Making Blockchain Real for Business Explained V3.7, 27 October 16 Page 1
Contents is Blockchain? Enterprise Design considerations? can IBM help us apply Blockchain? Page 2
Business networks, wealth & markets Business Networks benefit from connectivity Participants are customers, suppliers, banks, partners Cross geography & regulatory boundary Wealth is generated by the flow of goods & services across business network in transactions and contracts Markets are central to this process: Public (fruit market, car auction), or Private (supply chain financing, bonds) Page 3
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 4
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 5
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 6
Blockchain for business Append-only distributed system of record shared across business network Shared ledger Smart contract Business terms embedded in transaction database & executed with transactions Ensuring appropriate visibility; transactions are secure, authenticated & verifiable Privacy Consensus All parties agree to network verified transaction Broader participation, lower cost, increased efficiency Page 7
Contents is Blockchain? Enterprise Design considerations? can IBM help us apply Blockchain? Page 8
Blockchain vendors Offer specialization Each vendor Offers specialization Variant trust systems Consensus, Mining, Proof of Work, etc. Purpose Build Application Purpose Build Application Purpose Build Application Lock into single trust system Purpose built infrastructure components for a specialized use case Ripple Network Ethereum Network Blockchain Variant Network Design being field tested in form of POCs Crates fragmented blockchain models for enterprise Ripple Trust System Ethereum Trust System Consensus Variant Page 9 Blockchain Fabric Blockchain Fabric Blockchain Fabric
How can IBM Blockchain be different? How do we differentiate? Open design Providing flexibility with pluggable and modular trust system Open for specialized blockchains, e.g., Ripple Trust intermediary a trust system provisioning layer Enterprise blockchain platform concept Separate business domain with technology that supports it Page 10 IBM Blockchain Platform App A Chain A App B Chain B Interledger Interledger App C Chain C App D Chain D pbft BFT PoW/PoS RAFT Custom Block / ledger Crypto Encryption Mgmt Application Interface Business Domain Trust Intermediary Blockchain Trust Systems Blockchain Fabric / Infrastructure Hardware Considerations
What would enterprise chain infrastructure look like? Integrated enterprise will need more than one specialized use case Driving synergies between blockchains Invisible blockchain infrastructure Inter- and Intra-enterprise connections Concept introduction Interledger Intraledger Cross the trust systems for transactions Fractal visibility of ledger data Enterprise visibility control systems Partner Enterprise / DAO Interledger / ILP Identity Enterprise Chain Infrastructure Payments Conditional Contracts Crowdfunding Mortgage Initiation Conditional Contracts Securitization Trade Finance Page 11
Blockchain Transaction processing vehicle Enterprise integration considerations Integration with incumbent SoR Compliance and regulatory requirements Data formats ISO20022, EDI 820 etc. Blockchain to enable transaction processing, and preserve the enterprise SoR systems App A Chain A App B Chain B Interledger Interledger App C Chain C App D Chain D Chain as Transaction Processing System Enterprise Chain Connectors Enterprise Transaction System / SoR Compliance BI / Data / Analytics Design intent pbft BFT PoW/PoS RAFT Custom Path of least disruption Accelerate enterprise adoption Block / ledger Crypto Encryption Mgmt Page 12
Vision Interprise Synergy Enterprise chain infrastructure Design that enables new business models Invisible enterprise chain infrastructure will provide foundation Use of connectors, APIs to enable incumbent systems chain aware Conditional contracts between chains Interprise Synergy New business (e.g., P2P lending, crowdfunding) solely on blockchain Page 13 Enterprise Systems Partner Enterprise / DAO Interledger / ILP Identity Enterprise Chain Infrastructure Enterprise Systems Payments Crowdfunding Conditional Contracts BI / Data Mortgage Initiation Conditional Contracts Securitization Trade Finance Enterprise Systems Enterprise Systems Enterprise Systems BI / Data BI / Data BI / Data
Blockchain security Layered approach Trust System Layer Consensus pbft, BFT, PoS, PoW, Ghost, Paxos, RAFT, Custom Ledger, SSL, Crypto Modules, Sub Ledger, Encryption, ECC, ECDSA, ECDH, ECIES, etc. Blockchain Middleware Layer Physical IT Infrastructure Layer HSM, EAL, Crypto Accelerator, Private Cloud, Isolated Network, EAL5, etc. Page 14
Path to enterprise adoption Use Case Identification Business Blueprint Technology Blueprint Enterprise Integration First Project Enterprise Impact and Industry Impact Meaningful issues should revolve around significant costs to enterprise and industry Existing business process is distilled down to blockchainbased model Reinventing the business based on a trust system Technology to align with the business imperatives Technology design decisions and deployment options Integration with down stream transaction systems reflecting on critical business systems Page 15
7 design principles of sustainable blockchain business networks Providing network participants control of their business Provision for an extensible business network Flexibility in membership Permissioned but protected network Protecting competitive data Open access and collaborative global network Collective innovation Scalability Transaction processing and data encryption processing Security New security challenges of shared business network Coexisting with existing systems of record and transaction systems Page 16
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 17
Contents is Blockchain? Enterprise Design considerations? can IBM help us apply Blockchain? Page 18
Blockchain for business Our point of view Community + Code Linux Hyperledger Project Cloud IBM Blockchain Clients Blockchain Solutions Blockchain Garage 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 Making Blockchain real for business Blockchain Garage; New York London Singapore Tokyo Blockchain Services Practice Page 19
Blockchain NOW Hyperledger fabric on Docker Hub Fastest development of blockchain solutions Certified Hyperledger fabric instances Supported by IBM available cross platform Dedicated compute power isolated partition High security business blockchain on Bluemix Bluemix blockchain service Secure key management (FIPS 140-2 Level 4) Tamper resistant service container Performance optimized (Operating System & Privacy Services) Fast blockchain network on Bluemix also now China Samples for deployment, customization & usage Tool support for development and deployment Supporting serious blockchain deployment! Page 20
Linux Foundation s Hyperledger Project Open Ledger Project announced December 17, 2015 with 17 founders, now over 80 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 21 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
2016 2017 IBM IBM Corporation Pag Page22 22 As of 07 September 2016
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 Free of charge Free of charge For fee For fee Page 23
IBM & Hyperledger Selected references HSBC, Bank of America, IDA ABN AMRO Crédit Mutuel Arkéa Japan Exchange Group (JPX) Mizuho IBM Global Finance Everledger Bank of Tokyo Mitsubishi UFJ CLS UBS Trade Finance - Letter of Credit Financial Restructuring & Recovery Consortium Shared Ledger Post Trade Digital Currency Shadow Chain for Dispute Resolution Diamond provenance Business Partner Contracts Bilateral netting service Digital trade finance Page 24
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 25
Thank you!
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 27