Blockchain will fundamentally change the way we do businessViewed simultaneously as Opportunity & Threat
Every CEO, from every client, wants to know about Blockchain
IBM Blockchain is underway and open for business in 2016
IBM is an early mover and investing ahead of the curve.
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Introducing Blockchain
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Blockchain is a design pattern made famous by its use in bitcoin. But it’s uses go far far beyond.
Blockchain can reimaginethe world's most fundamental business interactions and open the door to invent new styles of digital interactions.
We are adopting Blockchainto a very broad rangeof business applications
Total Blockchain opportunity
Total Bitcoin opportunity
Blockchain is a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining business processes. Think of it as an operating system for interactions. It has the potential to vastly reduce the cost and complexity of getting things done.
Contents
What
Why
How
. . are Blockchain technologies ?
. . is it relevant for our business?
. . can IBM help us apply Blockchain?
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What is the context of Blockchain?
Transferring Assets, building ValueBusiness Networks, Markets and Wealth
Ledgers [1] are important Participants, Transactions and Contracts
What?
[1] The principal book (or computer file) forrecording and totaling financial transactions byaccount type, with debits and credits in separatecolumns and a beginning monetary balance andending monetary balance for each account.
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What’s the difference with Blockchain?
All parties have same replica of the ledger
Inefficient, expensive, vulnerable Consensus, provenance, immutability, finality
Without Blockchain
What?
With Blockchain
Block 1575
Transaction: Hash: 76f0ec56ce04423
Block Hash: 0000057ec2fda71
What is a Blockchain ?
Block 1574
Transaction: Hash: 8d0df86ffc15cd62
Transaction: Hash: feb359ad27c907d
Previous Block Hash:000000d68b2f0a3b
Previous Block Hash00000057ec2fda71
Block Hash:0000087ea2ffe94
Block 1576
Previous Block Hash0000087ea2ffe94
Block Hash:0000044bf2efe32
Made up of a series of blocks added in chronological order
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What?
Key Concepts - What’s Blockchain for Business?
Smart Contract
Privacy
Shared Ledger
ConsensusEnsuring appropriate
visibility; transactions are secure, authenticated &
verifiable
Business terms embedded in transaction database & executed with transactions
All parties agree to network verified transaction
Append-only distributed system of record shared across business network
Broader participation, lower cost, increased efficiency
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What?
Not for all today . . .
Blockchain is NOT
Suited to high performance (millisecond) transactions
For just one participant (no business network)
A replicated database replacement
A messaging solution
A transaction processing replacement
Suited for low value, high volume transactions
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Why?
Financial Services Payments
Securities registration & processing
Lending
Property Real estate
Intellectual property
Cars
Governmental services Voting
Registrations (passports, driving license)
Permits
Identification & Security Party/device registration
Authentication
Access control
Trade Document exchange
Asset exchange
Escrow services
Trade agreements
Internet of Things (IoT) Autonomous devices, such as
Cars
Drones
Robots
Potential of Blockchain extends across a wide range of application areas
Why?
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Consensus Use Case – Shared Routing Codes
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What?
Competitors/collaborators in a business network need to share
reference data, e.g. bank routing codes
Currently each member maintains their own codes, and forwards
changes to a central authority for collection and distribution
How?
Each participant maintains their own codes within
a blockchain network
Blockchain creates single view of entire dataset
Benefits
1. Consolidated, consistent dataset reduces errors
2. Near-real-time of reference data
3. Naturally supports code editing and routing code transfers
between participants
Why?
Provenance Use Case – Vehicle Maintenance
What?
Provenance of each component part in complex system hard to track
Manufacturer, production date, batch and even the manufacturing machine program
How?
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
Why?
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Immutability Use Case – Financial LedgerWhat?
Financial data in a large organization dispersed throughout many divisions and geographies
Audit and Compliance needs indelible record of all key transactions over reporting period
How?
Blockchain collects transaction records from
diverse set of financial systems
Append-only and tamperproof qualities create high
confidence financial audit trail
Use privacy features to ensure authorized access
Benefits
1. Lowers cost of audit and regulatory compliance
2. Provides “seek and find” access to auditors and regulators
3. Changes nature of compliance from passive to active
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Why?
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Finality Use Case – Letter of Credit
What?
Bank handling letters of credit (LOC) wants to offer them
to a wider range of clients including startups
Currently constrained by costs & the time to execute
How?
Blockchain provides common ledger for letters of credit
Allows all counter-parties to have the same validated
record of transaction and fulfillment
Benefits
1. Increase speed of execution (less than 1 day)
2. Vastly reduced cost
3. Reduced risk, e.g. currency fluctuations
4. Value added services; e.g. incremental payment
Why?
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Regulator Industry Group Market Maker
– An organization who enforces the rules of play
–Regulators are keen to support Blockchain based innovations
–Concern is systemic risk – new technology, distributed data, security
–Often funded by members of a business network
–Provide technical advice on industry trends
–Encourages best practice by making recommendations to members
– In financial markets, takes buy-side and sell-side to provide liquidity
–More generally, the organization who innovates
- Creates a new good or service, and business process (likely)
- Creates a new business process for an existing good or service
Key players for Blockchain adoption
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How?
– Linux Foundation project announced December 17, 2015 with 17 founders, now 40 members
– The Hyperledger Project is a collaborative effort to advance Blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledgers that can transform the way business transactions are conducted globally
– Open source and open standards-based
Enable adoption of shared ledger technology at a pace and depth not achievable by any one
company or industry
QUICK FACTS
Chairman: Blythe Masters/DAH
Executive
Director:Brian Behlendorf
Tech
Committee:Chris Ferris/IBM
Contribution:44,000 lines of code
in February 2016
Accept:
2Q IBM Open Code
accepted into
incubation
Sprint to one
codebase with
unified thinking:
Target 3Q release
www.Hyperledger.org22
Linux Foundation’s Hyperledger Project How?
IBM Blockchain – more than the Linux Hyperledger Project
Smart contract execution
environment,
ledger data structures,
Membership services,
modular validation framework,
modular identity services,
network peer services
Application development facilities
specialized extensions,
specialized validation algorithms
integration gateway,
operations dashboard
Custom built applications for specific use cases
App Layer
Value Added
Systems
Scope: Linux Hyper-ledger project
IBM Block-chain Plat-form
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How?
Capabilities
Complete DevOps Lifecycle via Bluemix
Smart contract language and API standards
Enterprise-grade identity, security and privacy
Seamless hybrid integration with legacy systems
Market leading performance and scalability
IBM Blockchain Platform –Powering Always-On Business Networks
IBM
DevOps
Service
IBM
Identity
Service
IBM
Consensus
Service
IBM
Smart Contract
Service
Public | Dedicated | Local : Bluemix | Softlayer | Z Cloud
IBM Blockchain PlatformReady for IBM & Partner Solutions
Linux Hyperledger Fabric
IBM Cloud
Hyb
rid
How?
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http://www.ibm.com/blockchain/
Blockchain for Business – IBM Strategy
Open Source Code: Blockchain built from the ground up for business;
Permission | Privacy Confidential | Auditable
Open Governance – 40 member board.
Blockchain value-added manged service on SoftLayer
and System Z:
Identity | Consensus | Audit | System Integration | Hardware-assist for
Performance & Security.
Blockchain Solutions for Financial Services; Trade Finance | Capital Markets
Blockchain GarageNY | London | Singapore | Japan | Böblingen
Blockchain GBS Practice
IBM BlockchainLinux
Hyperledger ProjectBlockchain SolutionsBlockchain Garage
Community + Code Cloud Clients
How?
http://www.ibm.com/blockchain/27
IBM Engagement Model overview
1. Discuss Blockchain
technology
2. Explore customer
business model
3. Show Blockchain
Application demo
1. Understand Blockchain
concepts & elements
2. Hands on with
Blockchain technology
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
1 to 2 hour speech
Remote or face to face
1 day classroom
Face to face
2 to 4 weeks in Garage
Face to face
t.b.d.
Free of charge Free of charge For fee For fee
Let’s Talk! TechnologyHands-on
First Project Scale
How?
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Blockchain Garage in Böblingen
Demos / Use Cases and Prototypes making Blockchain real for business - made by IBM
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IBM Global Finance –Blockchain in Financing
Car Lease Demo
Trading Commercial Paper Demo
(click on the picture to see the video / demo)
Mortgage Demo
Trading Finance based on Blockchain @IBM z Systems
Watson IoT with Blockchain
Financial Services publications on Blockchain
Fast forward - Rethinking enterprises, ecosystems and economies with blockchainshttp://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=GBE03757USEN#
Blockchain – the road to mass adoption, on Standard Chartered's BeyondBorders site https://www.sc.com/BeyondBorders/blockchain-mass-adoption/
IBM/finextra Banking on Blockchain: Charting the Progress of Distributed Ledger Technology in Financial
Services https://www.finextra.com/surveys/survey.aspx?surveyguid=32e19ab4-2d9c-4862-8416-d3be94161c6d
International Monetary Fund:
Virtual Currencies and Beyond: Initial Considerationshttps://www.imf.org/external/pubs/ft/sdn/2016/sdn1603.pdf
UK Office of Science:
Distributed ledger technology: beyond block chain https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf
DTCC: “Embracing Disruption – Tapping the Potential of Distributed Ledgers to Improve the Post-Trade
Landscape,” http://www.dtcc.com/news/2016/january/25/new-dtcc-white-paper-calls-for-leveraging-distributed-ledger-technology
Oliver Wyman/Euroclear: Blockchain in Capital Markets – The Prize and The Journey https://www.euroclear.com/dam/Brochures/BlockchainInCapitalMarkets-ThePrizeAndTheJourney.pdf
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EURO BANKING ASSOCIATION: Cryptotechnologies as major IT innovation and technical change agent.
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EBA on real-time payments:Ongoing developments in
cryptotechnologies merit
close attention in the context
of the current European drive
towards achieving “instant
payments” and in relation to
inter-PSP payment systems
in general
https://www.abe-eba.eu/downloads/knowledge-and-research/EBA_20150511_EBA_Cryptotechnologies_a_major_IT_innovation_v1_0.pdf
ECB: Distributed ledger technologies in securities post-trading Whitepaper: https://www.ecb.europa.eu/pub/pdf/scpops/ecbop172.en.pdf
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Summary
1. Blockchain is a shared, replicated, permissioned ledger technology
2. Blockchain can open up business networks by taking out cost,
improving efficiencies and increase accessibility
3. Blockchain addresses an exciting and topical set of business
challenges, which cross every industry
4. IBM supports the Linux Foundation Hyperledger open standard,
open source, open governance Blockchain
5. IBM has an easy to access, proven and incremental engagement
model giving customers the confidence to get started NOW
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Thank You
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IBM Deutschland GmbHWilhelm-Fay-Strasse 30-34 65936 Frankfurt
Mobile: +49 170 2280 465Phone: +49 7034 643 0631
Mail: [email protected]
Jürgen LangSenior IT Architekt
GeschäftsentwicklungBanken, Sparkassenund Finanzinstitute