Business Networks benefit from connectivity
– Connected customers, suppliers, banks, partners
– Cross geography & regulatory boundary
• Wealth is generated by the flow of goods & services across business network
• Markets are central to this process: – Public (fruit market, car auction), or
– Private (supply chain financing, bonds)
Transferring Assets, building Value
• Anything that is capable of being owned or
controlled to produce value, is an asset
• Two fundamental types of asset – Tangible, e.g. a house
– Intangible e.g. a mortgage
• Intangible assets subdivide – Financial, e.g. bond – Intellectual e.g. patents
– Digital e.g. music
• Cash is also an asset
– Has property of anonymity
Ledgers are Important • Ledger is THE system of record for a business
– Connected customers, suppliers, banks, partners
– Cross geography & regulatory boundary
• Wealth is generated by the flow of goods & services across business network
• Markets are central to this process: – Public (fruit market, car auction), or
– Private (supply chain financing, bonds)
Transferring Assets, building Value
• Anything that is capable of being owned or
controlled to produce value, is an asset
• Two fundamental types of asset – Tangible, e.g. a house
– Intangible e.g. a mortgage
• Intangible assets subdivide – Financial, e.g. bond – Intellectual e.g. patents
– Digital e.g. music
• Cash is also an asset
– Has property of anonymity
Ledgers are Important • Ledger is THE system of record for a business
– records asset transfer between participants.
• Business will have multiple ledgers for multiple business networks in which they participate.
• Records all transactions across business network • Shared between participants
• Participants have own copy through replication
• Permissioned, so participants see only appropriate transactions
• THE shared system of record
•
Participants, Transactions & Contracts • Participants - members of a business
network
– Customer, Supplier, Government, Regulator – Usually resides in an organization
– Has specific identities and roles
What?
• Transaction - an asset transfer
– John gives a car to Anthony (simple)
• Business will have multiple ledgers for multiple business networks in which they participate.
• Records all transactions across business network • Shared between participants
• Participants have own copy through replication
• Permissioned, so participants see only appropriate transactions
• THE shared system of record
•
Participants, Transactions & Contracts • Participants - members of a business
network
– Customer, Supplier, Government, Regulator – Usually resides in an organization
– Has specific identities and roles
What?
• Transaction - an asset transfer
– 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) What is Blockchain ?
A shared ledger technology allowing any participant in the business network to see THE system of record (ledger)
Blockchain and Bitcoin . . .
1. is unregulated, censorship-resistant shadow currency
2. Blockchain ensures “cash like” coin passing • unique,
• immutable,
• final
3. Bitcoin is the first Blockchain application
• Blockchain is not
4. Digital currencies different from cyptocurrency
Smart Contract
• Business rules implied by the contract . .
• . . embedded in the Blockchain & • executed with the transaction
• Verifiable, signed
– If Anthony pays John money, then car passes from John to
Anthony (simple) What is Blockchain ?
A shared ledger technology allowing any participant in the business network to see THE system of record (ledger)
Blockchain and Bitcoin . . .
1. is unregulated, censorship-resistant shadow currency
2. Blockchain ensures “cash like” coin passing • unique,
• immutable,
• final
3. Bitcoin is the first Blockchain application
• Blockchain is not
4. Digital currencies different from cyptocurrency
Smart Contract
• Business rules implied by the contract . .
• . . embedded in the Blockchain & • executed with the transaction
• Verifiable, signed
• Encoded in programming language
• Example:
– Defines contractual conditions under which corporate Bond transfer occurs
Security :-
••
••
Ledger is shared, but participants require privacy Participants need:
– Transactions to be private
– Identity not linked to a transaction
Transactions need to be authenticated Cryptography central to these processes
Validation
• Transaction verification & commitment
• When participants are anonymous – Commitment is expensive
– Bitcoin cryptographic mining provides verification for anonymous participants but at significant compute cost (proof of work)
• Example:
– Defines contractual conditions under which corporate Bond transfer occurs
Security :-••
••
Ledger is shared, but participants require privacy Participants need:
– Transactions to be private
– Identity not linked to a transaction
Transactions need to be authenticated Cryptography central to these processes
Validation
• Transaction verification & commitment
• When participants are anonymous – Commitment is expensive
– Bitcoin cryptographic mining provides verification for anonymous participants but at significant compute cost (proof of work)
• When participants are known & trusted – Commitment possible
at low cost
• Multiple alternatives
– proof of stake where fraudulent transactions cost
validators (e.g. transaction bond)
– multi-signature (e.g. 3 out of 5 participants agree)
Patterns for Customer Adoption
(1) INTERNAL LEDGER
• Ledger for internal reporting, audit and compliance,
• Consistent view of key business assets, • Provenance, immutability & finality more
important than consensus.
• Access to auditor and regulator
(2) CONSORTIUM SHARED LEDGER
• Created by a small set of participants
• share reference data between themselves and consumers.
• Consistent real-time view of key information © 2016 IBM Corporation (3) INFORMATION HUB
• A ledger set up in a single organization
• Sharing of information between participants (e.g. voting, dividend notification)
• Multiple alternatives
– proof of stake where fraudulent transactions cost
validators (e.g. transaction bond)
– multi-signature (e.g. 3 out of 5 participants agree)
Patterns for Customer Adoption
(1) INTERNAL LEDGER
• Ledger for internal reporting, audit and compliance,
• Consistent view of key business assets, • Provenance, immutability & finality more
important than consensus.
• Access to auditor and regulator
(2) CONSORTIUM SHARED LEDGER
• Created by a small set of participants
• share reference data between themselves and consumers.
• Consistent real-time view of key information © 2016 IBM Corporation (3) INFORMATION HUB
• A ledger set up in a single organization
• Sharing of information between participants (e.g. voting, dividend notification)
• Assets have information, not financial value,
• Require provenance, immutability & finality.
(4) HIGH VALUE MARKET
• Ledger for the transfer of high financial value assets • between many participants in a market.
• Requires all enterprise features of Blockchain 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 bank and counter-parties to have the same validated record of transaction and fulfillment
Benefits
• Increased trust
• Increase speed of execution (less than 1 day) • Vastly reduced cost
What?
(4) HIGH VALUE MARKET
• Ledger for the transfer of high financial value assets • between many participants in a market.
• Requires all enterprise features of Blockchain 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 bank and counter-parties to have the same validated record of transaction and fulfillment
Benefits
• Increased trust
• Increase speed of execution (less than 1 day) • Vastly reduced cost
What?
• Bank holding a corporate debt would like to
– pay vendors quickly for transactions validated by the client – allow the corporate client to see the payment is made
– provide government with oversight of the process
How?
• Blockchain provides a common ledger for recording the
corporate debt / bond,
• available to bank, corporate client, vendors & government. Benefits
• Speeds up vendor payments bigger net discounts
• Eliminates risk and accelerates decision making
• Owning bank can spread the cost across each market. What?
• Value of connected smart devices limited by ability to interact with business systems
How?
• Blockchain to manage automated interactions with the
external world
• ordering and paying for food to arranging for its own software upgrades and tracking its warranty.
Benefits
– pay vendors quickly for transactions validated by the client – allow the corporate client to see the payment is made
– provide government with oversight of the process
How?
• Blockchain provides a common ledger for recording the
corporate debt / bond,
• available to bank, corporate client, vendors & government. Benefits
• Speeds up vendor payments bigger net discounts
• Eliminates risk and accelerates decision making
• Owning bank can spread the cost across each market. What?
• Value of connected smart devices limited by ability to interact with business systems
How?
• Blockchain to manage automated interactions with the
external world
• ordering and paying for food to arranging for its own software upgrades and tracking its warranty.
Benefits
-
. 1. business value from connected technology
-
. 2. efficiencies in network and supply chains.
-
. 3. status transparent to all network members
What?
• Consumers demanding transparency on where and how their products are made.
• EU requires more information about corporate supply chains, with penalties for non-compliance.
How?
• Blockchain enable safe digital transfer of property across the end to end supply chain.
Benefits
• Consumers demanding transparency on where and how their products are made.
• EU requires more information about corporate supply chains, with penalties for non-compliance.
How?
• Blockchain enable safe digital transfer of property across the end to end supply chain.
Benefits
-
. 1. verifiable, preventing any party from altering
-
. 2. efficiencies through greater transparency
-
. 3. consumers can make informed purchases
-
. 4. governments get reliable information
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
What?
• Game player wants to trade “gold” earned in current game for
the currency or assets of another game
• Use experience with the current game to put me ahead and not have to start cold in the new game
How?
• Blockchain holds tokens of value shared across on line gaming platform
Benefits
• Transparency to game player, game owners & infrastructure
providers
• Efficiencies through elimination of intermediaries • Increased trust for all involved parties.
Other Potential Use Cases include . .
• Securities
– Post-trade settlement – Derivative contracts
– Securities issuance
– Collateral management
• Trade Finance
– Bill of Lading
– Cross-currency payment
• Syndicated Loans
• Intra-bank settlement
© 2016 IBM Corporation
• Retail Banking
– Cross border remittances
– Mortgage verification
– Mortgage contracts (smart contract)
• Public Records
– Real estate records
– Vehicle registrations
– Business license and ownership records
Enterprise Integration What?
• Customer realizes full benefit of Blockchain solution by scale up, scale out and enterprise integration
How?
• Full range of consulting, system integration & project skills
• Extension of Agile from Proof of Concept
• Integration into customers existing systems and business processes • Metrication to prove Return on Investment
Commercial?
• For fee
. 1. Blockchain is a shared, replicated ledger technology
– Collateral management
• Trade Finance
– Bill of Lading
– Cross-currency payment
• Syndicated Loans
• Intra-bank settlement
© 2016 IBM Corporation
• Retail Banking
– Cross border remittances
– Mortgage verification
– Mortgage contracts (smart contract)
• Public Records
– Real estate records
– Vehicle registrations
– Business license and ownership records
Enterprise Integration What?
• Customer realizes full benefit of Blockchain solution by scale up, scale out and enterprise integration
How?
• Full range of consulting, system integration & project skills
• Extension of Agile from Proof of Concept
• Integration into customers existing systems and business processes • Metrication to prove Return on Investment
Commercial?
• For fee
. 1. Blockchain is a shared, replicated ledger technology
-
-
. 3. Blockchain can open up business networks by taking out cost,
improving efficiencies and increase accessibility
-
. 4. Blockchain addresses an exciting and topical set of business
challenges, which cross every industry
-
. 5. Linux Foundation Hyper ledger project developing open source,
open standards shared ledger technology
Github
