use technology to add shareholder value Solution Open, decentralised payment networks Private data/sharing networks Innovation Disruptive Efficiency
- 6. Blockchain without bitcoin Disintermediation Immutable distributed ledger Underlying technology of bitcoin Peer to peer Blockchain agnostic Blockchain as an adjective Blockchain as a service DLT Decentralized Blockchain buzzword bingo
- 7. Ledgers Distributed Ledgers Blockchains Cryptocurrencies A guide to terminology: Hierarchies Public Permissioned Private Permissioned Other frequently used terms: • Permissioned / Private • Permissionless / Public There are nuances and major differences between these categories
- 8. Distributed ledgers ▪ Records of agreement(consensus), ▪ with a secure (cryptographic) audit trail, ▪ maintained and validated by several separate computers (network nodes). Consensus Agreement mechanisms evaluate information provided by participants to ensure consent among all relevant parties in an entry Visibility ▪ When a transaction is added to the ledger, the network is almost-instantly privy to this new version ▪ Distributed ledgers leave behind a cryptographically assured audit trail and timestamp ▪ All parties in the network keep a copy of their view of the ledger How it works?
- 9. The Significant Evolutionary Step of DLT.
- 10. Goal: I know that what I see is what you see…
- 11. Use Cases Leveraging DLT 11 Regulators • Cross Border Payments • Anti-Money Laundering / Know Your Client • Derivatives Clearing • Repo Clearing • Trade Reconciliations • FX Settlement • Loan Settlement • Collateral Management • Client Onboarding • Intracompany Settlement • Normalize Reference Data • Timestamping • Account Portability • Broker Fraud Identification • Securities Agreements as Smart Contracts • Crowdfunding • Virtual Identity • Credit Scoring • Cross Border Remittance • Vault/Escrow Services • Customer Deposit Cost • Peer-to-Peer Lending • Anti-Money Laundering / Know Your Client • Compliance Reporting • Risk Visualization • Basel III Compliance • Client Fund Transparency • Trade Reporting Financial Institutions IndividualsOperations Four of the high- potential FI use cases could alone generate $60-80bn in cost savings Source: McKinsey 2016 Findings From Research Into Distributed Ledger Technology
- 12. Healthcare: a sample of the marketplace • PokitDok has built DokChain, a distributed network of transaction processors operating on financial and clinical data across the healthcare industry. • Tierion has tried to do something similar with Philips and clinical data. • The Hyperledger Healthcare Work Group identifies opportunities for open source software development projects to host on Hyperledger-related platforms within its 100+ member consortium • Hashed Health has a consortium which forms working groups to develop networks focused on specific healthcare uses and provides services such as network product management, development, regulatory guidance and technology support. Change Healthcare (from Nashville) is a member. • The GemOS enterprise platform for healthcare allows all stakeholders secure access to shareable data with the right permissions. The platform is in compliance with HIPAA, streamlining communication along the continuum of care.
- 13. Note: it is strongly recommended you consult with securities and payments attorneys before doing any type of ICO
- 14. Digital assets, coins, and ICOs • High level: the ledger tracks the balances for a native coin (i.e., bitcoin) • The ledger can also track other coin balances • Initial Coin Offering • Creating a new coin on top of an existing blockchain is "easy and free" (probably not “free” after hiring legal specialists) • Can offer the new coin for sale in exchange for other coins such as bitcoin • A potential way to raise funding because existing coins such as bitcoin are exchangeable for USD
- 15. Strawman: how to raise funds with an ICO • Assemble a team and promote it on a website • Publish a white paper describing the use case for the new coin • Hire legal and accounting firms to help set up proper entities • Publish the fund-raising timeline • Market the website and new coin • Sell initial coins in a pre-sale to select investors • (Optional) Build prototype • Hold public sale of coins, possible in several stages, and hope to raise millions in Bitcoin, Ethereum, Litecoin
- 16. Large ICOs in 2017 • EOS ~$500m • Filecoin $257m • Tezos $232m • Bancor $153m • Status $90m