Vision of Satoshi Nakamoto, creator of Bitcoin
“With e-currency based on cryptographic proof, without the need to trust a third party middleman,
money can be secure and transaction effortless“
Nakamoto’s Whitepaperbitcoin.org/bitcoin.pdf
5© 2017 IBM Corporation
Contents
is Blockchain?
is it relevant
for our business?
can IBM help
us apply Blockchain?
5
6© 2017 IBM Corporation
What are Assets?
Two fundamental
types of asset
Intangible assets
subdivide
Cash is also
an asset
– Tangible, e.g. a house
– Intangible, e.g. a mortgage
– Financial, e.g. bond
– Intellectual, e.g. patents
– Digital, e.g. music
– Has property of anonymity
Anything that is capable of being owned or controlled to produce value, is an asset
7© 2017 IBM Corporation
… inefficient, expensive, vulnerable
Insurer records
Auditor records
Regulator records
Participant A’s records
Bank records
Participant B’s records
The Problem …
8© 2017 IBM Corporation … with consensus, provenance, immutability and finality
Blockchain A shared replicated, permissioned ledger…
Key Advantages of Blockchain:
Decentralized Storage of Transactions
Elimination of intermediaries
Transparency
Immutability of Transactions
Simplicity of Use
Easy Verification of Transactions
Improved Trust and Security
9© 2017 IBM Corporation
– 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)
Terms
10© 2017 IBM Corporation
Requirements of blockchain for business
Append-only
distributed system of
record shared across
business network
Business terms
embedded in
transaction database
& executed with
transactions
Transactions are
endorsed by
relevant
participants
Ensuring appropriate
visibility; transactions are
secure, authenticated
& verifiable Privacy
Shared
ledgerSmart
contract
Trust
11© 2017 IBM Corporation
• Shared between participants
• Participants have own copy through replication
• Permissioned, so participants see only appropriate transactions
• THE shared system of record
Records all transactions across business network
Shared ledger
12© 2017 IBM Corporation
Smart contract
• Verifiable, signed
• Encoded in programming language
• Example:
– Defines contractual conditions under which corporate Bond transfer occurs
Business rules implied by the contract … embedded in the Blockchain
and executed with the transaction
13© 2017 IBM Corporation
Privacy
• Participants need:
– Appropriate confidentiality between subsets of participants
– Identity not linked to a transaction
• Transactions need to be authenticated
• Cryptography central to these processes
The ledger is shared, but participants require privacy
14© 2017 IBM Corporation
Trust
• Participants endorse transactions
– Business network decides who will endorse transactions
– Endorsed transactions are added to the ledger with appropriate confidentiality
• Assets have a verifiable audit trail
– Transactions cannot be modified, inserted or deleted
• Achieved through consensus, provenance, immutability and finality
The ledger is a trusted source of information
Security: Public vs. private blockchains
• Some use-cases require anonymity, others require privacy
– Some may require a mixture of the two, depending on the characteristics of each participant
• Most business use-cases require private, permissioned blockchains
– Network members know who they’re dealing with (required for KYC, AML etc.)
– Transactions are (usually) confidential between the participants concerned
– Membership is controlled
15
• For example, Bitcoin
• Transactions are viewable by
anyone
• Participant identity is more
difficult to control
Public blockchains Private “permissioned” blockchains
• For example, Hyperledger
Fabric
• Network members are known
but transactions are secret
16© 2017 IBM Corporation
Contents
is Blockchain?
is it relevant
for our business?
can IBM help
us apply Blockchain?
16
17© 2017 IBM Corporation
Blockchain benefits
Savestime
Removescost
Reducesrisk
Increasestrust
Transaction time
from days to near
instantaneous
Overheads and
cost intermediaries
Tampering, fraud
& cyber crime
Through shared
processes and
recordkeeping
18© 2017 IBM Corporation
Typical Blockchain adoption patterns
COMPLIANCE
LEDGER
CONSORTIUM
SHARED LEDGER
ASSET
EXCHANGE
HIGH VALUE
MARKET
• Created by a small set of participants• Share key reference data• Consolidated, consistent real-time view
• Sharing of assets (voting, dividend notification)• Assets are information, not financial• Provenance & finality are key
• Transfer of high value financial assets• Between many participants in a market• Regulatory timeframes
• Real-time view of compliance, audit & risk data• Provenance, immutability & finality are key• Transparent access to auditor & regulator
19© 2017 IBM Corporation
Financial Public Sector Retail Insurance Manufacturing
Trade Finance
Cross currency payments
Mortgages
Asset Registration
Citizen Identity
Medical records
Medicine supply chain
Supply chain
Loyalty programs
Information sharing (supplier –retailer)
Claims processing
Risk provenance
Asset usage history
Claims file
Supply chain
Product parts
Maintenance tracking
Potential use casesFurther examples by (selected) industry
20© 2017 IBM Corporation
Low liquidity securities
trading and settlement
Cross Border
Supply Chain
Contract
Management
FX Netting Settlements through
digital currency
Identity management
Food Safety Private Equity Channel Financing
Selected References
© 2017 IBM Corporation 21
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.
Cross Border Supply Chain
© 2017 IBM Corporation
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
© 2017 IBM Corporation 23Page
Contents
is Blockchain?
is it relevant
for our business?
can IBM help
us apply Blockchain?
23
24© 2017 IBM Corporation
How IBM can help
Technology
Hosting and Support
Making blockchain real
for clients
High Security
Business NetworkIBM Bluemix
EngagementGarages
Hyperledger
Fabric
Hyperledger
Composer
www.hyperledger.org
25© 2017 IBM Corporation
Hyperledger Members
AssociateSource: https://www.hyperledger.org/about/membersUpdated April 2017
Premier
General
© 2016 IBM Corporation 26
Why Hyperledger Fabric?
Open Governance (Linux Foundation)
Anyone can join or contribute
Built from the ground up for enterprise
With a maturity model to help companies move to production
Performance
Supports up to 1000 tps*
Confidentiality and privacy
Built-in channels for isolation and membership services for signing and
encryption. Supports IBM High Security Business Network.
Modularity and flexibility
Choice of consensus algorithms and programming languages
27© 2017 IBM Corporation
Hyperledger Composer: Accelerating time to value
Business Application
Hyperledger Composer
Blockchain (Hyperledger Fabric)
– A suite of high level application abstractions for business networks
– Emphasis on business-centric vocabulary for quick solution creation
– Reduce risk, and increase understanding and flexibility
– Features
– Model your business networks, test and expose via APIs
– Applications invoke APIs transactions to interact with business network
– Integrate existing systems of record using loopback/REST
– Fully open and one of eight Hyperledger projects
– Try a demo now! - http://composer-playground.mybluemix.net/
28© 2017 IBM Corporation
Future Network of Networks
29© 2017 IBM Corporation
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 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 Digital Face to face Face to face
Let’s
TalkBlockchain
Hands-onFirst
ProjectScale
From the NewsEvolution or Disruption
© 2017 IBM Corporation 33
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
© 2017 IBM Corporation 34
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