LEADING THE WAY GLOBAL SPECIALIST RISK ADVISER & BROKER JLT SOUTH AFRICA www.za.jlt.com #SAAFF2018
Demystifying Blockchain & its Impact on the Supply Chain Louise Wiggett August 2018
Blockchain The Start : 1991 The first work on a cryptographically secured chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta They wanted to implement a system where documents' timestamps could not be tampered with or backdated In 1992, Bayer, Haber and Stornetta incorporated Merkle Trees to the design, which improved its efficiency by allowing several documents to be collected into one block 3
Blockchain Progress : 2008 The first public blockchain was conceptualized by a person (or group of people) known as Satoshi Nakamoto in 2008 It was implemented the following year by Nakamoto as a core component of the cryptocurrency bitcoin, serving as the public ledger for all transactions on the network However Blockchain is not Bitcoin two concepts that are often confused 4
Blockchain Progress : 2016 The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as a single word, blockchain, by 2016 The term blockchain 2.0 refers to new applications of the distributed blockchain database, first emerging in 2014 IBM opened a blockchain innovation research center in Singapore in July 2016 A working group for the World Economic Forum met in November 2016 to discuss the development of governance models related to blockchain 5
Blockchain Explosion : 2018 IBM offers a cloud blockchain service based on the open source Hyperledger Fabric project On May 8, 2018 Facebook confirmed that it is opening a new blockchain group which will be headed by David Marcus who previously was in charge of Messenger. According to The Verge, Facebook is planning to launch its own cryptocurrency for facilitating payments on the platform And much more innovation and exponential growth 6
Blockchain Summary A blockchain is a decentralized, distributed digital ledger that is used to record transactions across many computers The record cannot be altered retroactively without the alteration of all subsequent blocks and The consensus of the network This allows the participants to verify and audit transactions inexpensively 7
BYZANTINE GENERAL S PROBLEM Several generals camped outside city Simultaneous attack ensures victory The generals are dispersed, making centralized command difficult The generals must send messages between the factions to relay the attack time However, some generals are traitors and will not obey the command and worse, will relay the wrong attack time to the other generals The generals do not know who is loyal and who is a traitor and there is no way to find out. How do the factions ensure a coordinated attack to sack the city https://people.eecs.berkeley.edu/~luca/cs174/byzantine.pdf https://medium.com/@debrajg/how-the-byzantine-general-sacked-the-castle-a-look-into-blockchain-370fe637502c 8
20 BILLION DEVICES 9
T H E M A G I C O F C R Y P T O G R A P H Y T H E W O W F A C T O R Trust Gap 2000s 10
PUBLIC KEY CRYPTOGRAPHY Trust Gap 2000s 11
Blockchain Simple solution to problem using cryptograhy HASH HASH HASH 12 12
It s All About Money, Trade and Supply Chain The first long-distance trade occurred between Mesopotamia and indus valley in Pakistan ~3000 b.c 13
How do we Agree on Balancing the Books? 14
Traditional Ledgers 15
In the Digital World There are many copies, that may contain different versions of truth 16
In the Digital World THE CHALLENGE: Which one is the real one?! 17
Now everyone can publish their own version 18
Blockchain Transactions: Trust and Transparency HASH HASH HASH Coins are chains of digital signatures Transfers ownership by signing a hash of previous transaction with public key of next owner and adding to end of chain A payee can verify the signatures to verify the chain of ownership 19 19
International Trade Overview Global Trade estimated $ 1,8 trillion Potential savings for improvement in the effectiveness in the supply chain estimates are between 10 % and 40 % Size if world trading ecosystem continues to grow Complexities increase as growth accelerates New programs and ongoing developments Customs, Trade, Supply Chain Technology 20
International Trade Overview More than $ 4 trillion goods shipped each year 80 % of goods consumers use daily are carried by ocean shipping industry By reducing barriers within the international global supply chain global trade could be boosted by 15 % and this will result in Boosting economy Create new jobs 21
Case for a Better Way - TODAY Inconsistent information across organizational boundaries creating Blind Spots Complex, cumbersome and costly peer to peer messaging Manual, time consuming, paper based processes and procedures Risk assessments often lacks sufficient information Administrative cost high and increasing 22
Case for a Better Way - TOMORROW Fast secure access to end to end information across the supply chain, the truth Verifiable authentic information across all parties Trust across the organizational boundaries Better risk management Lower administrative cost and overall lowering of costs 23
What Blockchain can do for the Supply Chain 24
Blockchain in the Maritime Industry https://www.cbinsights.com/research/maritime-logistics-shipping-blockchain-global-trade/ 25
https://www.ey.com/gl/en/industries/financial-services/insurance/ey-blockchain-marine 26
Other Insurance Applications (built on the Corda Blockchain) https://www.cbinsights.com/research/maritime-logistics-shipping-blockchain-global-trade/ 27
Thank you! 28
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