BLOCKCHAIN REVOLUTION

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1 FOR WHOLESALE CLIENTS ONLY. NOT TO BE DISTRIBUTED TO RETAIL CLIENTS. NOT TO BE REPRODUCED WITHOUT PRIOR WRITTEN APPROVAL. BLOCKCHAIN REVOLUTION THE INTERNET OF VALUE BY DON TAPSCOTT MAY 2018 > What if there was not just an internet of information but an internet of value? Assets can be transferred for the first time peer-to-peer without an intermediary. This is blockchain. It represents the fourth industrial age and will change the nature of corporations.

2 DON TAPSCOTT Don Tapscott, CEO of The Tapscott Group, is one of the world s leading authorities on the impact of technology on business and society. He has authored over 15 books, including Wikinomics: How Mass Collaboration Changes Everything, which has been translated into over Lorem ipsum 25 languages. His 1992 bestseller, Paradigm Shift, helped coin this seminal management concept, and The Digital Economy, written in 1995, changed business thinking about the transformational NAME SURNAME nature of the Internet. Two years later he helped popularise the terms Net Generation and the Digital Divide in Growing Up Digital. Don s most recent and ambitious book was co-authored with his son, Alex Tapscott, and is entitled Blockchain Revolution: How the Technology Underlying Bitcoin is Changing Business, Money and the World. In 2017, Don and Alex co-founded the Blockchain Research Institute, whose many projects are investigating blockchain strategy, use-cases, implementation challenges and organisational transformations.

3 BLOCKCHAIN REVOLUTION: THE INTERNET OF VALUE BLOCKCHAIN HAS THE POWER TO CHANGE THE NATURE OF CORPORATIONS. IT IS CRITICAL THAT EVERY INVESTOR UNDERSTANDS THIS NEW TECHNOLOGY AND ITS IMPLICATIONS. FOR THE FIRST TIME IN HISTORY ASSETS CAN BE TRANSFERRED PEER-TO-PEER WITHOUT AN INTERMEDIARY USING AN INTERNET OF VALUE. THE POTENTIAL OF THE SECOND ERA OF THE INTERNET The second era of the digital revolution is here, and it has the potential to change everything about the way we interact around the world. The technology behind this new revolution is called blockchain the underlying technology behind cryptocurrencies like bitcoin and ether. Using cryptography, some clever code and collaboration, blockchain creates a decentralised network with trust built into the system. This represents nothing less than the second generation of the internet, and it holds vast promise for businesses, societies and individuals around the world. In turn, this will impact investments. THE DOUBLE SPEND PROBLEM For the past few decades the digital revolution has been defined by the internet of information, which has democratised the way we communicate around the world by enabling low-cost, massive peer-to-peer communication where everyone is an active participant. However, when I send an on that internet of information, I am in fact sending a copy of that . That system works well for information, but not for things with some sort of underlying value, which depends on scarcity. Things like money, stocks, bonds, votes, carbon credits, data, intellectual property and art cannot be reproduced infinitely if we hope to maintain their value. If someone can infinitely copy the $100 they just sent somewhere, that $100 suddenly has no value. This is called the double spend problem. Digitisation Encryption Decentralised Distributed ledger Blockchain Secure Autonomous Ordered records

4 All of the computer systems in all of our financial institutions can be hacked. DON TAPSCOTT

5 Usually, when we want to exchange things of value online, we depend on an intermediary to establish trust intermediaries like banks, governments, or social media companies. These intermediaries are able to ensure that when someone transfers $100, they don t still have that $100 in their bank account. This has worked, but it has some major problems. It s a centralised system, putting far too much power and personal data in the hands of a precious few. It can also be hacked, and increasingly is. All of the computer systems in all of our financial institutions can be hacked. Most importantly, it distributes the wealth created by the digital revolution of the past 20 years asymmetrically, leaving far too many people behind. THE SOLUTION Blockchain presents a solution a vast, distributed ledger with thousands of computers working to verify transactions. As a decentralised system, it can t be hacked, and it enables you to bypass the complex network of intermediaries currently needed to verify transactions. For the first time in history people can trust each other without an intermediary. Blockchain allows people to manage, use, and interact with assets peer-to-peer. This new internet of value will be owned by investors, so rather than a bubble there is a case to be made that this is the biggest investment opportunity in history. WHAT IS BLOCKCHAIN AND HOW DOES IT WORK? Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. Each unit of value is represented by transactions recorded in a blockchain, which leverages the resources of a large peer-to-peer network to verify and approve each transaction. The main differentiating features of blockchain relative to traditional ledgers of transactions are: Decentralised it runs on computers provided by volunteers around the world: there is no central database to hack Public anyone can view it at any time because it resides on the network, not within a single institution charged with auditing transactions and keeping records Encrypted it uses heavy-duty encryption involving public and private keys (rather like the two-key system to access a safety deposit box) to maintain virtual security Broadly, the steps in any blockchain process are: 1. Any transfer request is broadcast out to a global network of millions of computers each using the highest level of security. 2. At regular intervals the programme creates a block that contains all of the transactions in that period; in the case of bitcoin it is every 10 minutes. 3. All around the world there are a group of people called miners who compete to validate the transactions in the block. The first miner to validate the block gets paid part of the crypto currency from that blockchain. 4. Importantly, that block gets connected to the previous block to create a chain of blocks and it is sealed with a digital wax seal. The structure permanently time-stamps and store exchanges of value. If the block can t be validated it will not be connected and is referred to as an orphan block. 5. Records cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. Therefore, to hack a new validated block you would need to hack the entire chain simultaneously, not just on one computer but across millions of computers with each of the computers using the highest level of cryptography.

6 WHAT IS THE POTENTIAL IMPACT? With blockchain, trust is built into the network, which is why in our book Blockchain Revolution, Alex Tapscott and I refer to it as the Trust Protocol. This trust protocol has enormous implications and opportunities for business. Here are three real-world examples: This new internet of value will be owned by investors, so rather than a bubble there is a case to be made that this is the biggest investment opportunity in history. DON TAPSCOTT Global payment systems The global payment system, for instance, can finally be brought into the 21st century. Right now, it can take days or even weeks to bypass the complex, inefficient network of intermediaries set up to move money from one party to another internationally. These intermediaries also take a significant cut, which is especially harmful for remittances. When looking at the process of immigrants sending money back to their country of birth, the implications of reduced transaction costs would mean more money in the hands of local people and improved local economies in emerging markets. Verifying land titles Blockchain has the potential to assure the largesse of the digital age is distributed more equitably. The famous Peruvian economist Hernando de Soto pointed to land titles as one of the key points of failure for economic development in the Global South. There is as much as $9trn in capital yet to be used because of tenuous land titles, meaning that the people who own those farms, businesses or homes can t loan against them to improve their lives. As an immutable public ledger with a single version of the truth, blockchain enables us to establish a secure link between an individual and their land. This increased governance, and therefore security, may also have a significant impact on the appetite for foreign investors to invest in emerging markets. Data protection Blockchain also has the capacity to assure that citizens are able to exercise more sovereignty over their data. A person s digital identity currently controlled by large digital conglomerates who amalgamate and sell that data could be stored in a digital black box, secured on a blockchain. CONCLUSION Blockchain has the potential to help us secure our identities, improve the way we transact around the world and ensure everyone has access to the global financial system. These are just a few of the potential opportunities for blockchain, and there are already companies working to capture these opportunities today. The most successful companies in this second era of the digital age will be those that have the willingness and ability to harness the power of blockchain directly or indirectly. The most successful investors will be those that can identify the impact of blockchain on the companies they invest in.

7 FIND OUT MORE Insight Investment Level 2, 1-7 Bligh Street, Sydney NSW Bruce Murphy Director, Australia and New Zealand bruce.murphy@insightinvestment.com Rob Thompson Head of Adviser Distribution rob.thompson@insightinvestment.com This document is a financial promotion and is not investment advice. This document must not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or otherwise not permitted. This document should not be duplicated, amended or forwarded to a third party without consent from Insight Investment. Insight does not provide tax or legal advice to its clients and all investors are strongly urged to seek professional advice regarding any potential strategy or investment. For a full list of applicable risks, and before investing, investors should refer to the Prospectus or other offering documents. Please go to Unless otherwise stated, the source of information and any views and opinions are those of Insight Investment. Telephone calls may be recorded. For clients and prospects of Insight Investment Management (Global) Limited: Issued by Insight Investment Management (Global) Limited. Registered in England and Wales. Registered office 160 Queen Victoria Street, London EC4V 4LA; registered number For clients and prospects of Insight Investment Funds Management Limited: Issued by Insight Investment Funds Management Limited. Registered in England and Wales. Registered office 160 Queen Victoria Street, London EC4V 4LA; registered number For clients and prospects of Insight Investment International Limited: Issued by Insight Investment International Limited. Registered in England and Wales. Registered office 160 Queen Victoria Street, London EC4V 4LA; registered number Insight Investment Management (Global) Limited, Insight Investment Funds Management Limited and Insight Investment International Limited are authorised and regulated by the Financial Conduct Authority in the UK. Insight Investment Management (Global) Limited and Insight Investment International Limited are authorised to operate across Europe in accordance with the provisions of the European passport under Directive 2004/39 on markets in financial instruments. For clients and prospects based in Singapore: This material is for Institutional Investors only. This documentation has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, it and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ) or (ii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. For clients and prospects based in Australia and New Zealand: This material is for wholesale investors only (as defined under the Corporations Act in Australia or under the Financial Markets Conduct Act in New Zealand) and is not intended for distribution to, nor should it be relied upon by, retail investors. Both Insight Investment Management (Global) Limited and Insight Investment International Limited are exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 in respect of the financial services; and both are authorised and regulated by the Financial Conduct Authority (FCA) under UK laws, which differ from Australian laws. If this document is used or distributed in Australia, it is issued by Insight Investment Australia Pty Ltd (ABN , AFS license number ) located at Level 2, 1-7 Bligh Street, Sydney, NSW Insight Investment. All rights reserved

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