INTRODUCTION BLOCKCHAIN TECHNOLOGIES Nyenrode Breukelen, 28 March 2017 M. Oskar van Deventer
BLOCKCHAIN RAISES MANY QUESTIONS What is this "blockchain" stuff that everybody is talking about? Concrete examples of use, financial, voting, other Who guarantees the correct operation and security of the system? Legal aspects, risks, uncontrollability, opposition by "middle man" What does blockchain mean for my business? What are blockchain applications for my business? How does it make my business better, faster, cheaper,? How can I use blockchain against my competitors? Where do I start with my blockchain use case? What are my first steps? Which parties or suppliers should I contact??? 2 Introduction Blockchain Technologies 28 March 2017
CONTENTS A practical definition of Blockchain Technology: a blockchain is like a computer " " Ecosystem: a blockchain is like a party Technologies and technology instances " " 3 Introduction Blockchain Technologies 28 March 2017
A PRACTICAL DEFINITION OF BLOCKCHAIN * A blockchain is a shared ledger that everyone trusts to be accurate forever * David Siegel, https://medium.com/startup-grind/what-is-this-blockchain-thing-a5d2abb99297 4 Towards viable blockchain ecosystems 20 March 2017
CATEGORIES OF BLOCKCHAIN USE * Store value Currency, ownership, tokens Exchange value Trade currency, ownership, tokens Store permanent records Provenance, registry, identity Execute programs Add business logic to the above * David Siegel, https://medium.com/startup-grind/what-is-this-blockchain-thing-a5d2abb99297 5 Towards viable blockchain ecosystems 20 March 2017
A BLOCKCHAIN IS LIKE A COMPUTER Word-processing application Email g application Browser application Diamond-trade application Supply-chain application Identity application Real-world computer Blockchain computer Applications Operating system Hardware Real-world computer Real-world computer Real-world computer Consensus protocol achieves consensus about the state of a blockchain computer 6 Introduction Blockchain Technologies 28 March 2017
Collection of modifications of the shared truth *. * e.g. a shared transaction ledger or a shared virtual-computer state blockchain Block header Cryptographically linked in a chain-like fashion (using hash functions) Prev: H( ) Transactions: H( ) Prev: H( ) Transactions: H( ) Prev: H( ) Transactions: H( ) 7 Introduction Blockchain Technologies Block content (transactions) 28 March 2017
PRIVATE/PUBLIC, PERMISSIONED/UNPERMISIONED https://www.gov.uk/govern ment/uploads/system/uploa ds/attachment_data/file/492 972/gs-16-1-distributedledger-technology.pdf 8 Introduction Blockchain Technologies 28 March 2017
BLOCKCHAIN FEATURES & CHALLENGES A blockchain computer is Features Consensus Challenges Speed Highly reliable Validity Privacy But also Slow Memory limited Expensive Uniqueness Immutability Authentication Security Sustainable Cost 9 Introduction Blockchain Technologies 28 March 2017
A BLOCKCHAIN IS LIKE A PARTY Somebody has to take the initiative Invite friends to help you with the organisation Make decisions together Who arranges what? How are things paid? Outsource food or location? Whom to invite? Open, closed? How do we decide on things? Execute the plan and start the party Invitations, publicity, changes more work 10 Introduction Blockchain Technologies 28 March 2017
EXAMPLE USE CASE: PAY PER CONTENT ITEM More and more people create content items independently Professional, semi-professional, amateur, Video, blog, column, article, photo, app, Much money and power goes to the "middle man" Broadcasters, VoD services, magazines, newspapers, websites, "Could we have a marketplace where independents could sell their content directly to consumers?" "How do we prevent that our new marketplace turns into an expensive and powerful middle man" 11 Introduction Blockchain Technologies 28 March 2017
OK. LET'S START THE PARTY PLANNING Who shall I involve in planning my "pay-per-content-item" party? What will our system look like to users, mock-ups, proof-of-concept? How do we decide on the functionality of the system? Governance? Who invests in what aspect of the system? Business models? Make, buy, open source? What will be our legal status? (Note: a cartel on a blockchain is still a cartel) On what (blockchain?) infrastructure will we run our system? (Our own? A third-party one?) PoC pilot alpha beta operational more work E.g. Techruption Blockchain Acceleration 12 Introduction Blockchain Technologies 28 March 2017
TECHNOLOGIES AND TECHNOLOGY INSTANCES Transactional Data-oriented Smart contracts Swiss Army Knife Value transfer on the blockchain Database on the blockchain Computing on the blockchain Assemble your own blockchain Bitcoin Ripple BigchainDB Multichain Ethereum Eris/Monax Hyperledger various BaaS *Thanks to Karim Grini of Accenture for providing this classification 13 Introduction Blockchain Technologies 28 March 2017
BITCOIN Cryptocurrency for value transfer & value storage Permissionless: proof-of-work, "mining" Single main instance, several clones and variants (altcoins) Business models Validators ("miners") get awarded mining & transaction fees Bitcoin Foundation went bankrupt, developers now sponsored by MIT Exchanges, merchants and consumers each have their own business models Various business models for wallet software & services Governance Open source; two or three persons have keys to bitcoin core software Reddit discussions, anarchistic civil wars, censorship, DDoS, personal threats Voting about Bitcoin Improvement Proposals via mined blocks 14 Introduction Blockchain Technologies 28 March 2017
ETHEREUM Emulating a world computer ("skynet") Permissionless: proof-of-work, "mining", ambition to switch to proof-of-state Single main instance Business models Similar to bitcoin Governance Open source, centred around Vitalik Buterin Ethereum Foundation, executive director, steering board, advisory board Lots of "hard forking" (=non-backward-compatible patching) 15 Introduction Blockchain Technologies 28 March 2017
RIPPLE Value transfer of real-world assets Permissioned, single instance Validators are named parties, validatorship is announced via press release Trusted gateways (e.g. banks) issue euros, dollars, gold, silver and bitcoins on the Ripple chain Business models Developer Ripple Labs sells its "shares" in the form of XRP cryptocurrency Gateways and exchanges charge fees System integrators to integrate Ripple in bank back-ends Unclear how validators get rewarded Governance Central company Ripple Labs Voting about new features and fee changes using Ripple consensus mechanism 16 Introduction Blockchain Technologies 28 March 2017
BIGCHAINDB Database for create-read-update-delete of entries Permissioned, no single central instance Voting-based consensus algorithm Business models No cryptocurrency Like any distributed database: each instance would have its own owners and business model Governance Open source, led and decided by BigChainDB company Each instance would have its own owners and business model 17 Introduction Blockchain Technologies 28 March 2017
HYPERLEDGER FABRIC Modular set-up for DIY blockchains, "blockchains for business" No single central instance Permissioned or permissionless, decided per instance Voting-based consensus algorithm Business models Different per instance System integration and customer projects Governance Formal Hyperledger consortium, initiated by IBM Mix of standards body (requirements & architecture working groups) and open source community 18 Introduction Blockchain Technologies 28 March 2017
IN CONCLUSION Metaphors Blockchain is like a computer Blockchain is like a party Different blockchain technologies Public private Permissioned permissionless Value-transfer database computer Swiss army knife Single instance many instances Governance and business models Of a blockchain technology almost always open source Of a blockchain infrastructure instance varies: company, group, mining, fees, integration, Of a blockchain application varies: per sector, per application, 19 Introduction Blockchain Technologies 28 March 2017
LET US HAVE A GREAT BLOCKCHAIN PARTY! 20 Introduction Blockchain Technologies 28 March 2017