Making Blockchain Real for Business IBM Blockchain CMC Danmark August 24, 2017 Christian Lassen Nordic Leader, IBM Blockchain chlassen@dk.ibm.com +45 41 20 10 93 2017 2016 IBM Corporation Page 1
Blockchain in the press Page 2
Ledgers are key Ledger is THE system of record for a business. Business will have multiple ledgers for multiple business networks in which they participate. Transaction an asset transfer onto or off the ledger John gives a car to Anthony (simple) Contract conditions for transaction to occur If Anthony pays John money, then car passes from John to Anthony (simple) If car won't start, funds do not pass to John (as decided by third party arbitrator) (more complex) Page 3
Problem Party D s records Party A s records Bank records Party C s records Party B s records Auditor records Inefficient, expensive, vulnerable Page 4
Solution Party D s records Party A s records Bank records Shared, replicated, permissioned Party C s records Party B s records Auditor records Consensus, provenance, immutability, finality Page 5
Contents is Blockchain? is it relevant for our business? can IBM help us apply Blockchain? Page 6
Blockchain benefits Saves time Removes cost Reduces risk Increases trust Transaction time from days to near instantaneous Overheads and cost intermediaries Tampering, fraud & cyber crime Through shared processes and recordkeeping Page 7
Blockchain-based platform for seven big European banks
Global Financing: Dispute Resolution What? IBM Global Finance provides a $41bn channel financing per year. There are a number of disputes that take time to resolve and can lock up transactions costing time and money How? Blockchain provides visibility and provenance end-to-end across supply chain Benefits 1. Reduced dispute resolution time by 75% 2. Released working capital from $100m 3. Combine IGF and Supplier info to further expand benefits further 4. In production since Sept 2016
Cross Border Supply Chain What? Ninety percent of goods in global trade are carried by the ocean shipping industry each year. Costs associated with trade documentation processing and administration are estimated to be up to one-fifth the actual physical transportation costs. How? A new blockchain solution from IBM and Maersk will help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process. Benefits 1. Enhance transparency and the highly secure sharing of information among trading partners and customs officials. 2. Reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management and ultimately reduce waste. 3. Potential to save the industry billions of dollars. Page 10
Private Equity Administration What? Infrastructure supporting private equity has seen little innovation in recent years at a time when investors are seeking greater transparency, security and efficiency. How? Creation of an innovative private equity ecosystem designed to deliver increased efficiency, security and transparency. Benefits 1. Provides real-time insight and transparency to all parties, including the fund managers and investors. 2. Designed to allow regulatory access as required. 3. Support compliance of local regulations. 4. In production. Page 11
Food Traceability in China What? Traceability of food from farm to fork How? Blockchain holds history of food items processed through entire supply chain Benefits 1. Increased trust multiplied by each participant in food supply chain 2. Pinpoint source of compromised food, reducing the unnecessarily broad recall 3. Improved co-ordination in food supply chain Page 12
Legitimize Diamonds and Reduce Fraud What? Track diamonds across supply chain from mine to retail How? Shared ledger for storing digital certification with supporting material Benefits 1. Protect against the occurrence of fraud, theft, trafficking and black markets 2. Assist in the identification and reduction of synthetic stones being labelled as authentic 3. Increase speed of transparency for cross border transactions for insurance companies, banks and claimants Page 13
RDW selects IBM Blockchain for PoC to combat electric bicycle theft How Manufacturer Dealer Bike Lock Owner Insurer Blockchain records make, serial, insurance, and owner in an append-only ledger IoT sensors supplying geo-location and lock status data Tamperproof qualities create high confidence record and audit trail for bike owner and location Manufa cturer Bike Positio n Owner Lost/ stolen Insuranc e Claim Benefit Two-Click theft reporting removes all bureaucracy Owner Police Insurer Owner, police, insurer can quickly see state of lock and last known location, verify ownership, bike make and model. Provides very quick response times and a high value source of information for police, insurer and citizens. 14
Contents is Blockchain? is it relevant for our business? can IBM help us apply Blockchain? Page 15
Engagement model overview Let s Talk Blockchain Hands-on First Project Scale 1. Discuss Blockchain technology 2. Explore customer business model 3. Show Blockchain Application demo 1. Understand Blockchain concepts & elements 2. Hands on with Blockchain on Bluemix 3. Standard demo customization 1. Design Thinking workshop to define business challenge 2. Agile iterations incrementally build project functionality 3. Enterprise integration 1. Scale up pilot or Scale out to new projects 2. Business Process Re-engineering 3. Systems Integration Remote or face to face Remote or face to face Face to face Face to face Page 16
Thank you! May 22, 2017 Christian Lassen Nordic Leader, IBM Blockchain chlassen@dk.ibm.com +45 41 20 10 93
Back up Page 18
Common KYC Data What? View of customer identity to enable compliance with Know Your Customer (KYC) How? A complete view of customers' documents across a distributed network Benefits 1. Creation of a single but cross-businesses KYC platform to inform all of the banks processes. 2. Crédit Mutuel Arkéa could enable its customers to deliver proof of their identity to third-parties such as local utilities, retailers or regulated service providers. Page 19
Financial Audit and Compliance Ledger What? Reimagine current expensive audit process requiring integrating data often inconsistent and outdated - from various sources on the blockchain How? Shared replicated ledger serves as single point of truth Auditors are guaranteed that no one has tampered the data via immutability of blockchain Benefits 1. Clients, bank and regulators all see single version of truth 2. No data inconsistencies => clear audit trail 3. Enables efficient lower-cost Asset Quality Reviews (AQR) IBM Blockchain 20
Provenance use case Vehicle maintenance What How Provenance of each component part in complex system hard to track Manufacturer, production date, batch and even the manufacturing machine program Blockchain holds complete provenance details of each component part Accessible by each manufacturer in the production process, the aircraft owners, maintainers and government regulators Benefits 1. Trust increased, no authority "owns provenance 2. Improvement in system utilization 3. Recalls "specific" rather than cross fleet Page 21
Selected References FX Netting Settlements through digital currency Identity management Food Safety Trade Finance Channel Financing Low liquidity securities trading and settlement Reward points management Contract Management Page 22
Linux Foundation s Hyperledger Project Open Ledger Project announced December 17, 2015 with 17 founders, now over 100 members QUICK FACTS Hyperledger Project rebrand in February 2016 Chairman Blythe Masters/DAH Collaborative effort to advance Blockchain technology by identifying and addressing important features for a crossindustry open standard for distributed ledgers that can transform the way business transactions are conducted globally Open source, open standards, open governance Enable adoption of shared ledger technology at a pace and depth not achievable by any one company or industry Page 23 Executive Director Technical Chair Contribution Sprint to one codebase with unified thinking Brian Behlendorf Chris Ferris/IBM 44,000 lines of code in February 2016 Staged releases www.hyperledger.org
Premier Hyperledger Project Members General QUICK FACTS Chairman Blythe Masters/DAH Executive Director Technical Chair Contribution Sprint to one codebase with unified thinking Brian Behlendorf Chris Ferris/IBM 44,000 lines of code in February 2016 Staged releases Updated Jan 2017 Associate Page 24
What makes a good blockchain use case? Identifying a good blockchain use-case is not always easy! However there should always be: 1. A business problem to be solved That cannot be solved with more mature technologies 2. An identifiable business network With Participants, Assets and Transactions 3. A need for trust Consensus, Immutability, Finality or Provenance Page 25
What makes a good first blockchain use case? 1. A limited scope, but still solves a real business problem Minimum Viable Product in a few weeks of effort 1. A smaller business network Usually without requiring regulators and consortia 2. Allows for scaling with more participants and scenarios Consider shadow chains to mitigate risks Start small, succeed and grow fast! Page 26
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Blockchain for Business Our Point of View Community + Code Linux Hyperledger Project Cloud IBM Blockchain Open Source Code: Blockchain for business; Consensus Provenance Immutability Finality Open Governance 100 member cross industry board Blockchain managed service on IBM Cloud and z Systems; Identity Consensus System Integration Hardware-assist for Performance & Security IBM Blockchain on Bluemix Clients Blockchain Solutions Blockchain Garage Making Blockchain real for business Blockchain Garage; New York London Singapore Tokyo Blockchain Services Practice Page 28
Summary Blockchain is a shared, replicated, permissioned ledger technology can open up business networks by taking out cost, improving efficiencies and increase accessibility addresses an exciting and topical set of business challenges, which cross every industry IBM supports the Linux Foundation Hyperledger open standard, open source, open governance Blockchain has an easy to access, proven and incremental engagement model giving customers the confidence to get started NOW Page 29
Further Information Use case Links HSBC, Bank of America, IDA: http://www.coindesk.com/hsbc-bank-america-blockchain-supply-chain/ ABN AMRO: https://www.abnamro.com/en/newsroom/blogs/arjan-van-os/2016/walking-the-walk-exploring-the-power-ofblockchain.html Crédit Mutuel Arkéa: http://www.coindesk.com/ibm-completes-blockchain-trial-french-bank-credit-mutuel/ JPX: http://www.ibm.com/press/us/en/pressrelease/49088.wss Kouvola Innovation: http://www.ibm.com/press/us/en/pressrelease/49029.wss London Stock Exchange: http://www.ibtimes.co.uk/linux-foundation-blockchain-consortium-digital-asset-ibm-credits-london-stockexchange-board-1533798 Mizuho: http://www.coindesk.com/mizuho-digital-currency-powered-blockchain-settlement/ IBM Global Finance: http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/ Page 30