AWS re:Invent 2022 - When to use blockchain: Private and public use cases (BLC201)

- Hello everyone and welcome to the breakout session, When To Use Blockchain. My name is John Liu, the head of product for AWS Web3 and blockchain services. And I've been leading product strategy in the blockchain industry for about five years now.

And prior to that I spent 18 years in traditional finance, as a bond portfolio manager and also as a product executive. At AWS, I work with our customers and our engineers to make building with blockchain simpler and more secure. Now, 2022 has definitely been an interesting year, lots of headline news and market moving events.

But putting that aside for a second, and let's focus on the technology adoption and the innovation, we see positive signals on both those fronts. Private blockchain proof of concepts continue to make their way into production. Governments are using blockchain technology to build central bank digital currencies and identity-based solutions.

Web3, public blockchains, are taking advantage of the build season to innovate, and investments continue to come into the space to fund innovations in this area. Likewise, public blockchains are also adopting their work, their technology for enterprise type of workloads. They're releasing SDKs which make it simpler for private enterprises to launch private instances of their chains.

Also, they're releasing application tools that make it simpler for non blockchain developers to access this technology. That's why we're seeing companies like Nike, like Starbucks, and also Tiffany's, all releasing some type of public blockchain related product. So in this time of engagement, innovation, adoption, the question of when to use blockchain is as relevant as ever.

So to help you answer that question, we'll review four criteria to identify good use cases for blockchain. We'll look at the different types of technologies that you'll come across, private and public blockchains, and then see how Web3 fits into this picture. We'll talk about how customers use AWS and Amazon Managed Blockchain as they build Web3 and blockchain applications.

And then we'll turn it over to Elliott, who will share private blockchain solution from CJ Corporation. And Will from Toyota Connected, who will share a public blockchain solution. To answer the question of when to use blockchain, let's first answer the question of what blockchains are actually good for.

Certainly we hear benefits like decentralization, immutability and automation, but it's really the combination of these benefits, that let blockchain solve a unique consumer and business need, and that need is to collaborate more efficiently with each other in a digitally connected world. However, blockchain is just one of many possible solutions that can create such a network of collaboration. So to help you identify when blockchain should be used for your use case, let's review four criteria.

As mentioned before, decentralization, immutability and automation are benefits of blockchain. So, if your workflow has fragmented business processes and siloed data sets, multiple sources of truth, even incomplete sources of truth, then blockchain is a good candidate to evaluate. Next, look at the number of parties that have to operate in your workflow.

Blockchain is well suited for bringing efficiencies to multi-party workflow. And these workflows could be different companies, segregated departments within a company, individuals, or as we're seeing more and more these days, some combination of all three of these. Now, these two criteria, while very important in selecting blockchain as a possible solution, do not justify blockchain.

Because you can just build a centralized application on top of an immutable database to create the same thing. So this next criteria is actually one of the most important, which asks the question, do the multiple parties that operate this blockchain network need to have those equal rights and responsibilities? And this need for equal rights and responsibility comes from both individual and business needs.

Think for example, Bitcoin. It was created because individuals wanted a peer to peer, financial exchange layer, without having to rely on a single third party financial institution. Likewise, companies are turning towards blockchain in order to enable cooperative workflows.

Finally, look at the performance requirements of your workflow. If your workflow has performance requirements that are more aligned with traditional databases like 50,000 transactions per second, or right finality that's less than one second, then blockchain today as a standalone solution is not ideal. Because of their consensus mechanisms, blockchains tend to max out at around 20,000 transactions per second with the right finality at around two or three seconds.

However, if your use case has matched all four of these criteria, then blockchain is a good candidate. And as you're looking at these technologies, you'll come across two general categories, private and public blockchains. And it is important to remember these two categories of blockchains do not compete with each other.

They simply approach the use cases you wanna solve with different considerations around security, privacy. You can draw the analogy loosely to purpose-built databases. Now all these purpose-built databases are databases that can read, write store data.

But for example, DocDB is very well suited to store and retrieve media files for mobile applications, whereas GraphDB is very good for finding hidden relationships between big data. So let's look at private blockchains. Their permissioned networks, which allow the network members to set permissions on who can join the network, and also assign proper roles to those who do join the network, give them the proper read and write access.

Frequently they have to share information that is materially sensitive to the entities that are on this network. Therefore, the network members are generally known in advance. And finally, the identity knowledge of all the participants in a private blockchain is very important, because this is what allows the network members, as well as the application builders on top of that network, to set the proper roles and permissions.

And these characteristics enable for fine tuned control of access to the resources and data that's operating on this blockchain, as well as support for advanced privacy and compliance features. Importantly because the members are trusted, they can employ more efficient types of consensus mechanisms, such as proof of authority. And this generally leads to higher transaction throughput and more efficient energy consumption.

Now, public blockchains are making innovations on this front as well. On both scalability and sustainability. For example, Ethereum now has various different types of layer two technologies, such as zero knowledge rollups or optimistic rollups that increase the transaction throughput of Ethereum by thousands to tens of thousands of transactions per second.

And in September, Ethereum changes consensus from proof of work to proof of stake, decreasing the energy consumption by about 99%. However, enterprises and governments still gravitate towards private blockchains, because this gives them that safe space to bring a lot of their workloads that have to meet regulatory and compliance requirements. And here are three sample use cases that private blockchains are applied under.

We start with track and trace use cases, and these use cases span almost every industry out there. And sometimes they're used across different use cases within an industry, such as fighting counterfeits to tracking shipments in real time, and in certain cases even tracking the access of code and software. Oftentimes, they have multiple parties and fragmented business processes, and many times there are manual processes involved in here as well, which makes them very ideal for private blockchain applications.

And although bringing these type of solutions to a private blockchain is actually very challenging, just given the number of parties that you have to align, we're seeing success stories now come to production, such as the one that CJ Corporation will share later in this session. The financial industry is also very interested in private blockchain applications to increase the efficiency of their settlement. In certain areas, the financial industry is very, very effective, such as the equity markets.

But then in other assets, alternative assets such as bonds and private equity, the financial industry still relies on siloed databases and end of day reconciliations. And private blockchains allow these industry, these institutions to tokenize these securities and then put them onto a blockchain, automate a lot of the distribution of payments and information to the holders, and importantly, use that single source of truth. Finally, there are identity solutions that governments are building on top of blockchain.

Now, the key part of governments building these identity solution, is that they can digitize these type of credentials. They could be driver's license, they could be passports, but they digitize them in a way that can be shared real time and in accurate fashion across different government agencies, and even across different countries. To handle these types of use cases, there are different types of private blockchains that you can evaluate.

There's Hyperledger Fabric, with its modular framework gives builders the maximum flexibility of what to use. You can swap in different types of protocols, you can swap in different type of databases even. And importantly, you can create privacy channels between peers.

Then there's Hyperledger Besu, and this offers native compatibility with public blockchains like Ethereum. This makes it ideal for workflows that will later integrate with public blockchains, or even move completely onto a public blockchain. There's r3, which is well built and well suited for the financial industry and insurance industry with a high transaction throughput network, as well as integration with existing financial settlement systems.

And there are other private blockchains such as Indy, Quorum. They all have their own value propositions and I'm happy to share more details with you after the session. Now let's turn towards public blockchains, which is permissionless networks, right?

This means that anyone can join this network, secure the network, build upon the network. And to enable this freedom to join and importantly leave the network at any point in time, the participants are not identified. And because all the On Chain transactions and activities visible to anyone who can join, protecting the anonymity of these participants is very important.

With innovations like decentralized identity, as well as zero knowledge proofs making their way into public blockchains, we're now seeing applications that can take advantage of identity-based workflows, and still take advantage of the anonymity and reach of public blockchains. So these characteristics enable that open read and write network, which then creates a self-reinforcing loop of innovation, participants adopting these innovations, and further increasing the value of the public blockchain. And importantly because people can freely join and help secure this network, the ledgers of public blockchains are generally more widely distributed than their private blockchain counterparts.

As an order of magnitude to consider, a public blockchain typically has probably a few 1000 nodes securing a network, as opposed to a private blockchain, which has maybe 10 to, I've seen a 100 nodes, securing a private blockchain. Now let's review some adoption drivers that are actually, driving the use cases here in public blockchain. Starting with decentralized finance or DeFi.

And this settles billions of dollars daily with millions of users, many of which do not have access to traditional banking systems. And what DeFi has done, is it's taken all the financial system and put it onto a decentralized network. And this has enabled new forms of participation in financial exchange systems, such as through decentralized exchanges and decentralized lending platforms.

And has also enabled new instruments such as flash loans. Now with the recent headlines around centralized counterparties, maybe taking a little more leverage than they should have, or using funds that maybe they shouldn't have, there has been a renewed focus around DeFi and self custody. Innovation happens in the digital payment space as well.

It started with Bitcoin linked to debit card, but of course expanded to include other types of cryptocurrencies. Especially with the support of fully backed stable coins, such as USDC. And these stable coins have increased the adoption from both consumers and merchants.

In a survey done by BNY Mellon across 270 financial institutions this year, over 88% of these surveyed were ready and willing to adopt some type of digital cash payment solution. Furthermore, payment processors such as Visa, MasterCard, and fintechs, such as PayPal and Stripe, all continue to increase their offerings in the digital payment space. Finally, there's non fungible tokens or NFTs, which represent unique digital assets.

And we remember in 2021, this use case was actually responsible for driving a lot of cross-industry adoption of public blockchains. You had high value art sales. You had enterprises releasing their own collectibles, and you had celebrities releasing their own collectibles too.

Now in 2022, we're seeing continued innovation in this space. Enterprises are now thinking about adding ongoing engagement, ongoing utility to these NFTs. So there's not just a once buy and done type of experience.

Now they will buy, consumers can buy NFTs and will want to hold them. The solution that Toyota Connected will share later in this session, highlights the possibilities of just such a solution. You'll come across many different types of public blockchains.

Oftentimes you'll say, well, there's just too many of 'em. So a good place to start really is with Bitcoin and Ethereum. These are the most decentralized, most secure settlement layer of information.

You also come across blockchains that focus on interoperability, which allow data and value to be exchanged in heterogeneous blockchains. You'll come across blockchains focused on scalability, and there are different types of technologies they use. Some of them are their own layer one, some of them are side chains on Ethereum, and some of them are layer twos that exist on top of a layer one chain like Ethereum.

And there are so many more. There's Cardano, there's Litecoin. Again, find us at after the session or in our kiosk village, and I'm happy to talk about the different technologies available.

So where does Web3 fit into this picture? Well, Web3 is just a continued evolution of the internet that started in the 1990s as a read only experience. You can think of GeoCities as a good example of the experience at that time.

Now, as the technology improved and bandwidth also increased, the internet involved into Web2, which allowed for read-write type of experience, or an interactive experience. Importantly, in Web2, content consumers could actually add value to the websites they were consuming content from. A good example of those would be Meta or Twitter.

However, Web2 does have one drawback, which is the centralization of the value being created on the internet, as well as the centralization of the control of private data. So that leads us to Web3, which takes the interactive version of the Web2, and now powers it with some type of collaboration network, where the builders, the content creators, and the content consumers can all share in the value that's being created on the internet, as well as share in control of the private data that is being put onto the internet. So then is this network of collaboration a private or a public type of use case?

While all the innovation that we see today is being driven from public blockchains, the reality is as enterprises adopt the Web3 technologies to enable mass adoption, they will need to integrate against existing workloads that have to operate under regulatory and compliance requirements. And this type of integration paired with the enterprise need to find more efficient ways to collaborate with each others anyway in a cooperative environment, will lead us to a solution that blends private and public blockchains. So let's illustrate this example with a sneaker company, right?

The sneaker company wants to meet the ESG requirements from their consumer. At the same time, they want to create digital experiences for that consumer. The sneaker company can take advantage of a private blockchain supply chain, which is already bringing efficiencies between the participants, the manufacturers, the sneaker, as well as the distributor.

And then they can take the public information that they want to extract, such as where the sneaker was manufactured and where it actually ended up to be sold, and link it to a public blockchain NFT or non fungible token. So now the consumer can check and make sure that their sneaker was manufactured in a sustainable fashion. Importantly, this NFT can also be used to unlock new experiences.

It could be digital skins in a metaverse or something more near term, practical, exclusive in-store events that are happening, exclusive in-store sales of sneakers. And these two sides of the blockchain can be tied together with things such as decentralized identities that protect the identity of the individual, while still identifying that individual to the people who need to know who that person is. And their identities for the sneaker too.

That's, that's a funny concept to think about, but every device also has an identity. Customers use AWS and Amazon Managed Blockchain to build these types of Web3 applications. They rely on AWS for the core compute services, such as EC2 to power their applications, as well as many of the nodes that help secure the blockchains today.

Customers also use a variety of AWS storage options such as S3, sometimes to store the large media files that are linked to NFTs. In the aspect of helping customers accelerate their time to market, AWS offers services such as API Gateway, which makes it very simple for developers to build and scale secure application endpoints. In the important aspect of security, AWS provides customers a variety of options such as KMS and also Nitro Enclaves.

And these services can be used to protect and monitor access to the private keys that give access to the wallets which hold cryptocurrency funds, as well as control the deployment and management of smart contracts behind many of the distributed applications today. Finally, customers can take advantage of AWS data services. These services can be used to merge on chain data with off chain data and transform all those into business insights and application triggers.

AWS continues to tailor its services for blockchain builders and Amazon Managed Blockchain provides a fully managed service for a private blockchain network, Hyperledger Fabric, as well as fully managed nodes for Ethereum. It comes with a reliability and scalability that AWS is known for, and offers a low pay as you go model, which helps keeps the customers cost low. Importantly, it's integrated with AWS' 200 other services, some of which we saw in the previous slide.

In 2022 we released support for Hyperledger Fabric, the latest LTS or long term support version, and then we also released Hyperledger Fabric support on GovCloud. And this allows government agencies, or those entities that need to work with government agencies, which require the strictest US requirements, to actually use a fully managed blockchain solution. Furthermore, we released token based access to our public blockchain Ethereum nodes.

Now, this allows for easier access for distributed applications to send transactions or re-transactions from the nodes, and also allows for easier support of test environments. If you want, look for more information, we published a blog recently on it, that highlights when you should use token based access and when you should use the more secure sign in such as SiPb4. Now I'd like to turn it over to Elliot from CJ Corporation, who will share a private blockchain supply chain solution.

- [Elliot] Thank you. (audience clapping) Thank you John. So good afternoon and my name is Elliot Ahn, and I'm a DT Executive Director of CJ- (whispering) of CDO office at CJ Corporation.

And okay, today I'm here to explain about, a little bit about our group CJ, and also how we are leveraging Amazon blockchain services to power our solutions. So actually these are three symbolic icon where we're introducing our group. But what happened to this slide, we actually just before today's presentation, the copywriter lawyer actually recommended me the change and replace the slide with plain text since, unless I wanna face the loyalty dispute.

So I just changing this slide, it's very boring, but I'll try my best to make you understand, how the CJs are really like, has the big things that you might know. First imagine LeBron James with the LA Lakers, and Lebron James wearing a uniform with the symbol of our signature brand logo. And Bibigo is our CJ, (speaks Korean) is our signature logo.

And then trust me, it is true, you can Google it. And then also next goes to the second part is the Oscar winner Parasite film. This one actually supposed to be direct, Mr Bong his picture should be on the center of this slide.

And then also our, one of our subsidiary company, CJ ENM entertainment division. CJ ENM is investor and also distributor of this film. And lastly on our list, recently wide-spread out to the world, K-culture, whatever comes with a capital K.

Recently, wide-spread out Korea culture, KCON and also MNET. MNET Asian Music Award, we are the evangelist of the K culture. So we are, this thing probably I can say that most of the famous symbolic icon when we're introducing our group.

So actually we are, we share the same route with Samsung group. And so we started in 1953, then we got started our, we started is independence is nineties. This year our group did 40 billion in revenue, and then probably we have 80,000 employment.

For the last 70 years, our group diversified into many different industries. So this kind of a slide, we've been diversified into four. This kind of slide explain about our four verticals that we've been in, we've been diversified into.

So up top in red in food and food services, that this vertical is actually, they're really the starting business when CJ found, and currently the largest business as well, food and food services. Here we also have the bakery business, and food and restaurant as well. And also goes to the next gray box in bio business.

This vertical probably is not that consumer facing, but we are looking into human nutrition outside of the feed nutrition. And goes to the next in the blue box under name of the convenient work, here we have the logistics and retail business and ICT business as well. So logistic business, you can say here in Korea, you can easily can see that UPS kind of truck going around to Korea, and our last mile fulfillment company in Korea, CJ Logistics.

Also we have the retail business both online and offline. Online, CJ ENM commerce division, previously called CJ O Shopping, TV home shopping business, previously called the CJ O-Shopping is kind of like QVC for Korea. Also we have CJ Olive Young, HMB Health and Beauty offline channel, kind of like Walgreen and QVC, CVS for Korea.

And also we have CJ Olive Network, is ICT company and also I'm dual headed as a CSO, Chief Strategic Officer there. It's ICT backbone, we're doing system integration and system management as well. And also not least, but not last, but not least, in the orange box, Joyful World there is CJ Entertainment division, we produce music, drama, and movies and we manufacture, we produce this kind of a Korean culture as well.

And also we have a CJ CGV there, we have the music, we have a movie theater business as well. So this kind of a slide, (background mike whispering) is pretty much about nutshell of the CJ Group. And now next slide I will talk about blockchain innovation.

So these are blockchain innovation within the CJ Group as a promising field. First SMART HACCP. HACCP is hazard analysis critical control point.

As a qualified HACCP provider, you need to submit the historical credential to the government. As previously it's manually submitted, the credential to the government, that way actually, being exposure to the risk, to the data manipulation. The blockchain actually Smart HACCP has based on the blockchain way, we just eliminate this data manipulation possibility in a real time.

And then goes to the next BGM Copyright Management. In this, management system background in music industry. So broad casher provided revenue to the association per revenue.

This way actually is, have a problem to pay them more than they actually used. So this settlement issue has been solved by blockchain in a way of, they provide actual music play the information. So lastly in a Chain One, today's main presentation topic, in a supply chain management.

Thanks to the COVID-19 is recently people are, became familiar with the COVID vaccine, vaccine cold chain management system. So also its importancy has been highlighted and strengthened. So in the next slide I will, in next slide before we dive into, deep dive into more information about Chain One, I think it will be very helpful sharing the more information about the challenges and needs, where we're development this product, and also pace during the development and also how we work that out.

So first I will start talking about outside situation COVID-19. So during the outrage, the COVID-19 situation, government temporary allow the pre-online prescription. And especially during the, especially during the sub-quarantine period, people are easily can asking medicine in that way, risk to the high demand in the medicine.

So also at the same time in line with that, government raised the bar to, in terms of the regulation. So the shipment regulation in terms of the pharmaceuticals and the prescription in the logistics way. Those are the outside of the situation surrounded by logistics industry.

However, while we're taking, looking into the logistics industry or the pharmaceutical industry data in terms of the data management and also about the quality management. But I will talk, I will also be talking about the next slide in detail as well. But there is tons of different level of the pharmaceuticals that exist in Korea, very small pharmaceuticals to the very big and mega pharmaceuticals there.

They having different way to share their different management of their data. And also at the same time there is no way to share the data, data standardization. So this is also the problem.

And because of that actually, the problem of the data, the medicine quality management also have a problem. So for example, like a temperature or humidity problem management has an issues. So lots of the medical medicines are just as recorded.

So this is also the both industry's issues has remained. And finally all, just like all other industries, those logistics at the pharmaceuticals industry also looking for another way to grow the industry, and new business opportunities are looking for the, find another way. So all this situation led to our intention and to find the vaccine management new product.

So now like I just mentioned in the previous slide, just on the left side in green box, there's tons of different level of pharmaceuticals there. And also they have different style of the data this exists. So there first I need to, we need to define the data standardization first and also in the middle of the player in the value chain there, each member there is no way to share the data.

And so when the first time when they opted the medicine, product of the start the delivery, at the same time, they only way to that moment, they only can see that they find the way the status, of their medicine status. So once we find the way of data standardization, once we get it done, then we can have the enhancing transparency in distribution process. After that, once after the task can be get done and then we can do the prompt, promptly and rapid action to any issues.

So also we decided to go with blockchain technology. Then why AWS blockchain technology? There are number of great reason for that.

However, and the really the core one is, it let us leverage our strength, Chain One and application development. And our sweet spot is client would like to use safe and secured application solution, fully application solutions. So number one, thanks to the convenience solution, convenience framework easily can add a new member.

Hyperledger fabric. Hyperledger fabric requires quite a complications, quite a complex configuration including server setting. But even if you have have a boxing background, nobody take two to three weeks.

But with the AWS services, normally it takes just a one day. And also secondly, fully management services and the fully managed services that AWS uses a KMS key management services for safe key management services. And private blockchain use the key management for sharing the data to participate it the channel.

And also EC2 for the, EC2 for scale, auto scaling up, it depends on the traffic. (whispering) And also lastly, adoption friendly. There is so many different within the AWS, there's different types of the other applications in this.

In our case for example, we have a QLDB, quantum laser database. It's double protected. It's integrity then all data uploaded up the road.

There's the way to edit the information. Also we add AWS Fargate server. Server is the server.

So the provide API to member to integrate with, to the Chain One. So these are the major reason why we're working together with AWS to be a partner. And then these are actually the one of the simulation that we've been prepared is a real case in the Chain One platform.

And you can see that this is a manufacturer and logistics distributor, medical hospital here. And you can see that the lots of the data here, time, status, organization and the data and everything is, can be shared every five minute. So this is actually exactly normal situation.

And trucks is going on, the situation is very normal. And then after all this truck is going on, you can see that is very normal situation. And the next slide, I will show you this different situation.

The temperature has alarming different situation. (whispering) The situation is exactly same from the previous slide, but we can have some different situation until it detects abnormalty temperature out of the appropriate range. You can say here it's eight and 25 Celsius degree can be out of range.

So you can see that automatically alarming will be given to your device. So, and then also product will be checking, and then product will be disposal, and then recipient will be given to your client. In summary can Chain One improve the work efficiency through the automation and transparency of distribution processes?

So first it can be, it can provide a big database to customize the services like a cost of reduction or capacity prediction. And then secondly, support the quality of a medicine by eliminating and managing risk during the distribution processes. And moreover, lastly, in case of the medicine distribution and collaborating with government agencies is critical.

So ended up in the way working together with government, we can make a new standard in a new industry the blockchain technology. So what would be the next step beyond? Our goal is expanding our industry horizontally and vertically.

We are at the, now we are at the Phase one pharmaceutical and also in the logistics, but we're going to gradually expand it our phase throughout the the luxury product. And also we going to the food ingredient and the vertically, and also we are going to expand it horizontally logistics, the food and food services ended up, and we're going to working together with the government, here saying that MFDS, the Ministry of Food and Drg Safety. So we are really excited to explore the next journey with AWS and to see what we can take advantage of to further power our CJ platforms.

So this is pretty much about my presentation here. So thank you so much for your time again. It's a privilege to honor to be here.

And if you have any question about our group and our product or myself, and please feel free to shoot me an email or. And then I'm going to invite Will Hargis of Toyota and please welcome him. Thank you.

(audience clapping) - Thank you Elliot. All right. Hello everybody.

Thank you for coming. My name is Will Hargis. I come from an organization called Toyota Connected, and I'm very excited to share our story today with all of you.

But first, let's answer your first question. Who is Toyota connected anyway? Well, in 2016 we were founded as an innovation accelerator for software.

And our purpose is primarily in connected services, worldwide in the support of Toyota. We primarily focus on, as I mentioned, software development, but also data science, data engineering, machine learning, and artificial intelligence. We build services for mobility, convenience, and safety.

We're largely a tech company. The vast majority of our team members are in fact technical in one form or another. Today we're gonna talk about how Web3 has now become a part of our core competency.

So the next question you're probably asking is, why do we care about Web3? Well, in any situation, when there's an opportunity to capture a new audience, it's at least worth looking into, especially when the technology is gaining adoption. But we also recognize an opportunity to create greater engagement with our customers.

We were very focused on the utility of the NFT itself. While many were going in one path with the way that they were delivering NFTs and airdrops, we were actually looking at a big blue ocean opportunity for us in a very different way. And that was important for us, because many of our owners have a unique relationship with their cars.

You build memories, you have those relationships that you've had for a long time. Many of you today probably have a fond memory of some time in your life with your car. And so certainly this was going to be a long term commitment.

This could not be just a flash in the pan. So as we think about those emotional connections and the way that we could utilize NFT technology, we started thinking about the Lexus Performance Drving School. And I've gotta tell you, if you've never been to the performance driving school, it is an amazing experience.

You get to drive Lexus owned vehicles across some of the most iconic racetracks in the country. Road America, Laguna Seca, Indianapolis Motor Speedway, and more. What we noticed was that many of the participants were going through the program with smiles planted on their face.

They're going around the track, they're feeling the adrenaline, they're feeling the speed. And at the end of the program they would receive paper certificates. And those were important certificates as they would frame them on the wall as an emotional connection back to this experience that they had at one time.

We saw an opportunity to deliver a more delightful experience than a paper certificate. And so realizing that that emotional connection existed, and thinking about ways that we could apply NFTs, we set our sights on the August weekend of the performance driving school. We had an opportunity to delight 130 guests.

We would look at the hands-on experiences that they would have through autocross, skid pad, as well as their lead follow time on track. They would also be driving three vehicles, the Lexus RCF, the Lexus IS 500 F-Sport Performance, as well as the Lexus L3, LC, excuse me. If we could translate what felt like intangible, the emotion connection that they had, into ways that were digitally certified artifacts, we felt like we could be on something.

One of the ways that we felt like we could make, the intangible tangible, was in the data that they were generating from the vehicle. In many ways they could look at their speed and recollect the feelings that they had going down the straightaway, the G forces that they experienced, or the brake pedal pressure and the motions that gave them going through a return. So when we set out for this pilot, we looked at these data points as keys that we could potentially deliver as a part of the NFT.

So, our use case has been identified and we got straight to work. Partnering with John's team at AWS, we built a completely green filled, greenfield, bottom up NFT minting platform. We largely leveraged services like AWS Lambda, Step Functions Cognito for speed to market purposes.

But that wasn't our only hurdle, because we were generating data on these fleet vehicles, we had to capture the driver, the specific car that they were in, the timestamp, and then pull that into an S3 bucket that we could utilize. And some challenges were non-trivial. In some cases the transition between drivers and cars was less than two minutes.

Furthermore, they would likely not drive the same car throughout the day. On top of that, we were including pre-shot practical footage from another performance driving school. We were also capturing a hero moment that we shot live onsite that day in which we gave the drivers and the guests a way of professional race car driver introduction.

We would combine all of this with our 3D asset, and our goal was to deliver these NFTs to the customer within 24 hours of their participation. But, back end capabilities were not the only thing of our focus. Now, I have to tell you, when we started out working on this program, many individuals were prepared to tell us that we were doing this all wrong.

That we needed to create the hype engine, that we needed discord servers, and that the demographics were all wrong. But we didn't care. We cared about the experience that our customers were getting and a way that we could capture that, and our goal was to provide this as a living memory for them.

So how would we bridge the gap? Well, today it's becoming more normalized in a term of Web2. 5.

We had to build something relatable to what they were already used to instead of asking them to go through leaps and bounds to understand Web3 technology and crypto wallets. Instead, we delivered the technology to them in a way that's frictionless and familiar. And what's more familiar than getting an email in your inbox with a clear call to action to claim your NFT.

From there, we asked them to register with the email that they'd already registered with from the performance driving school. This is a way we could verify who they were, create a password, we would enroll them in multifactor authentication. And just three steps later, they're prepared to claim and mint their NFT.

Now, if you're unimpressed by this process and you feel like this is too simple, then great. That's exactly what we were aiming for. We wanted it to be simple.

At this point, they're also getting a preview of what this NFT would look like. So, given that this is a highly personalized NFT, we wanted to put the control in their hands, and only until they pressed the claim button, would this actually be published to public blockchain, and in this case it would be Polygon. On top of that, what took away a lot of the friction was creating a custodial wallet behind the scenes.

This allowed people who are not familiar with Web3 to still participate in the program, reap the benefits. And after they click on the claim button, this is what they would receive. (energizing music) (car engine roaring) (car tires skidding) (energizing music) I'll tell you, I've watched that video hundreds of times, and I still get excited watching that video.

The emotions that come out of it, the visuals that you see, the data that they generated from their experience captured at the racetrack, the events, the cars that they drove, it's a very emotional connection. It's something that we'll live on forever as a living package memory. And I'm so excited of the team who built this.

Everything that you've just seen was built in six weeks, from concept to production level code. Furthermore, we achieved our goal in delivering 100% of these assets to our participants within 24 hours. What a great milestone.

But wait, there's more. So if you notice, there was a fourth step in the process. We weren't catering only to just Web2 users or Web2.

5 users. We also wanted to invite Web3 users to participate in a way that they were familiar with. And we did so by allowing them to transfer to their polygon compatible wallet after they press claim.

Now we've been able to provide a great experience to not those who are just savvy, but also those who are not quite as savvy. Now let's talk about the outcome. Post event survey came back 100% excited or very excited to receive this token.

This was huge. In fact, it was so significant that we went back to double check the survey and the results, because we weren't quite sure if we would believe it. On day one when we shared with them that they were gonna get an NFT, we asked for hand-raisers for those who were interested or excited, and we got maybe a handful.

When we showed them what they were going to get, people became very excited. On day two and day three of the event, we massaged the messaging and talked about more of a digital collectible, a digital certification, and ways that we could frame their experience. Everybody was excited.

Of those 130 guests that came to our program, 80% registered with interest in the NFT. 50% of those 130 guests already went through the entire process, minted and claimed their NFT. They are now a part of the program.

10% actually transferred to their own wallet. And this statistic was as surprising as any other. Because remember we had the wrong demographic.

These were the wrong people. We were doing it the wrong way. But we learned that more people are savvy than we first realized.

I also want to talk about some really interesting data points in the sense that the second person to ever claim an NFT through our program, was a male who was approaching 80 years of age. We were very successful in our way of bridging this capability. Now let's talk about our learnings.

Talent. So as if it's not difficult enough for you to find the right people in your organization, I've now just given you a new domain that you have to go out and search for. The market has not yet matured to the point in which you can simply buy this talent.

Many Web3 developers don't have a lot of enterprise experience. We were fortunate enough to have some hand-raisers already within our own organization, existing software engineers and technical teams, who are willing to jump into this foray and wild ride with us. Combining them with Web3 developers, created the super team in which we were execute so well.

So if you haven't worked on your development program for team members yet, today would be a great time to start. And yes, you're still on the right talk, but it's true. Nobody actually cares about NFT.

We verified that. When you mention NFT, people don't hear what's possible, all they hear is scams. NFT as itself has a bit of a branding problem right now in the mainstream.

And to be fair, why do they care about the technology? If you were gonna invite someone to your website, do you invite them to your hypertext protocol? No, probably not.

What they want to understand is what can I do with it? How will this help me? What's the value that I get out of it?

So that leads me to the fact that the fundamentals of business have not changed. If you want them to go out of their way and you want them to separate money from their wallet, there has to be some value associated with it. In this case, if all we ever did was give them what you just saw, the value was already there.

It's intrinsic, we've already got that connection. The benefits and the opportunities that we talked about is potential use cases down the road, those are all cherry on the top for them. I'll also tell you that the ecosystem has some rough edges.

As we were demonstrating this capability to our head of engineering just days and maybe even a couple of weeks, prior to our launch, the claim process timed out. The web hook that we were using had issues. We ended up creating our own polar services, a complimentary capability in order to provide a clean and consistent experience.

And then navigating the industry noise. As I just mentioned, where was our discord server and how come we weren't generating the hype train? Well, the truth is, we cared about the utility.

We cared about high quality NFTs, not the quantity of NFTs. So at some point in our future, we may generate the most amount of NFTs that have ever existed on the planet, but that's not our first goal. Our first goal was to be focused on the customer.

And that brings me to my last point. If you're gonna be successful, everybody has to benefit not just the brand, but also the customer and potentially who they also interact with down the road. Which takes me to our forward vision.

Our vision is crystal clear. We're going to continue to explore new and meaningful ways that we can engage with our customers. We've got a great start with Motorsport today, but we wanna expand that with luxury, product launches, as well as the environmentally conscious.

How can we take what they're doing already today, driving their cars and building these experiences and capture those in really unique ways? Ways that could be utilized as incentives. We could also use those NFTs as a bridge to other engaging experiences tangential to what we already do today.

And finally, it's about extensible customer value. And I have to tell you that not enough people are talking about this. One of the biggest benefits about utilizing NFT and a public blockchain is its portability.

The network effect that we are very interested in creating, means when you have an NFT, it's not valuable just backed with our own brand, but it's also extensible to other brands. As an example, if you went to the performance driving school and you had an opportunity to utilize that NFT in a really interesting and unique way with gaming titles, so you could carry your physical real world experience into digital gaming, that would be really unique. Furthermore, if you have a consumer interest with off-roading, how can we connect you with outfitters that would love to provide you tents to mount on top of your truck?

We'll know this because we've captured those special moments, and now those special moments are opportunities to engage with other brands. So with all that said, we're very excited about what we've done so far. I thank you all for your time and I really look forward to seeing you out on the racetrack in 2023.

Thank you very much.