The Slides from the Blockchain meetup.

1. Blockchain Overview
Rethinking enterprises, ecosystems and economies with blockchains
Farhan Shahzad | Blockchain & Integration Solution Architect - farhans@ae.ibm.com

2. What is Blockchain?
A distributed ledger technology that establishes trust, accountability and
transparency to streamline and innovate processes across any business network
Business Transactions can be Integrated in Real
Time
Business Activities Become Transparent and
Auditable
Eliminate Intermediaries and scale easily
Opens new business models
Across Business
Network
Instead of messaging-based communications, the new paradigm is state-based: Information that
was once obscure now becomes transparent

3. ©2016 IBM Corporation3
Every participant keeps
their own ledger updated
with their transactions
Every participant keeps
their own ledger updated
with their transactions
An incident in one
organization can propagate
across the network
Every participant keeps
their own ledger updated
with their transactions
An incident in one
organization can propagate
across the network
Each organization in the
network has complex silos
that require reconciliation
Every participant keeps
their own ledger updated
with their transactions
An incident in one
organization can propagate
across the network
Each organization in the
network has complex silos
that require reconciliation
©2016 IBM Corporation
Parties in a business
network access
different information,
which is also prone
to tampering
Source: IBM Institute for Business Value analysis

4. “Some 5 billion persons and 20 trillion dollars
have been shut out of the economy due to
disputed assets.”
–Hernando De Soto, First Annual Block Chain Summit, May 2015
©2016 IBM Corporation4

5. ©2016 IBM Corporation5
1 | Distributed and sustainable
The ledger is shared and replicated among participants.
Blockchains are not owned by any one organization.
Five key attributes enable building powerful business
applications on a shared ledger
… Consensus, provenance, immutability, finality

6. ©2016 IBM Corporation6
2 | Secure and indelible
Cryptography ensures that network participants see only the parts of the
ledger relevant to them, and that all transactions are authenticated and
verifiable. If a transaction was in error, a new transaction must be entered.
Five key attributes enable building powerful business
applications on a shared ledger
… Consensus, provenance, immutability, finality

7. ©2016 IBM Corporation7
3 | Transparent and auditable
Due to participants having access to the same records,
transactions are verified in real time
Five key attributes enable building powerful business
applications on a shared ledger
… Consensus, provenance, immutability, finality

8. ©2016 IBM Corporation8
4 | Consensus-based and transactional
Participants in the network must confirm that a transaction is valid.
Achieved using consensus algorithms.
Five key attributes enable building powerful business
applications on a shared ledger
… Consensus, provenance, immutability, finality

9. ©2016 IBM Corporation9
Because business rules and smart contracts can be built into the platform at any time,
blockchains can be extended beyond their original purpose, across an end-to-end
business process and a wide range of activities in a business network.
5 | Flexible and orchestrated
Five key attributes enable building powerful business
applications on a shared ledger
… Consensus, provenance, immutability, finality

10. Reduces
Time
Business transactions
can be conducted in
near real-time
Saves
Cost
Business networks can
eliminate intermediaries
and scale easily
Mitigates
Risk
Business transactions
become verifiable and
auditable
©2016 IBM Corporation 17 August 201710
Opens New
Business
Models
Business networks
reshaped and profit
pools are redefined
As industries grow blockchain use, fundamentals change
and new business models enter the stage
Source: IBM Institute for Business Value analysis

11. Why Blockchain

12. ©2016 IBM Corporation12
Banks
Ports
Logistic
companies
Insurance
Regulators
Certifier
s
Securities
Settlement
Compliance
Trade
Importer Exporter
Trade Finance – A Classical Blockchain use case

13. ©2016 IBM Corporation13
BanksTrading Logistics Ports
Insurance CertifierRegulator
Invoice Letter of Credit Electronic Bill of Lading
Manifesto
Prior Info of
Type of Goods
Details of Manifesto
Details of Imported
Goods
Real Time Risk Info Direct entry of information
Letter of Credit Implications and Participants

14. ©2016 IBM Corporation14
Full transformation value kicks in when a variety of
industries and activities come together
Supply chains are prime examples of
blockchain’s potential for transformation
that spans industries
The value derived from something as
fundamental as a blockchain-enabled bill
of lading ripples out beyond the port of
entry to span many industries

15. ©2016 IBM Corporation1515
What?
– Improve the efficiency of our commercial
financing business by sharing data in a
secure and transparent manner on
Blockchain
How?
– Blockchain enables Comprehensive View
of key operational data
Benefits
– Fewer disputes & faster settlement
– Reduction in dispute resolution time: 40+
days to under 10 days
– Improved capital efficiency; freer flow of
capital
IGF world-wide statistics
4000+
Partners and
Suppliers
2.9M
Invoices / year
$44B
Financed /
Year
$100M
Capital tied
up at any
time
25,00
0
Disputes /
year
$31K
Avg.
disputed
invoice
value
44 days
Avg. time to
resolve a
dispute
orders
Partners
Supplie
rs
products and
services
IG
F
IBM Global Financing Client Dispute Resolutions

16. ©2016 IBM Corporation16
How do we qualify a use case is fit for Blockchain
Does the use case require multiple party
interaction each having a defined role?
Do the participants need a shared database
to store and exchange digital asset of value
to the network?
Yes
Do the participants need to establish trust about
the digital assets created in the shared
database?
Yes
Don’t use
Blockchain
No
No
Disintermediation needed
Does the parties needs to agree & write rules
and collaboration interaction for the assets?
Does the trust requires an Intermediary
party?
Yes
What is the qualification to be participants of the
network?
Smart Contracts needed
Intermediary is mandatory
Public
PermissionlessAnyone can join. All participants
validate the work
Private
PermissionedCriteria for qualification exist. Some
or most of these participants
validates the work
No

17. Enterprise Blockchain Summary
§ 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
§ 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
• Business rules implied by the contract
…embedded in the Blockchain &
• Executed with the transaction
• Verifiable, signed and encoded in
programming language
• Example:
– Defines contractual conditions under
which corporate Bond transfer occurs
Shared
Ledger
Permissions
for
Privacy
Consensus Smart
Contracts
§ The process by which transactions are verified
§ Anonymous Participants: Expensive (e.g.,
Bitcoin cryptographic mining - proof of work)
§ Known & trusted participants : Possible at low
cost
§ Multiple alternatives
q proof of stake where fraudulent transactions
cost validators
q multi-signature (e.g. 3 out of 5 participants
agree)
q PBFT (cross checked secure message exchange)
§ Industrial Blockchain needs “pluggable”
consensus

18. Building Blockchain Solutions for
Enterprises

19. By design Blockchain Solutions requires Distributed
Architecture

20. ©2016 IBM Corporation20
Blockchain Application Reference Architecture
EDGE SERVICES
Enterprise User
Directory
Enterprise
Data
Transformation &
Connectivity
Enterprise NetworkPublic Network
Web Front
End
Mobile
Business Partner
Applications
Blokchain
Presentation Layer
Web App
Backend
Mobile Gateway
API Gateway
Shared Ledger Smart Contracts Protocol Runtime Events
Blockchain Protocol Layer
Enterprise
Applications
Protocol SDK
Blockchain Application Layer
Data Repository Business Services Identity & User Access
Operational Services Layer
Monitoring &
Log Management
Blockchain Operations
Console
Security Monitoring &
Intelligence
Blockchain Deployment (Cloud/ Enterprise Network)

21. ©2016 IBM Corporation21
Components in a blockchain solution
Permissioning
Smart Contract
Systems
Management
Events
Peer
Network
Wallet
Ledger
A ledger is a channel’s chain and current state data which is maintained by each peer
on the channel.
f(abc); Software running on a ledger, to encode assets and the transaction instructions
(business logic) for modifying the assets.
…
E T
A broader term overarching the entire transactional flow, which serves to generate an
agreement on the order and to confirm the correctness of the set of transactions
constituting a block.
Permissioning Services authenticates, authorizes, and manages identities on a
permissioned Blockchain network.
Creates notifications of significant operations on the blockchain (e.g. a new block), as
well as notifications related to smart contracts.
Provides the ability to create, change and monitor blockchain components
Securely manages a user’s security credentials
i
Systems
Integration
Responsible for integrating Blockchain bi-directionally with external systems. Not part
of blockchain, but used with it.
!

22. ©2016 IBM Corporation22
A ledger consists of two data structures
§ Blockchain
! A linked list of blocks
! Each block describes a set of transactions
(e.g. the inputs to a smart contract invocation)
! Immutable – blocks cannot be tampered
§ World State
§ An ordinary database (e.g. key/value store)
§ Stores the combined outputs of all transactions
§ Not usually immutable
World state
block
txn txn txn
Blockchain

23. ©2016 IBM Corporation23
Block Details (simplified)
- A blockchain is made up of a series of blocks with new blocks always added to the end
- Each block contains zero or more transactions and some additional metadata
- Blocks achieve immutability by including the result of a hash function of the previous block
- The first block is known as the “genesis” block
Block 16
Previous Block Hash:
57ec2fda71
Block Hash: 87ea2ffe94Block Hash: 57ec2fda71
Block 15
Previous Block Hash:
d68b2f0a3b
Block 17
Previous Block Hash:
87ea2ffe94
Block Hash: 44bf2efe32
Transaction
…
…
Transaction
Transaction
Transaction Transaction
Transaction

24. ©2016 IBM Corporation24
Working with the ledger
World state
Transaction input - sent from application
invoke(myContract, setOwner,
myCar, Matt)
…
myCar.vin = 1234
myCar.owner = Matt
myCar.make = Audi
…
World state: new contents
Smart contract implementation
setOwner(Car, newOwner) {
set Car.owner = newOwner
}
txn txn txnmyCar.vin =
1234, ...
“Invoke, myContract,
setOwner, myCar, Matt”
Application
f(abc);
Smart
Contract

25. ©2016 IBM Corporation25
How applications interact with the ledger
Blockchain
developer
Smart
Contract
submits
develops
develops
recorded
accesses
event
emits
emits
D
Ledger
‘get’, ‘put’, ‘delete’
Client
Application
SDK
!
!
World state
block
txn txn txn
Blockchain

26. ©2016 IBM Corporation26
How events are used in Blockchain
• In computing, an event is an occurrence that can trigger handlers
– E.g. disk full, fail transfer completed, mouse clicked, message received,
temperature too hot…
• Events are important in asynchronous processing systems like
blockchain
• The blockchain can emit events that are useful to application
programmers
– e.g. Transaction has been validated or rejected, block has been validated or
rejected…
• Events from external systems might also trigger blockchain activity
– e.g. exchange rate hasgone below a threshold, the temperature has gone up,
a time period has elapsed…
txn txn txn
!
New
txn
New txn
handler
Transfer
confirmed
Application

27. ©2016 IBM Corporation27
Integrating with existing systems – possibilities
Transform
Existing
systems
1. System
events
2. Blockchain
events
3. Call into Blockchain network
from existing systems
Blockchain network Existing
systems
!
!

28. Thank You