DRAFT - Marist-June 13th 2017-How Blockchain is ... - Marist ECC

IBM Blockchain Summit

How Blockchain is transforming industries by reimagining business interactions Marist College June 13th 2017 Ramesh Gopinath — VP, Blockchain Solutions [email protected] @rameshg


Blockchain will fundamentally change business processes

With Blockchain

Traditional

Auditor

Auditor’s records

Party A’s records

Clearing House

All parties have same replica of the ledger

Bank’s records

… Inefficient, expensive, vulnerable

2

Party B

Party A

Party B’s records

Digitally signed, encrypted transactions & ledger

Bank

… Consensus, provenance, immutability, finality

#IBMBlockchain

© 2017 IBM Corporation


Blockchain for business …

Append-only distributed system of record shared across business network

Ensuring appropriate visibility; transactions are secure, authenticated & verifiable

Distributed Shared ledger

Smart contract

Privacy

Consensus

Business terms embedded in transaction database & executed with transactions

All parties agree to network verified transaction

… Broader participation, lower cost, increased efficiency

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#IBMBlockchain


IBM Blockchain

IBM Blockchain Point of View: open, trusted and ready for business networks

Blockchain ecosystem: Ecosystem of startups, independent software vendors (ISVs), service integrators (SIs), industry consortia, and developers working predominately in open-source to support the adoption of blockchain-related technology through the creation of solutions, platforms and fabrics.

Blockchain Ecosystem

Blockchain Solutions Build

Operate

Invest

Blockchain as a Service

Blockchain Fabric

4

Blockchain solutions: Independent or integrated solutions designed to address specific industry and technology challenges necessary for blockchain adoption

Blockchain platform IaaS: Integrated platforms to support the development of enterprise blockchain networks on top of underlying blockchain fabrics including hosting environments and integration with blockchain solutions Blockchain fabric: Underlying blockchain infrastructure defining core blockchain components including the ledger, consensus, membership, and immutability

IBM Confidential



Linux Foundation Hyperledger Project participation expands almost 5X since launch in December 2015 Premier

General

Updated Jan 2017

Associate

5

#IBMBlockchain


IBM Blockchain

Hyperledger Fabric is built to run production blockchain networks Production Workloads

Confidentiality Partitioned execution

Transaction history

Optimize network performance by separating chaincode execution and transaction ordering

Searchable transaction history for efficient auditing and dispute resolution

Permissioned membership

Network tools

Operate a trusted blockchain network with known participants and regulatory oversight

Channels

Modularity

Enable multi-party transactions with the privacy and confidentiality needed for regulated industries

6

IBM provides tools for monitoring, logging, and for compliance reasons backup/restore

IBM Confidential

Select preferences for number of peers, consensus, identity management, and encryption to dynamically grow a business network


IBM Blockchain

The Opportunities are Large

Approximately 1 in 6 enterprises expect to have blockchain solutions in production in 2017

Banks spend $270B on regulatory compliance per year. 15% of banks expect to have production blockchains in 2017.1 Sharing data across organizations could save hospitals $93B over 5 years in the U.S. alone.2 $200B estimated cost of counterfeit drugs sold globally.3

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Financial

Government

Healthcare

Supply Chain

IBM Confidential

Estimates of 1.5B people worldwide who have no legal identity or proof of birth.4

$600B in fraud in global trade annually.5 1/3 of all food produced globally is wasted.6


IBM Blockchain

Client Examples CLS

FX Netting

Crédit Mutuel Arkéa

Diamond provenance BAML HSBC

Credit Default Swaps

Identity management IBM Global Financing

Trade Finance

Channel Financing

Food Safety

Health Data Exchange

Japanese Stock Exchange

Low liquidity securities trading & settlement 8

IBM Confidential


Global Trade Digitization Supply Chain Actors

An open, extensible platform for sharing shipping events, messages, and documents across all the actors and systems in the supply chain ecosystem. Important principles • Detailed information remains under the control of the owner • Neutral • Fault Tolerant • Everyone can work in their own systems

Carrier s Transportation management.

Customs Dashboard Shippers

Supply Chain Visibility systems

GTD Platform Logistic actors internal systems

Provider of interface: value-add partners

Terminals Event publishers & subscribers

Port community systems

Trade Associations

Supply Chain Management

Authorities

Key Benefits

Potential benefits for supply chain actors as a result of adoption Authorities

Forwarders

•

Improved efficiency and reduced admin cost (reduced communication and compliance time)

•

Gain market share by improved service offering to customers—e.g., supply chain visibility

•

Trade boost (tax revenue, political perception)

•

Reduced costs of existing services to customers

Shipping lines

Terminals

•

Access to direct customers, increased share of wallet, improved service offering

•

Increased market share in competitive ports

•

Reduced administrative costs

•

Cost savings from reduced waiting time, admin costs, compliance costs

•

Increased available capacity from improved efficiency and fewer inspections

Importers/exporters Ability to differentiate by responding faster to shifts in market supply/ demand

•

Increased market share through improved service

•

Improved tracking of consignments

•

•

Lower variance of transportation time, reducing warehousing cost

Reduced waiting time due to admin delay, increasing available capacity

•

Inland transportation

Increasing transparency and timeliness of data enables new offerings and changes the parameters of competitive differentiation for each actor-type

GTD Demo

GTD Demo Link (IBM Intranet)


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Global Financing: Dispute Resolution What? • IBM Global Finance provides a $41bn channel financing per year. There are number of disputes that take time to resolve and can lock up transactions costing time and money

How? • Blockchain holds history of food items processed through entire 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 In production since Sept 2016

4.


IGF Demo IGF Demo Link (IBM Intranet)


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Food Traceability 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 Improved co-ordination in food supply chain

3.


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IBM Blockchain

IBM Blockchain in Financial Services Sector LOW-LIQUIDITY SECURITY TRADING

PAYMENT NETTING (FX)

Reduce trade settlement time by automating the end-to-end multi-party interactions for low liquidity trading

Provide efficiency and resiliency across global FX markets in a standardized manner

LOYALTY POINTS

CONTRACT MANAGEMENT

Build a peer-to-peer reward point trading system between banks, credit card users, gift shops, for seamless exchange of loyalty reward points

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Accelerate the Design, Management and Execution of Contracts among business partners on the Blockchain

IBM Confidential


IBM Blockchain

IBM Blockchain in International Trade and Supply-chain SUPPLY-CHAIN VISIBILITY

DOCUMENT WORKFLOWS Automate current inefficient, manual and error-prone workflows in documentary trade finance

Provide single view for purchase order life-cycle across the supply-chain as the truth

TRADE/SUPPLY-CHAIN FINANCE Improve the efficiency of (our) commercial financing business by sharing data in a secure and transparent manner

SUPPLY-CHAIN PROVENANCE Provide provenance across the supplychain cutting through distributicomplex on and processing ecosystems

GOODS SUPPLIER

CUSTOMER

MONEY

MONEY FINANCIER

Manufacturers Suppliers Tr ack Other s Tr ack Back

Products Faulty Par t

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IBM Confidential


IBM Blockchain

IBM Blockchain in Healthcare CLINICAL TRIALS CONSENT MGMT.

HEALTH DATA EXCHANGE Data Exchange across Health eco-system based on patient centric control and consent

Patient consent management, data capture and exchange based on consent; enable compliance & auditability

CLAIMS AND FRAUD MANAGEMENT

PHARMA SUPPLY-CHAIN PROVENANCE

Full audit trail of electronic medical records, pharmacy, claims data, etc. facilited by data exchange (above)

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Provide a complete endto-end audit trail in the pharma supply chain by serialization IBM Confidential


Architecture of Hyperledger Fabric v1 membership No SPoF No SPoT

peer application

2: Execute CC

SDK Keys

Endorser

1: Submit Proposal 3: Return Endorsed Response

4: Submit Tx

o-service 5: Order TXs in a batch according to consensus

6: Deliver batch

Chaincode

Committer 7: Validate & Commit Tx

Ledger Event

Source : https://jira.hyperledger.org/browse/FAB-37

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Sample transaction: Step 1/7 – Propose transaction Application proposes transaction

P3

E0 A

Client Application

S D K

A

B

E1 A

O

B

Ap

E2 A

P4

O

D

O O

Endorsement policy: • “E0, E1 and E2 must sign” • (P3, P4 are not part of the policy) Client application submits a transaction proposal for Smart Contract A. It must target the required peers {E0, E1, E2}

Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric

Ordering Node Smart Contract (Chaincode)

Endorsement Policy

19

Sample transaction: Step 2/7 – Execute proposal Endorsers Execute Proposals

P3

E0 A

Client Application

S D K

A

B

E1 A

P4

O

B

D

O

E0, E1 & E2 will each execute the proposed transaction. None of these executions will update the ledger Each execution will capture the set of Read and Written data, called RW sets, which will now flow in the fabric. Transactions can be signed & encrypted

Ap

E2 A

O

O

Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric


Endorsement Policy

20

Sample transaction: Step 3/7 – Proposal Response Application receives responses

P3

E0 A

Client Application

S D K

A

B

E1 A

O

B

Ap

E2 A

P4

O

D

O O

RW sets are asynchronously returned to application The RW sets are signed by each endorser, and also includes each record version number (This information will be checked much later in the consensus process) Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric


Endorsement Policy

21

Sample transaction: Step 4/7 – Order Transaction

P3

E0 A

Client Application

S D K

A

B

E1 A

O

B

Ap

E2 A

P4

O

D

O O

Application submits responses for ordering Application submits responses as a transaction to be ordered. Ordering happens across the fabric in parallel with transactions submitted by other applications

Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric


(other applications)

Endorsement Policy

22

Sample transaction: Step 5/7 – Deliver Transaction Orderer delivers to all committing peers

P3

E0 A

Client Application

S D K

A

B

*

E1 A

B

Ap

E2 A

P4

O O

D

O O

Ordering service collects transactions into proposed blocks for distribution to committing peers. Peers can deliver to other peers in a hierarchy (not shown) Different ordering algorithms available: • SOLO (Single node, development) • Kafka (Crash fault tolerance) • SBFT (Byzantine fault tolerance) Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric


Endorsement Policy

23

Sample transaction: Step 6/7 – Validate Transaction Committing peers validate transactions

P3

E0 A

* Client Application

B

*

E1

S D K

A

*

Ap

*

A

A

O

B

E2

P4

O

D

*

O O

Every committing peer validates against the endorsement policy. Also check RW sets are still valid for current world state Validated transactions are applied to the world state and retained on the ledger Invalid transactions are also retained on the ledger but do not update world state Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric


Endorsement Policy

24

Sample transaction: Step 7/7 – Notify Transaction Committing peers notify applications !

E0 A

Client Application

S D K

!

!

O

B

Ap

E2 A

! A

B

E1 A

!

P3

!

O

P4

D

O O

Applications can register to be notified when transactions succeed or fail, and when blocks are added to the ledger Applications will be notified by each peer to which they are connected

Key: Endorser

Ledger

Committing Peer

Application

B

Ordering-Service

Hyperledger Fabric

Ordering Node Smart Contract (Chain code)

Endorsement Policy

25

Ordering Service The ordering service packages transactions into blocks to be delivered to peers. Communication with the service is via channels. Different configuration options for the ordering service include: – SOLO

O

O

O

O

Ordering-Service

• Single node for development – Kafka : Crash fault tolerant consensus • 3 nodes minimum • Odd number of nodes recommended – SBFT : Byzantine fault tolerant consensus • 4 nodes minimum 26

Channels

Separate channels isolate transactions on different ledgers – Chaincode is installed on peers that need to access the worldstate

E0 E1

O O

O O

Ordering-Service

– Chaincode is instantiated on specific channels for specific peers – Ledgers exist in the scope of a channel • Ledgers can be shared across an entire network of peers • Ledgers can be included only on a specific set of participants

– Peers can participate in multiple channels – Concurrent execution for performance and scalability 27

Single Channel Endorsement

Client Application

S D K

E0

E2 A

B

O

O

O

O

A

B

Ap

E1 A

B

Ordering-Service

E3 A

• Similar to v0.6 PBFT model • All peers connect to the same system channel (blue). • All peers have the same chaincode and maintain the same ledger • Endorsement by peers E0, E1, E2 and E3 Key: Endorser

Ledger

Committing Peer

Application

B

Hyperledger Fabric Ordering Node Smart Contract (Chaincode)

Endorsement Policy

28

Multi Channel Endorsement

• Peers E0 and E3 connect to the red channel for chaincodes Y and Z Client Application

S D K

E0

E2 Z

O

Y

O

Ap Client Application

S D K

B

Ap

O

E1 A

A

• Peers E1 and E2 connect to the blue channel for chaincodes A and B

B

O

Ordering-Service

E3 Y

Key: Endorser

Ledger

Committing Peer

Application

Z

Hyperledger Fabric Ordering Node Smart Contract (Chaincode)

Endorsement Policy

29

IBM Blockchain

IBM Blockchain Offerings supporting Hyperledger Fabric Hyperledger fabric

IBM managed on IBM cloud Starter

Self-managed

High Security Business Network

Start writing chaincode in seconds

High performance and reserved capacity

Integrated dashboard, logs and tools

Best in Industry security, isolation and spec support

Community samples, tutorials, and quickstarts

Proven Audit environment for compliance and forensics

Docker

*.*

any Docker environment

IBM offers technical support for x86, Power and System z

IBM Blockchain for Developers

30

IBM Blockchain for Production

IBM Confidential

Support for Hyperledger Fabric https://hub.docker.com/r/ibmblockchain/fabric/


Introducing: IBM Blockchain on Bluemix High Security Business Network Business network running on dedicated high security compute IBM

Key Capabilities:

© 2016 2017 IBM Corporation

Dedicated Compute Four connected peers and a CA in an isolated partition on dedicated compute

Secure Service Container Protection from tampering with all code running in a secure virtual appliance

SecureKey and HSM On board HSM with tamper resistant cards providing up to FIPS 140-2 Level 4 security

Performance Optimized Crypto acceleration, high speed network all running on the worlds fastest Linux system

31

IBM Blockchain

Fabric Composer: Accelerating time to value – 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

Business Application

Fabric Composer

Blockchain (Hyperledger Fabric)

– 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 part of Linux Foundation Hyperledger – Try a demo now! - http://fabric-composer.mybluemix.net/ 32


Page

32

IBM Confidential



Research Opportunities in Blockchain § IBM Research has been providing leadership

Leadership in cryptography for blockchain

Advanced consensus algorithms

AI + blockchain

IoT devices designed around blockchain

§ There is large opportunity in the Blockchain Solutions research area – Innovative architectures for blockchain based enterprise system – Incentives and economic models for creating and growing blockchain solution networks

33

#IBMBlockchain
