Blockchain Technology: From disruptive concept to Enterprise solution

Blockchain | Aligned to Microsoft Mission

Blockchain Technology:
From disruptive concept to
Enterprise solution
MS Accelerator TLV - December 26h 2017
www.facebook.com/gold.kostya
www.linkedin.com/in/kostyagoldstein/

Agenda
1 What is a Blockchain?
2 Blockchain and Fintech
3 Business Scenarios and Potential Benefits of Blockchain
4 Microsoft Strategy and Roadmap
5 Q&A

10 октября 2016 год
(АБС) - Автоматизированная
банковская система
Реестр включает обязательства перед
84 400 вкладчиками на 52,1 млрд
рублей
Но реальный размер привлеченных
банком средств может превысить 57
млрд рублей
Агентству по страхованию вкладов
(АСВ) пришлось использовать реестр
двухмесячной давности, пишут
«Ведомости». В итоге в реестр
вкладчиков не попали клиенты с
требованиями на 5 млрд рублей
http://www.banki.ru/news/lenta/?id=9279756
Агентство с предложением Красновой не согласно и использовать более поздний реестр не намерено.
«Поскольку АБС, из которой мог быть сформирован реестр вкладчиков, уничтожена, первичной
документации нет и, соответственно, нет оснований доверять этому документу, так как в нем могли появиться
«нарисованные» или раздробленные вклады», — говорит представитель АСВ.

Financial Institution
Security Layer
Data – Centre of Gravity
Database

Buying Broker
Typical Finance Services Transaction
Securities Settlement Process
Database
Selling Broker
Database
Clearing House
(Intermediary)
Reconciliation
Database
Trust Boundary Trust Boundary
Challenges
Slow Processing
High risk of errors
Security
High Compliance
Overhead
Everyone has their own
database

Blockchain Attributes
Trust
Peer to Peer Secure
Distributed Network
TRUST
What if?
Everyone could have a ‘Single Version of the Truth’ - Blockchain
Clearing House
(Intermediary)
Blockchain
Buying Broker
Blockchain
Selling Broker
Blockchain
Tamper Proof
Security
Traceability
Shared

Peer to Peer Secure
Distributed Network
TRUST
What if?
We can take Intermediaries out of the process? – Business Benefits
Clearing House
(Intermediary)
Blockchain
Buying Broker
Blockchain
Selling Broker
Blockchain
Disintermediation ->
Digital Transformation
Security/Reduce Fraud
Improve efficiency and
productivity
Increase revenue and
reduce costs

Blockchain | 4 Pillars
Cryptographically Authentic
Uses tried and true public/ private signature
technology. Blockchain applies this technology to
create transactions that are impervious to fraud
and establishes a shared truth.
Shared
Blockchain’s value is directly linked to the number of
organizations or companies that participate in them.
There is huge value for even the fiercest of competitors
to participate with each other in these shared database
implementations.
Distributed
There are many replicas of the Blockchain
database. In fact, the more replicas there are, the
more authentic it becomes.
Ledger
The database is a read/write-once database so it is
an immutable record of every transaction that
occurs.
14
✓ Peer-to-peer technology
✓ Trustless
✓ Decentralized

Blockchain and Fintech
Banking is essential, Banks are not, 1994 Bill Gates

Regs
Changing
Business
Models
Basel III
MIFID
LCR
Recovery &
Resolution
GSIB
Low
Interest
Rates
Proprietary
Trading
SEC, FDIC,
Dodd Frank
Ringfencing
PSD-2
ROE
Legacy
Infrastructure
& Technology
Disruptive
Technology
FinTech
Non-Traditional
Competitors
KYC
T2S
SEPA
Cost of
Capital
BANKS AND THEIR PRESSURES…

Reshaping Banks… …how they are faring
Source: FT 28/12/15
New CEO
PRIORITIES
• Cut costs
• Reshape investment
banks
• Address legacy of
Legal & Regulatory
transgressions
• Get the most
productivity out of
their organizations

Blockchain in Financial Services
Source: World Economic Forum –
The future of financial infrastructure –
August 2016

https://www.imf.org/en/News/Articles/2017/09/28/sp092917-central-banking-and-fintech-a-brave-new-world
Better value for money?
For instance, think of countries with weak institutions and
unstable national currencies. Instead of adopting the
currency of another country—such as the U.S. dollar—
some of these economies might see a growing use of
virtual currencies. Call it dollarization 2.0.

Blockchain is more Regtech
rather than Fintech

21
Regulators will learn Blockchain are their best friend
Regulators will write software specs and develop test that compliant companies / software must pass.
 Real time compliance , accounting and monitoring.
 Real time comprehensive auditing , not sampled or quarterly lookback.
 Real time risk metrics and sensitivity analyses.
 Real time overview dashboard for companies .
 Real time overview dashboard for regulators.
 View and aggregated views of companies , sectors , region countries.
 Compliance is backed into the logic or the smart contracts that underlie all processes.
 Organizations using certified software will not be able to break or bend any rules. For 99,999% of transactions there will be
no room for interpretations of words. Code is law.
 When exceptional conditions arise outside of the anticipated scenarios , the situation can be handled using conventional
regulatory and legal mechanisms.

Blockchain technology supports two main goals
EFFICIENCY TRANSFORMATION

Blockchain shows tremendous potential across
industries
Manufacturing
Asset tracking
Real time auction
for supplier
contracts
Supply chain
transparency
Retail
Loyalty tracking
Product
provenance
Logistics
management
Insurance
Claims
Management
MBS/Property
Payments
Fraud detection
Automated
underwriting
Banking and
Capital Markets
Bond Issuance
Trade Finance
Loan Syndication
Post Trade
Settlement
Cross Border
Payments
Derivatives Trading
KYC/AML
Government
Licensing and ID
Benefits
distribution
Aid tracking
Military security
Health
Personalized
medicine
Records sharing
Compliance

Webjet Uses Blockchain in First-Of-A-Kind
Travel Bookings Solution
Challenge
• Webjet handles thousands of hotel
bookings every day that pass through
multiple operators. The high volume
of transactions and number of parties
involved in each transaction can lead
to discrepancies.
• Booking errors negatively affect customers’
experiences and undermine trust between
Webjet and its partners, and can also have
serious financial consequences.
Strategy
• Webjet and Microsoft
developed a first-of-a-kind
blockchain solution.
• The solution creates secure,
independent transaction
records that all parties can
see. Known as ‘Smart
Contracts, they streamlining
the booking and payment
process, and reducing errors.
Results
• The use of blockchain removes the risk of data
inaccuracy, boosts security and efficiency, and
enhances trust and accountability between
Webjet and its partners.
• The solution gives Webjet a competitive edge
and could set a new industry standard.
• Webjet has an exciting opportunity to grow
by facilitating transactions across the travel
industry and selling its solution into other
sectors.
“Microsoft’s ongoing investments in building the industry’s most trusted cloud platform around the principles of security,
privacy and control, compliance and transparency, along with its deep heritage in guiding businesses, including Webjet,
through periods of significant IT transformation made the decision to go on this journey with Microsoft a no-brainer.”
— John Guscic, Managing Director, Webjet

Maersk Uses Blockchain to Secure and Streamline
Marine Insurance Process
Challenge
• Duplication, inefficiency, lack of
transparency, lack of data, fraud, and errors
across lots of parties interacting in marine
insurance
• Change is hard due to multiple regulators
and jurisdictions
• Rates are under pressure and costs are
becoming unmanageable
• Compliance is challenging
Strategy
• EY, Maersk, Guardtime, and
Microsoft developed a real-
time blockchain enabled
platform for marine
insurance
• The solution streamlines
claims and settlement
processes, while reducing
errors.
Results
• Real-time visibility into the location, condition
and safety of high-value assets moving around
the world
• Accurate, dynamic and fair underwriting and
pricing based on that visibility
• Streamlined regulatory reporting and
compliance
• Accurate and transparent data sharing among
all relevant stakeholders with audit trail
• Capital freed from poor credit system
“It is a priority for us to leverage technology to streamline and automate our interaction with the insurance market. Insurance
transactions are currently far too tedious and frictional. The distance between risk and capital is simply too far.”
— Lars Henneberg, VP, Head of Risk and Insurance of A.P. Moller-Maersk

Bank Hapoalim Uses Blockchain to Streamline the
Bank Guarantee Process
Challenge
• Bank guarantees are a guarantee from a
lending institution like a bank that ensure
the liabilities of its customers are met.
• Required for large purchases like real
estate.
• Currently customers must visit a branch
multiple times to move through the
application process.
Strategy
• Bank Hapoalim and
Microsoft Services developed
a real-time blockchain
enabled platform to
collaborate on documents
with customers.
• The solution lets customers
and banks update
documents securely without
in person verification.
Results
• Blockchain technology improves the customer
experience and confidence in the banking
system by enabling them to receive automated,
digital documents without the need to go to a
physical bank branch.
• The solution creates a competitive advantage
and cost savings for Bank Hapoalim by
streamlining existing systems and services.
“The use of Blockchain technology will significantly improve the customer experience and the level of trust in the
banking system.”
— Arik Pinto, Chief Executive Officer of Bank Hapoalim

Utilidex Reimagines Energy Trading with Blockchain
Challenge
• The sector is becoming increasingly
complex, with new suppliers entering the
market.
• Markets have also suffered from increased
volatility, while generation trends have
shifted significantly towards renewable
sources such as solar power.
• Changing dynamics of the market, and
increasing value in energy flexibility.
Strategy
• Help customers buy, sell and
optimise their energy in an
open, transparent way.
• Worked with Microsoft to
trial blockchain technology
and prove the technology’s
application in buying and
selling energy.
Results
Utilidex’s blockchain technology will:
• Let users analyse data on plants.
• Make billing easier.
• Show real-time market data.
• Predict energy production.
• Feature a personal digital assistant that offers
instant alerts.
“This work is part of our broader ambitions to help customers buy, sell and optimise their energy in a very different way”
- Richard Brys, Chief Executive Officer of Utilidex

Consortium
Woodgrove
Financial
Contoso
Bank
Northwind
Traders
Bank b
Insurance c
Investment
consortium c
Bank A
Blockchain
Location 1
Location 2
Location 3
Location 4
Department
A
Department
B
Public ConsortiumPrivate
• Many, unknown participants
• Writes by all participants
• Reads by all participants
• Consensus by Proof of Work
• Known participants from one organization
• Write permissions centralized
• Reads may be public or restricted
• Multiple algorithms for consensus
• Known participants from multiple
organizations
• Writes require consensus of several
participants
• Reads may be public or restricted
• Multiple algorithms for consensus
Public
blockchain
Persona
Woodgrove
Financial
Person B
Northwind
Traders
Bank 6
Bank 1
Consortium
6
Source: Ethereum blog by Vitalik Buterin https://blog.ethereum.org/author/vitalik-buterin/
Blockchain | Network Types

Proof of Work
Proof of
Authority
The Proof-of-Work (PoW) method
asks users to repeatedly run
hashing algorithms or other
client puzzles, to validate
electronic transactions in
exchange for the opportunity of a
reward.
In Proof of Stake (PoS) based
blockchains the creator of the
next block is chosen in a
deterministic (pseudo-random)
way, and the chance that an
account is chosen depends on its
wealth (i.e. the stake).
“Voter” nodes can vote on which
block should be the canonical
head at a particular height.
The most recent block with the
most votes is considered the
canonical head of the chain. A
block is only considered valid
once a given threshold of votes
has been received from valid
voters.
Proof-of-Authority (PoA) uses a
hard-configured set of
"authorities" - nodes that are
explicitly allowed to create new
blocks and secure the blockchain.
This makes it easier to maintain a
private chain and keep the block
issuers accountable.
Proof of Stake Proof of Authority Proof of Vote
These are just a few examples… the future is pluggable consensus algorithms
Consensus Protocols

Public Blockchain
( Permissionless)
Private/ Consortium Blockchain
( Permissioned)
Access
Speed
Transaction
Security
Identity
Examples
Open Read/Write access to the
database
Permissioned Read/Write access to selected
nodes
Slower Faster
Proof of work/ Proof of stake Pre- approved participants
Anonymous / Pseudonymous Known identities
Bitcoin/ Ethereum R3 / Eris Industries / Multichain
Source: Ethereum Blogpost
Understanding the nuances of different types

Contract
SmartContract == Agreement
Smart Contract == Agreement
• Based on reaching agreed-upon conditions
• Contain code and execute various terms written in that contract
• Controls a particular digital asset
Smart Contracts on Blockchain
• Self-Enforceable
• Trust-less
• Faster
• Cheaper

'0x606060405260006002553461000057604051610bb7380380610bb783398
101604090815281516020830151918301516060840151608085015160a0860
15160c087015194870196958601959390930193919290915b60c0604051908
1016040528060018152602001888152602001678ac7230489e800008152602
00160008152602001858152602001600081526020015060006000600181526
02001908152602001600020600082015181600001556020820151816001019
08051906020019082805460018160011615610100020316600290049060005
2602060002090601f016020900481019282601f1061010057805160ff191683’
abi:
{ constant: false,
inputs: [Object],
name: 'sell',
outputs: [],
payable: false,
type: 'function' },
{ constant: false,
inputs: [Object],
name: 'buy',
outputs: [],
payable: true,
type: 'function' },
pragma solidity ^0.4.6;
// @title Real Estate Registry Contract
contract RealEstateRegistry {
event Purchase(uint256 id, uint256 price);
modifier onlyEscrow() {
if (!escrows[msg.sender]) throw; _;}
enum Status { Owned, Sale, WaitConfirmation}
struct Estate {
uint256 id; string name; uint256 price; Status ; address owner;
address potentialOwner; }
mapping (uint256 => Estate) estates;
mapping (address => bool) escrows;
function sell(uint256 estateId, uint256 price) {
if (estates[estateId].owner != msg.sender) throw;
if (estates[estateId].status != Status.Owned) throw;
estates[estateId].price = price;
estates[estateId].status = Status.Sale;
}
function buy(uint256 estateId) {
if (estates[estateId].status != Status.Sale) throw;
estates[estateId].potentialOwner = msg.sender;
estates[estateId].status = Status.WaitConfirmation;
}
Smart Contract part of
blockchain
Blockchain in Real Estate Transactions
Decentralized consortium of
banks/lenders
Make payment to seller if the
following terms are met:
• House inspection results in
no issues
• Both buyer and seller agree
on sale
Otherwise terminate contract
if terms are not met or if
time period exceeds 45 days

General Propose Chain
General Propose Chain
Blockchain | Multiple Chain Types
Blockchains
Alternative
blockchains (altchains)
(Decentralized
Transport)
(cryptocurrency) (cross-industry collaborative)
(cross-industry collaborative)
(FSI consortium)
open platform for
developers and devops
to build blockchain apps
(banking industry collaborative)
(Social News
Blockchain DB)
(IBM Open Blockchain )

When your project meets certain criteria
Answering a few questions can determine if blockchain
is appropriate
Can intermediaries
be removed?
Is there a
requirement for
verification?
Do multiple
parties share data?
Is this a business
process that crosses
trust boundaries?

97% of Blockchain Startups are ‘Chainwashing’ – R3’s
“By asking these types of questions our team has helped
filter the 400 or so companies/projects into a much more
manageable dozen,”
99% of Blockchain Startups Are Bullshit
http://bitcoinist.com/chainwashing-r3-swanson-blockchain-hype/
https://convergence.vc/99-of-blockchain-startups-are-bullshit-4cf11a549895
When I say 99% it is meant figuratively, but actually if 90% of
everyday startups fail in their first 3 years, 99% in blockchain
may very well be close

Standby Letter of Credit (SBLC)
Microsoft
Treasury
Agrees to Buy
Requests SBLC
Provides SBLC
Terms
Accept Terms and
Provide Issuing Bank
Details
Validates and Approves
Issuing Bank
Submits Application
Sends SBLC
Sends SBLC
Reviews SBLC
for Treasury
Processing
Tracks security to expiration date so
long as customer maintains
payment schedule. If customer
defaults, pursues claim with
Advising Bank.
Initial
Contract
Negotiatio
n
Initial Contract
Negotiation
Inform Advising
Bank in case of
Customer default
Amendment Negotiation
Amendment
Negotiation Forwards
Amendments
Resends SBLC
Reviews SBLC
Again for
Treasury
Processing
Applicant Beneficiary
Issuer Advisor
Inefficient operations
Working capital and
balance sheet
implications
Lack of visibility to
exposures

40
Digital Transformation
▪ People – All four parties involved would need similar IT skill competencies to build and operate a digital system
▪ Process – Transformation would relocate the pain from manual entry to reconciliation whenever one counterparty updates
▪ Technology – All counterparties would require compatible technology stacks and then allow access into their networks
Corporate
Web
server
Web
Server
Database serverDatabase
Server
EnterpriseDatacenter
DeviceCorporate
Network Application serverApplication
Server
Issuing Bank
Web
server
Web
Server
Server
DeviceCorporate
Server
Advising Bank
Web
server
Web
Server
Server
DeviceCorporate
Server
• Counterparty IT staffs have to maintain
network connections and provide operational
cybersecurity
• SBLC latency is reduced moving from paper
to digital but still exists due to counterparty
synchronization
• Which counterparty maintains the
authoritative system of record?
• The underlying databases are still subject to
data entry errors
Opportunities for “standard” digital transformation
But…

41
Blockchain-enabled digital transformation is different
Distributed system with
distributed ledger
Secure
Authenticated counterparties digitally sign SBLC requests,
updates and claims.
Shared
Applicants and beneficiaries collaborate in near real-time using
standardized templates.
Distributed
Each member of the network can use the blockchain to validate
the other counterparties.
Authoritative
Each immutable SBLC entry is written once thereby increasing
visibility and auditability while reducing error rates.
With blockchain, it’s possible to create new, more efficient processes

SBLC with Blockchain
Smart
Contract
Update
1. Applicant agrees
to transact with
Beneficiary via
SBLC
2. Applicant
submits
SBLC request
to the ledger
3. Applicant
bank issues
SBLC
Applicant Issuer Advisor Beneficiary
5. SBLC activated
with expiration
date;
transaction
complete
3. Beneficiary bank
reviews and
advises SBLC
SBLC Process:
Ledger Process:
Smart
Contract
Update
Smart
Contract
Update
Issuance time from
weeks to hours
Increased sales and
speed of delivered
services
Transparency across
all participants

Microsoft Treasury and Bank of America
Standby Letter of Credit
Blockchain Solution
3days

Why isn’t everyone using Blockchain right now?

Blockchain wasn’t built for enterprise
Getting Off the Island - Integration
There are a number of challenges to integrate
a blockchain with existing IT architecture
Enterprise-Grade Ledgers
Ledgers designed for public network
cryptocurrencies lack the performance,
confidentiality, and governance capabilities
needed for commercial use
Smart Contracts
Smart contracts were not designed to
leverage existing enterprise tools and skill sets

Microsoft Blockchain Strategy and Roadmap

We’ve delivered an open, broad,and
flexible cloud across the stack
Applications Management Clients
Web App Gallery
Dozens of .NET & PHP CMS and Web apps
Infrastructure Databases AppFrameworks
SQL Server
+Hundreds of community supported
images on VM Depot
AzureBaaS
HyperScale
EnterpriseGrade
Hybrid
| An Open Cloud

Single click automated deployment of ledgers and
tools

Deploy in the topology of your choice
Dev/Test: Enable developers to get started
Single node (virtual machine)
1
Single Member: Simulate production for
multiple divisions within a single organization
Multi-node across single region
2
Multi-member: Collaborate between
multiple divisions and organizations
Multi-node across multiple regions, Azure
subscriptions, and/or organizations
3

Build development environment consisting of blockchain ledgers and
network infrastructure
1. Review blockchain protocol specific network
documentation
2. Determine topology for a consortium network
3. Map topology to IT resources
4. Manually deploy
5. Configure blockchain clients via Linux
BASH scripts to support private network
(peering, isolate mining nodes, etc.)
6. Configure other blockchain protocol properties
(consensus algorithms, max peers, etc.)
7. Trial and error to make above steps work
8. Configure IT networks and firewall ports to
permit blockchain protocol traffic
9. Test, debug, and repeat
1. Activate Azure subscription
2. Search Azure Marketplace for desired blockchain
3. Click on blockchain image of choice
4. Provide 10 user parameters
(number of consortium members, number of
blockchain VMs, admin usernames and passwords,
etc.)
5. Deploy and wait 15 minutes
(+/- depending of nodes selected)
VS.

IDChain – remote identification
https://github.com/RosEvroBank/IDChain

We need the fastest most
secure blockchain now!
Pretty sure your going to
need to get some Bitcoin
to buy a starting block and
some chain. Lets show it
off to our customers…next
week at the sales
conference.

Customers said they wanted…
Smart
Contract
Ledger
Ledger

What do Blockchain Architectures look like?
Stream
processing
Cloud
Gateways
Modern
Applications
Search and
query
Microsoft Cortana
Analytics
Microsoft
Power BI based
Dashboards
Notifications
and workflow
interactions on
devices
Communication
with existing LoB
via Industry
Protocols or
Enterprise
Infrastructure
Modern
Applications
• Service bus
• Azure DBs
• Azure storage
• HDInsight
• SQL Data Warehouse
• Azure Data Lake
Blockchain
LedgerAzure
Active Directory
Azure
Key Vault

#ofCustomers
Path to Production
ProductionPilot
PoC
Experimentation
Learning
Too expensive and
long to create a PoC
Blockchain feels isolated
from everything
95% of Customers
At/Before POC Stage
• Address customer pain
point of 8-12 week
PoCs that cost upwards
of $300K
• Limited blockchain
knowledge
• Need help connecting
blockchain to other
services such as
identity, data, and
integration
• Most customers are in
learning and
experimentation phases
• Need to help accelerate
customer journey
State of the World Today

Accelerate your development with App Builder
Get Off the Island
Automatically connect Blockchain
applications to services you care about
Reduce Cost and Time
Build Blockchain apps faster and easier and
reduce costs of development
Move towards production
Move towards production faster with
automatically built scaffolding

Application
Insights
Client Apps
Web App
iOS App
Android App
IoT Devices
Azure Active
Directory
Gateway
Service API
Event Hub
IoT Hub
Native Ledger Services
and LedgersConsumers
Storage
Consumer
DLT Consumer
DB Consumer
DLT Native
Service
Azure Storage
Azure SQL DB
Azure Key Vault DLT Watcher
Hyperledger
Fabric DLT
Service
Ethereum DLT
Service
Ethereum
Hyperledger
Fabric

Simplifying Blockchain app development

61
Blockchain evolving from simple ledgers, to cryptlets that fetch trusted
and agreed-upon external data needed to execute Smart Contracts
Smart Contracts are unable to access external data or events based on time or market conditions. Calling code or
data outside of a Smart Contract or blockchain breaks the general trust barrier and authenticity of transactions.
Cryptlets will allow the blockchain to access external data securely, while maintaining the integrity of the blockchain.
Microsoft Innovation

An enterprise-friendly platform
Connect to existing
apps and workflows
Coordinate with
relevant tools
Fully managed
enterprise ledgers
MiddlewareLedgerCoreIndustrySolutions
Fully-Managed Distributed Ledger Hosted Compute (VMs)
Coco Framework
Partner
Distributed
Ledger A
Partner
Distributed
Ledger B
Partner
Distributed
Ledger C
Partner
Distributed
Ledger E
Partner
Distributed
Ledger D
Identity
& Key
Management
Data
Platform
(ML/BI)
Secure Off-
Chain
Execution
Monitoring &
Security
3rd Party
Services
HealthcareRetail & CPG GovernmentDiscrete
Manufacturing
Banking,
Capital
Markets
Horizontal SaaS & Adapters
App Builder
Workflow Design &
Orchestration
Professional Services & Support
3rd
Party
1st Party
…….
DeveloperServices(Tools,Team,CI/CD)
Azure & Azure Stack – Blockchain resource provider

Introducing Cryptlets – Secure Distributed Middleware
Blockchain ledger
A bank, hedge fund and
insurance company enter into a
SmartContract
Everyday at 4 PM GMT it needs a
calculated rate like:
(LIBOR * .04%) + Diff(Gold)

But it cannot deliver enterprise security or scale
Storing business logic on-chain means
that it has to be re-written for each
chain, limiting scaling
Security
Scale
Traditional Contract Mortgage
Variable Items
% Rate
Payment Amount
Static Items
Payment Date | Late Date | Term
Assets or Security | Amount Financed
Total Sale
Date Payment Late Fee
12/1/16 $500.00 $0
1/1/17 $500.00 $0
Payments & Fees Recorded in Ledger
Proprietary code stored in shared data
layer.
Unable to call off-chain data

Blockchain + Cryptlets
Cryptlets
(Business Logic)
Business Logic
Traditional 3-Tier
Software Architecture
Presentation LayerPresentation Layer Presentation Layer
Early blockchain Dapp
architecture
Blockchain (Data Layer)
Smart Contracts
(Data Handling)
Data Layer
Stored Procedures
(Data Handling)
Blockchain (Data Layer)
Smart Contracts
(Business Logic)
You need a re-imagined architecture with Cryptlets

Smart Contract oracles
Market
Data
Cryptlet Container
Cryptlet
4:00 PM EST?
Market
Day?
Crypto-delegate
(validation & auth)
Blockchain Node
Smart Contract Virtual Machine
function init(){
var marketWatcher = MarketWatcher();
}
//callback method that is run when the Cryptlet PriceUpdate event fires
[event(marketWatcher.MarketEvent(’16:00 GMT-5’, true, ‘LIBOR’, ‘AU’)];
function CalculatePrice(var eventData){
…
}
Smart Contract
Event
Subscription

Smart Contract as Schema
Smart Contract Virtual Machine
Data 1
Cryptlet Container
Control
Surrogation
contract CreditDefaultSwap is
ContractCryptlet{
uint price;
uint accPrem;
uint basis;
//properties
function Price(uint val){
price=val;
}
function AccPrem(uint rate){
price accPrem basis …
Schema & Sub-Ledger
Smart Contract
Data 2
Blockchain Node
Crypto-delegate
(validation & auth)
Logic Logic
Price = 2
AccPrem = 5
Basis = 1
Cryptlet

Cryptlet Fabric - Update
Azure
Key Vault

Overcome technology gaps with Coco Framework
Configurable constitution
to govern membership
Richer and more flexible
confidentiality models
Database-like speeds for
transaction throughput
and latency
Scalability Confidentiality
Consortium
Governance

70
Addressing Enterprise Challenges | Introducing the Coco Framework
Coco Enterprise Framework
Flexible/Distributed Governance Policy
Enterprise Challenges
Database Throughput
Richer Controls and Granular Access
Energy Efficient Consensus

71
Announcing the Coco Framework
• Achieve Throughput and latency approaching database speeds.
• Richer, more flexible, business-specific confidentiality models.
• Network policy management through distributed governance.
• Reduced energy consumption.

Enterprise Ethereum Protocol Stack

a = eth.accounts[0]
web3.eth.defaultAccount = a;
var simpleSource = 'contract simplestorage { uint public storedData; function simplestorage(uint initVal) { storedData
= initVal; } function set(uint x) { storedData = x; } function get() constant returns (uint retVal) { return storedData; } }’
var simpleCompiled = web3.eth.compile.solidity(simpleSource);
var simpleRoot = Object.keys(simpleCompiled)[0];
var simpleContract = web3.eth.contract(simpleCompiled[simpleRoot].info.abiDefinition);
var simple = simpleContract.new(42, {from:web3.eth.accounts[0], data: simpleCompiled[simpleRoot].code, gas:
300000, privateFor: ["ROAZBWtSacxXQrOe3FGAqJDyJjFePR5ce4TSIzmJ0Bc="]}, function(e, contract) {
if (e) {
console.log("err creating contract", e);
} else {
if (!contract.address) {
console.log("Contract transaction send: TransactionHash: " + contract.transactionHash + " waiting to be mined...");
} else {
console.log("Contract mined! Address: " + contract.address);
console.log(contract);
}
}

Microsoft and consortium partnership
“The partnership between Microsoft and R3
will scale the use of distributed ledger
technology in a way that will change the entire
financial services industry,” said David Rutter,
CEO of R3. “The Azure platform and intelligent
cloud services bring advanced capabilities to
this budding financial ecosystem, and the
commitment by Microsoft will accelerate the
adoption of distributed ledger technology
around the globe and take our R3 Lab and
Research Center offering to a new level of
capability.”

Challenges hindering mainstream adoption of Blockchain
Co-operation & Establishing Standards
• In order to gain widespread adoption, standards need to be agreed between
participants that create a common set of protocols for individual firms to adopt.
This is challenging given the number of participants that need to come to
agreement
• For some markets “Critical mass” will be achieved by a smaller group that will then
work together and create de-facto standards
Regulatory Framework
• Regulators will focus on how blockchain achieves outcomes
that align with regulatory concerns (e.g. AML/KYC,
Resilience, Recovery and Resolution)
• Specific local regulations such as specific Asian data Secrecy
requirements will need to be met
• Negative connotations associated with bitcoin impact on
regulator’s perceptions
Scalability & Resilience
• Bitcoin’s transaction capacity (~3 transactions per
second) precludes mainstream capital markets
adoption
• Regulators concerns around operational resilience will
need to be satisfied
Legal Framework
• To trade significant values of assets firms need to ensure that they
can perfect legal title to the underlying asset recorded by the
tokenised asset in the distributed ledger
• An identified challenges is achieving a uniform legal framework
across a distributed set of peer parties with no centralised authority
Settling value in “real money”
• Any mainstream application will need settlement certainty in
real money
• Tokenized solutions pose an added layer of settlement and
counterparty risk that will not be acceptable
Legal and regulatory, rather than technology are primary barriers for blockchain adoption

Office
Equipment
Identity
Home
Home Security Home Automation Garden, Lawn & Plant Care
Air Conditioning &
Temperature Control
Leak Detection
Smart Appliances Food & Nutrition Tracking
Indoor
Navigation
Behavior ModificationMedication Adherence Health Monitoring
Sleep Tracking
Smart Lighting
Pet Tracking
Information Capture
New devices & Sensors
Trip Tracking &
Car Health
Control
Child & Elder Monitoring Sports &
Fitness
Environmental Sensors
Beacons & Proximity
Object Tracking
Smart Vending
Machines
Workplace
Smart Ears
Smart Jewelry
Entertainment Systems
Smart Luggage
Bikes
Home

Platform Services
Infrastructure Services
Web
Apps
Mobile
Apps
API
Apps
Notification
Hubs
Hybrid
Cloud
Backup
StorSimple
Azure Site
Recovery
Import/Export
SQL
Database DocumentDB
Redis
Cache
Azure
Search
Storage
Tables
SQL Data
Warehouse
Azure AD
Health Monitoring
AD Privileged
Identity
Management
Operational
Analytics
Cloud
Services
Batch
RemoteApp
Service
Fabric
Visual Studio
Application
Insights
VS Team Services
Domain Services
HDInsight Machine
Learning Stream Analytics
Data
Factory
Event
Hubs
Data Lake
Analytics Service
IoT Hub
Data
Catalog
Security &
Management
Azure Active
Directory
Multi-Factor
Authentication
Automation
Portal
Key Vault
Store/
Marketplace
VM Image Gallery
& VM Depot
Azure AD
B2C
Scheduler
Xamarin
HockeyApp
Power BI
Embedded
SQL Server
Stretch Database
Mobile
Engagement
Functions
Cognitive Services Bot Framework Cortana
Security Center
Container
Service
VM
Scale Sets
Data Lake Store
BizTalk
Services
Service Bus
Logic
Apps
API
Management
Content
Delivery
Network
Media
Services
Media
Analytics

https://www.youtube.com/watch?v=CnHSsYdqb0s

Learn more
Visit our Azure
Blockchain Page
Visit the Azure
Blockchain Blog
and our
Blockchain User
Voice
Connect with the
Microsoft Tech
Community
Join the
conversation on
Azure Advisors
Sign up for an
Azure account
and join our
Blockchain
Preview Program

BraveLog – Blockchain for
Sport
Alliance between AMIS, Taiwan Triathlon,
ITRI, Fubon Financial Holdings.
Tracks sporting events, activity, into a
secure shared Blockchain platform on
Azure.
Link to PR – here
86

• KPMG are using Blockchain as a Service
on Azure as their platform for their
Distributed Ledger Solutions
• Link to PR here-
• https://home.kpmg.com/xx/en/home/ins
ights/2016/09/kpmg-and-microsoft-
blockchain-services.html

Taiwan Amis use Microsoft Azure as its blockchain platform
Link to Case Study

Insurance Giant John Hancock – customer
experience

BHP turns to blockchain to improve its
supply chain
• The system has been
developed in conjunction
with blockchain startups
BlockApps (on Azure)
and Consensys, and will
allow both the company
itself and the vendors they
use throughout the supply
chain, to track live data of
material movements.
Sources : Consensys

Generali Insurance
• Generali are an Insurance Company looking
to digitally transform with Microsoft.
Strategic alliance announced - here
• Customer Centric new business: leverage on
Microsoft’s capabilities to analyze social
activities to better engage with Generali’s
prospect customers, create innovative
insurance products building Blockchain
Smart Contracts and exploiting Cloud and
Artificial Intelligence
• Transform how they engage customers and
enables them to execute against their
strategy to partner with Discovery Insurance,
Progressive, and Renault Nissan

Blockchain Technology: From disruptive concept to Enterprise solution

Blockchain Technology: From disruptive concept to Enterprise solution

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