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Copyright © 2016
Howard Smith
v26, November 2016
Blockchain 2016
Distributed Ledger Technologies
Towards a scalable real t...
2November 4, 2016Copyright © 2016
“So I thought I knew about the blockchain”
On traditional server architectures, every ap...
3November 4, 2016Copyright © 2016
Encountered / studied during my learning
• 21 Inc
• Adjoint.io
• AlignCommerce
• AlphaPo...
4November 4, 2016Copyright © 2016
Sample of recent blockchain industry news (last 10 days)
• The launch of a new cryptocur...
5November 4, 2016Copyright © 2016
Scope
• Blockchain(s)
– The technology
– The applications
– The platforms
• Inspire idea...
6November 4, 2016Copyright © 2016
Blockchain is more than bitcoins and altcoins
“We should think of blockchain as another ...
7November 4, 2016Copyright © 2016
Definitions of blockchain point in the same direction
“The Blockchain combines cryptogra...
8November 4, 2016Copyright © 2016
Blockchain compared to traditional architectures
Source: Magister Advisors
9November 4, 2016Copyright © 2016
Blockchain flavours
Source: Magister Advisors
10November 4, 2016Copyright © 2016
How blockchain works, many visualizations via Google images
11November 4, 2016Copyright © 2016
The community is finding ways to describe blockchain
• Blockchain timestamps
– Decentra...
12November 4, 2016Copyright © 2016
Blockchain viewed as an important new technology platform
13November 4, 2016Copyright © 2016
Support existing or create new business models, public or private
Source: twitter.com/w...
14November 4, 2016Copyright © 2016
Potential applications
Financial
Currency
Private equities
Public equities
Bonds
Deriva...
15November 4, 2016Copyright © 2016
Potential applications cont.
Physical assets
Home / apartment keys
Vacation home / time...
16November 4, 2016Copyright © 2016
Recent news of enterprise efforts to leverage blockchains
Activity and news
• Beyond pu...
17November 4, 2016Copyright © 2016
We could go on and on …
Cont.
– 40 R3 CEV members (banks) have trialled
trading fixed i...
18November 4, 2016Copyright © 2016
Recommended books / papers
https://www.gov.uk/government/uploads/system/uploads/attachm...
19November 4, 2016Copyright © 2016
Keeping up to date
• Coindesk.com
– Leader in digital currency and blockchain news
– Co...
20November 4, 2016Copyright © 2016
Deeper learning resources
• Bitcoin and Decentralized Technology
• https://www.pluralsi...
Copyright © 2016
Technology details &
Standardisation efforts
22November 4, 2016Copyright © 2016
Segmenting the technology
• All blockchains are not the same
• Public / private
– Unper...
23November 4, 2016Copyright © 2016
Blockchain technologies differ
• Differences will pan out over time, leading a more sta...
24November 4, 2016Copyright © 2016
Blockchains utilise distributed “consensus” protocols
• The Byzantine General Problem a...
25November 4, 2016Copyright © 2016
Standardisation
…. the Hyperledger Project
• A Linux Foundation project, a collaborativ...
26November 4, 2016Copyright © 2016
Chain
• The team at Chain has built products at Google,
Salesforce, Visa, Microsoft, Sq...
27November 4, 2016Copyright © 2016
Chain Open Standard chain.com/os
28November 4, 2016Copyright © 2016
Chain Core, OS and Sandbox
• Enterprise blockchain software for production deployment
•...
Copyright © 2016
Examples
30November 4, 2016Copyright © 2016
Coinbase
• A Bitcoin wallet and platform for merchants and customers
– Aiming to be the...
31November 4, 2016Copyright © 2016
Circle
• A social payments app
– Send money as easily as sending an email, a txt messag...
32November 4, 2016Copyright © 2016
Kraken
• A prominent trusted bitcoin exchange (bitcoin,
Ethereum, others)
• Used by pro...
33November 4, 2016Copyright © 2016
EverLedger
• A blockchain based fraud detection system, overlaying big data from
closed...
34November 4, 2016Copyright © 2016
Supply chain commerce
SKUChain
• Blockchain solutions for B2B Trade
and Supply Chain Fi...
35November 4, 2016Copyright © 2016
R3
• R3 is a financial innovation firm that leads a consortium
partnership with over 40...
36November 4, 2016Copyright © 2016
Ripple
• A blockchain based Global Settlement
Network
• Cryptographically secure end-to...
37November 4, 2016Copyright © 2016
Ripple architecture ripple.com/technology
The Ripple network contains the Ripple
Consen...
38November 4, 2016Copyright © 2016
Ripple implements the XRP cryptocurrency
• Banks perceive cryptocurrencies as
tokens re...
39November 4, 2016Copyright © 2016
Align Commerce
• Venture funded by KPCB and other prestigious investors
– “Rethinking B...
40November 4, 2016Copyright © 2016
Axoni
• Axoni develop blockchain infrastructure for Capital Markets
• Blockchain ‘smart...
41November 4, 2016Copyright © 2016
Symbiont
• Enterprise ready Issuance and Trading
platform, helping Wall Street get on
b...
42November 4, 2016Copyright © 2016
Factom
• A scalable data layer for the blockchain
• Using the technology behind Bitcoin...
43November 4, 2016Copyright © 2016
MasterCard announce blockchain public API/lab
• MasterCard have
opened up APIs into
the...
44November 4, 2016Copyright © 2016
Blockchain in defence industry
Use case 1
• Secured messaging system / apps via a
‘perm...
45November 4, 2016Copyright © 2016
Guardtime
• An industrial blockchain platform
powering digital transformation
• 100 cry...
46November 4, 2016Copyright © 2016
Blockchain APIs in the cloud? Yes.
• BlockCypher is an infrastructure fabric for blockc...
47November 4, 2016Copyright © 2016
21 Inc.
• Vision to build software and devices to enable blockchain / bitcoin
applicati...
Copyright © 2016
Moving onto Smart
Contracts, Ethereum
et al
49November 4, 2016Copyright © 2016
Introducing the terminology of “Smart Contracts”
Technology
• Programmable currency
– C...
50November 4, 2016Copyright © 2016
Monax (was Eris Industries)
• Described as ‘process automation
for enterprise ecosystem...
51November 4, 2016Copyright © 2016
Monax
• Verifiable execution
– Transaction engine
– Consensus engine
monax.io/platform
...
52November 4, 2016Copyright © 2016
Ethereum
• “A worldwide decentralised computer with theoretically unlimited power
and f...
53November 4, 2016Copyright © 2016
Blockchain 2.0 as described by Ethereum.org
• A decentralised platform that runs smart ...
54November 4, 2016Copyright © 2016
Ethereum concepts
A simple smart
contract might be
a bet between two
parties about
tomo...
55November 4, 2016Copyright © 2016
Solidity and Dapps
• A blockchain app platform for ‘unstoppable’ applications, includin...
56November 4, 2016Copyright © 2016
DAOs and The DAO
• DAO, a Distributed Autonomous Organization
– Digital democratization...
57November 4, 2016Copyright © 2016
Synereo
• Began life as a life to build a truly distributed
social network with ‘attent...
Copyright © 2016
Dark, Anonymity and
Social Directions
59November 4, 2016Copyright © 2016
From the dark web, to dark coins and dark orgs
https://letstalkbitcoin.com/blog/post/da...
60November 4, 2016Copyright © 2016
Nxt.org is trying to anonymise and decentralize the future
• Open Source (GPL v2), dece...
61November 4, 2016Copyright © 2016
Going ‘dark’ may not be such a bad thing
• The Darkcoin open source foundation was re-b...
62November 4, 2016Copyright © 2016
Z.Cash
• First open, permissionless financial system employing zero-knowledge
security
...
63November 4, 2016Copyright © 2016
Identity for the digital era? The blockchain passport concept
64November 4, 2016Copyright © 2016
A new global citizenship?
• From e-Estonia to BITNATION
– Digital nations without borde...
65November 4, 2016Copyright © 2016
Trend
Society
• Nations are becoming e-Nations
– e-Estonia led the way
• Borders will b...
Copyright © 2016
How fast are things
moving?
67November 4, 2016Copyright © 2016
Examples of blockchain activity in the IT Services industry
Projects
• Accenture launch...
68November 4, 2016Copyright © 2016
Ernst & Young blockchain start up challenge
• Mentors from the accounting firm to
build...
69November 4, 2016Copyright © 2016
IBM Adept and the IoT Blockchain
• An IoT research project led by IBM
– Machine-to-mach...
Copyright © 2016
Ecosystems, Hype
and Bubbles
71November 4, 2016Copyright © 2016
Funding and funding bubbles
• In 2015, Bitcoin and Blockchain-related startups raised o...
72November 4, 2016Copyright © 2016
73November 4, 2016Copyright © 2016
74November 4, 2016Copyright © 2016
Peak of hype: Where are we with blockchain according to Gartner?
75November 4, 2016Copyright © 2016
The ‘Let’s Talk Payments’ Blockchain Momentum infographic 2016
• Use cases of blockchai...
Copyright © 2016
Challenges and
Futures
77November 4, 2016Copyright © 2016
Expect bumps in the road
• In June 2016, The DAO, a platform for the autonomous governa...
78November 4, 2016Copyright © 2016
Are concerns about the vision real?
Questions
• Are we really on the cusp of solving lo...
79November 4, 2016Copyright © 2016
Accenture proposed an editable (redactable) blockchain
• Accenture files patent that al...
80November 4, 2016Copyright © 2016
Challenges ahead for blockchain
• Throughout
– Bitcoin processing 7 tps (2015), VISA 2,...
81November 4, 2016Copyright © 2016
Lightning Network
• Addressing scalability of blockchain
using persistent bitcoin-based...
82November 4, 2016Copyright © 2016
Thunder Network
• Lightening.Network moves from the theoretical to the practical
• Alph...
83November 4, 2016Copyright © 2016
Tezos
• A self-amending (evolving) blockchain
– Decentralised technology governance
– P...
84November 4, 2016Copyright © 2016
But won’t Apple Pay (and its ilk) be enough?
Evolution
• A mobile payment and digital w...
85November 4, 2016Copyright © 2016
Beware the hype but understand the potential
• Disintermediating central authorities fr...
86November 4, 2016Copyright © 2016
Finally, let’s not forget
• Bitcoin (and all other tokens/
currencies) is not the same ...
Copyright © 2016
Appendix A:
Blockchain
applications & markets
88November 4, 2016Copyright © 2016
More and more applications are envisaged
• App development: Proof of ownership of modul...
89November 4, 2016Copyright © 2016
In more and more sectors
Crucial Blockchain Properties
• Cryptoledger
• Decentralized n...
90November 4, 2016Copyright © 2016
Financial and Public Records Applications
• Financial instruments
1. Currency
2. Privat...
Copyright © 2016
Appendix B:
Ethereum’s Solidity
92November 4, 2016Copyright © 2016
Ethereum
• A (complex) blockchain based distributed
computing platform
– “Smart contrac...
93November 4, 2016Copyright © 2016
A Solidity cheat sheet
Copyright © 2016
Appendix C:
The role of “Oracles”
95November 4, 2016Copyright © 2016
Operation of smart contracts
• Smart contracts track performance in real time and can t...
96November 4, 2016Copyright © 2016
Oracles in Smart Contract architecture
• “Oracles” sit between a smart contract and the...
Copyright © 2016
hsmith23@csc.com
@smithh #blockchain
www.csc.com
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Blockchain in 2016 - Advanced Distributed Ledger Technologies

Advanced Distributed Ledger Technologies – Towards the Internet of Value (IoV) and Certainty-as-a-Service (CaaS)

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Blockchain in 2016 - Advanced Distributed Ledger Technologies

  1. 1. Copyright © 2016 Howard Smith v26, November 2016 Blockchain 2016 Distributed Ledger Technologies Towards a scalable real time Internet of Value (IoV) and Certainty-as-a-Service (CaaS)
  2. 2. 2November 4, 2016Copyright © 2016 “So I thought I knew about the blockchain” On traditional server architectures, every application has to set up its own servers that run their own code in isolated silos, making sharing of data hard. If a single app is compromised or goes offline, many users and other apps are affected. On a blockchain, anyone can set up a node that replicates the necessary data for all nodes to reach an agreement and be compensated by users and app developers. This, coupled to appropriate cryptographic options, allows user data to remain private (when required) but most importantly for apps to be decentralized. The blockchain is therefore a distributed database that maintains a continuously growing list of data records that are hardened against tampering and revision, even by operators of the data store's nodes.
  3. 3. 3November 4, 2016Copyright © 2016 Encountered / studied during my learning • 21 Inc • Adjoint.io • AlignCommerce • AlphaPoint • AppliedBlockchain • Ascribe.io • AssemblyMade • Augur.net • Axoni • Balanc3.net • BigChainDB • Bitcore.io • BitFury • BitHealth.io • BitNation.io • BitWage • BlockApps • Blockchain.com • BlockChainLab • Blockchain-X • Blockcypher • BlockFreight • Blockstack.org • Blockstream • BlockVerify.io • Bloq • Boardroom.io • Chain • ChainThat • ChromaWay • Circle • Clearmatics • Coinbase • CoinFabrik • Coinfirm.io • CoinsBank • Colu • Consensys • CounterParty.io • Dash.org • DCG.co • DigitalAsset • Draglet • E-Estonia • Epiphyte • Ethereum (Solidity) • EverLedger • Factum • Farmshare.us • Filament • Funderbeam • GenesisMining • Gnosis.pm • Guardtime • HyperLedger.org • HyprCorp • IBM Adept • ICONOMI.net • ICOO.io • Identify • IncentLoyalty • IPFS • Jaak.io • Jaccoo • Kraken • KrypC • La’zooz • Libra.tech • Lightning.Network • Lisk.io • Monax.io (Eris) • MultiChain • Nxt.org • OpenChain • OneName • Peernova • ProofOfYou • Provenance.org • Purse.io • R3cev • RiddleAndCode • Ripple • Rubix (Deloitte) • SericaTrading • SkuChain • Slock.it • SmartLedger.io • Stampery • Symbiont.io • Synereo (Rholang) • TallySticks.io • Tendermint • Telehash.org • Tezos • Tierion • Tramonex • TransActiveGrid.net • Ursium • Velocity.technology • WavesPlatform • xapo
  4. 4. 4November 4, 2016Copyright © 2016 Sample of recent blockchain industry news (last 10 days) • The launch of a new cryptocurrency, Z.Cash, whose ‘genesis block’ was minted on October 28, generating a price frenzy, pushing its value over that of BTC (Bitcoin) • MasterCard opens APIs to its blockchain development/innovation lab to stimulate new applications in P2C, P2P and B2B payments & supply chain • A group of banks in South Africa are following those in USA and Europe to establish collaborative trials of Ethereum blockchain solutions for asset swaps and syndicated loans • Disney became a blockchain advocate, releasing a platform called Dragonchain, highlighting Disney tokens/coins, streamlining distributed operations to ride queue optimisation strategies • Japan Bank Consortium formed (42 member banks) to trial Ripple blockchain services for payments and settlement, moving to 24-hour settlement and real time remittances • Chain has decided to release an open source version of its blockchain platform, attracting more attention from Visa (similar move by RS CEV for its Corda oss via the HyperLedger Project) • Capital One is to test blockchain for healthcare claims and analytics, in partnership with Gem and healthcare API platform PokitDok • Commonwealth Bank and Wells Fargo announce they are testing blockchain to support trade finance and a digitized fraud resistant supply chain, initially focussed on the global cotton market, working with Skuchain • Mediachain Labs has released an oss blockchain based image/media attribution engine that includes IPFS (Interplanetary File System) • Bank of Chain and HSBC are aiming to launch a blockchain based property survey database, with integration to the bank’s mortgage systems • Five of Europe’s biggest insurers have joined forces to create B3i (The Blockchain Insurance Industry Initiative), includes Allianz, Swiss Re and Zurich and uses cover the gamut of the entire insurance value chain • Swift is spearheading a new Global Payments Initiative, led by leading banks, that approximates how the blockchain works • ABN AMRO and Delft University of Technology have partnered to develop oss for complex blockchain applications • Euler Hermes (insurance) has partnered with Fluent.Network to build insurance applications on the blockchain • HyperLedger, the Linux foundation oss effort to advance standardisation of blockchain technology has added over 10 new members, including Huawei, Nokia and the National Stock Exchange of India • South Korea is planning a national digital currency using a blockchain as part of a consorted effect in Fintech investments • Estonia is expanding its leading e-Estonia digital citizen and e- residency services, by partnering with BitNation • AT&T is seeking a patent for a blockchain server, describing subscriber home server consistent with Bitcoin
  5. 5. 5November 4, 2016Copyright © 2016 Scope • Blockchain(s) – The technology – The applications – The platforms • Inspire ideas for applying blockchain architecture – In different industries / use cases – In domains other than digital currency – Public, private and consortium-based – Distributed trusted transactions • Simple, complex, two party, escrow, multi- party From digital currency to smart contracts to smart property (IoT) to distributed autonomous organisations (DAOs)
  6. 6. 6November 4, 2016Copyright © 2016 Blockchain is more than bitcoins and altcoins “We should think of blockchain as another class of thing like the Internet – a comprehensive information technology with tiered technical levels and multiple classes of applications for any form of asset registry, inventory, and exchange, including every area of finance, economics, and money; hard assets (physical property, homes cares); and intangible assets (votes, ideas, reputation, intention, health data, information etc.) But the block concept is even more; it is a new organizing paradigm for the discovery, valuation, and transfer of all quanta (discrete units) of anything, and potentially for the coordination of all human activity at a much larger scale than has been possible before … The economic, political, humanitarian, and legal system benefits of blockchain start to make it clear that this is potentially an extremely disruptive technology that could have the capacity for reconfiguring all aspects of society and its operations”. - Melanie Swan 2015 • Blockchain 1.0 – Digital currency: the deployment of cryptocurrencies in applications related to cash transfers, remittances and payment systems • Blockchain 2.0 – Digital contracts (shared P2P business logic): the entire panoply of economic, market and financial applications using the blockchain and that are more extensive (complex multi- party) than simple currency transfers: i.e. stocks, bonds, futures, loans, mortgages, titles, smart property (IoT + blockchain), and smart contracts • Blockchain 3.0 – Digital applications beyond Fintech (currency, finance, markets): Areas such as government, health (records), science, literacy, culture, art.
  7. 7. 7November 4, 2016Copyright © 2016 Definitions of blockchain point in the same direction “The Blockchain combines cryptography & distributed computing to deliver secure, direct, peer to peer transactions without the need for a central party. At its heart is the Distributed Ledger. This is a tamper proof, public [or private], network-hosted, record of all consensus verified transactions. Initially realised via Bitcoin and similar ‘cryptocurrencies’, focus & investment is now shifting to the potential of Blockchain technology to revolutionise the infrastructure and processes of established Financial Institutions & other enterprises.” – First Partner “Blockchain basics: A network of nodes puts transactions into blocks and blocks into a single chain that represents the "truth" of what has happened. If two competing transactions happen at about the same time, the network resolves this conflict by choosing one and rejecting the other, so all nodes have the exact same copy of the distributed ledger.” – Coindesk “A blockchain is a distributed computing architecture where every network node executes and records the same transactions, which are grouped into blocks. Only one block can be added at a time, and every block contains a mathematical proof that verifies that it follows in sequence from the previous block. In this way, the blockchain’s “distributed database” is kept in consensus across the whole network. Individual user interactions with the ledger (transactions) are secured by strong cryptography. Nodes that maintain and verify the network are incentivized by mathematically enforced economic incentives coded into the protocol.” – Ethereum Github ReadMe
  8. 8. 8November 4, 2016Copyright © 2016 Blockchain compared to traditional architectures Source: Magister Advisors
  9. 9. 9November 4, 2016Copyright © 2016 Blockchain flavours Source: Magister Advisors
  10. 10. 10November 4, 2016Copyright © 2016 How blockchain works, many visualizations via Google images
  11. 11. 11November 4, 2016Copyright © 2016 The community is finding ways to describe blockchain • Blockchain timestamps – Decentralized - no one entity controls the database of timestamps, and everyone in the network confirms that timestamp has happened – Immutable - once a timestamp has been verified and recorded, you can’t un-do it – Public - all of the timestamps are publicly visible, though some aspects of the data are encrypted – Programmable - you can write code against the blockchain: for example, triggering some sort of action based on the details of a “smart contract” embedded in a timestamp. “The blockchain is a database of verified public timestamps, we’ve never had that before” “One way I’ve described this is similar to the way people used to use postmarked envelopes to verify that something had happened at a certain time. For example, signing a will and putting it in an envelope, and mailing it to yourself — the post office’s postmark on the envelope, which has the date of the stamp, proves that whatever was put in the envelope was done so before the date of the stamp.” “Previously, every app kept its own notion of time. So if I post something on Facebook, Facebook saves that post and timestamps it. We have to trust them to get that right, and not to change it ever in the future. This is fine for cat photos, but less fine for financial transactions, or deeds to a house.” “We're going from state-based datastores (databases) to time-based datastores (blockchains). The rationale is that state is space: locality determines truth. If record X has a value of K in the the "master" database, then that's its actual value. In the blockchain, the value of X is not determined by where you read it but by the transaction log.” https://www.ouvre-boite.com/space-to-time/http://www.nickgrossman.is/2015/06/the-blockchain-as-time/
  12. 12. 12November 4, 2016Copyright © 2016 Blockchain viewed as an important new technology platform
  13. 13. 13November 4, 2016Copyright © 2016 Support existing or create new business models, public or private Source: twitter.com/wmougayar author of: Where will blockchain find its applications?
  14. 14. 14November 4, 2016Copyright © 2016 Potential applications Financial Currency Private equities Public equities Bonds Derivatives (futures, forwards, swaps, options and more complex variations) Voting rights associated with any of the above Commodities Spending records Trading records Mortgage / loan records Servicing records Crowd-funding Micro-finance Micro-charity Record keeping Land titles Vehicle registries Business license Business incorporation / dissolution records Business ownership records Regulatory records Criminal records Passports Birth certificates Death certificates Voter IDs Voting Health / Safety Inspections Building permits Gun permits Forensic evidence Court records Voting records Non-profit records Government/non-profit accounting/transparency Personal / public Contracts Signatures Wills Trusts Escrows GPS trails (personal) Degree qualifications Certifications Learning Outcomes Grades HR records (salary, performance reviews, accomplishment) Medical records Accounting records Business transaction records Genome data GPS trails (institutional) Delivery records Arbitration
  15. 15. 15November 4, 2016Copyright © 2016 Potential applications cont. Physical assets Home / apartment keys Vacation home / timeshare keys Hotel room keys Car keys Rental car keys Leased cars keys Locker keys Safety deposit box keys Package delivery (split key between delivery firm and receiver) Betting records Fantasy sports records (!) Intangibles Coupons Vouchers Reservations (restaurants, hotels, queues, etc.) Movie tickets Patents Copyrights Trademarks Software licenses Videogame licenses Music/movie/book licenses (DRM) Domain names Online identities Proof of authorship / Proof of prior art And more … Documentary records (photos, audio, video) Data records (sports scores, temperature, etc.) Sim Cards GPS network identity Gun unlock codes Weapons unlock codes Nuclear launch codes (!) Spam control (micro-payments for posting)
  16. 16. 16November 4, 2016Copyright © 2016 Recent news of enterprise efforts to leverage blockchains Activity and news • Beyond pure-play startups, industry and public sector are experimenting with blockchains – Understanding scalability, interoperability, security and stability – Establishing working groups, temporarily putting any concerns on hold • Pilots / trials / demonstrations / plans – Deloitte and ConsenSys (an Ethereum developer/integrator) announced plans in 2016 to create and demonstrate a digital bank – An R3 CEV mock trading project connected 11 banks to a distributed ledger using a private Ethereum blockchain running on Microsoft Azure cloud – Citibank is developing, testing and working on its own crypto-currency called CitiCoin and supporting blockchains Cont. – Estonia government services (e-Estonia) are securing healthcare records using blockchain – Microsoft VS (Visual Studio) is making the Ethereum Solidity programming language available to a wider set of developers – Innovate UK (government open innovation) is funding Tramonex to develop a cross border payments demonstration using Ethereum – JP Morgan Chase is developing a blockchain on Ethereum to support private/public derivatives and payments in a way that would satisfy regulators while protecting privacy – The Isle of Man Government is trailing blockchain based government services including identity – The Royal Bank of Scotland claims to have built a Clearing and Settlement process based on Ethereum smart contracts, with promising performance for real world use
  17. 17. 17November 4, 2016Copyright © 2016 We could go on and on … Cont. – 40 R3 CEV members (banks) have trialled trading fixed income products over 5 separate blockchains, involving technology from Chain, Ethereum and Eris Industries (now known as Monax) – The Bank of Russia has developed and tested an Ethereum-based blockchain prototype called ‘Masterchain’ for financial messaging, to be used by banks in Russia – The Australian Securities Exchange is building a blockchain replacement for its current systems and strengthen its role in the markets – IBM and Credit Mutual are working on customer identity services for verification and support in blockchain applications – Visa and Mastercard have live pilots in the domain of cross border payments and exploring how to extend financial services to adjunct business, e.g. car leasing Cont. – Phillips is building a blockchain based application for medical records management – Siemens existing IoT activities has been extended to encompass blockchain with a view to developing the nascent area of Ledger of Things – Deloitte is working with several blockchain start ups, including BlockCypher, Bloq and Consensys, working on a range of banking, insurance and payments processes. Deloitte has a division on this called RUBIX. – Blockchain ‘smart contract’ equity swaps demonstrated with Barclays, Citi, Credit Suisse and JP Morgan (Next slide) – IBM in China building a blockchain application to track the food supply chain, e.g. Pork, food health
  18. 18. 18November 4, 2016Copyright © 2016 Recommended books / papers https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf UK Government:
  19. 19. 19November 4, 2016Copyright © 2016 Keeping up to date • Coindesk.com – Leader in digital currency and blockchain news – Consensus 2016 conference drew 1500+ attendees – Publish the “State of Blockchain” report • http://www.coindesk.com/state-of-blockchain-q1-2016/ • The-blockchain.com – A blockchain portal and education site – Good selection of videos • Lots of other Web resources, as you can imagine
  20. 20. 20November 4, 2016Copyright © 2016 Deeper learning resources • Bitcoin and Decentralized Technology • https://www.pluralsight.com/courses/bitcoin-decentralized-technology • By the same author – Understanding the bitcoin blockchain in 5 minutes and in 24 minutes • https://www.youtube.com/watch?v=l9jOJk30eQs • https://www.youtube.com/watch?v=Lx9zgZCMqXE • Coursera • https://www.coursera.org/learn/cryptocurrency imponderablethings.com coursera.org
  21. 21. Copyright © 2016 Technology details & Standardisation efforts
  22. 22. 22November 4, 2016Copyright © 2016 Segmenting the technology • All blockchains are not the same • Public / private – Unpermissioned (~ Web 3.0) – Permissioned (Enterprise) • Orientation – Transactions • Cryptocurrencies • Digital Assets – Logic • Distributed Applications (dApps) • a.k.a. Smart Contracts • And other dimensions – e.g. Anonymity, Pseudonymous (indirectly discoverable identity) – Consensus Protocols Source: Eris Industries, now Monax.io
  23. 23. 23November 4, 2016Copyright © 2016 Blockchain technologies differ • Differences will pan out over time, leading a more standardised platform, similar to the evolution of databases and traditional app server stacks – Cryptographic keys supported – Data structures supported – Consensus protocol employed – Sophistication of sharding – data partitioning – Permissioning layer details – Role of ‘coins’ and ‘tokens’ in the architecture – Concurrency model supported – Block confirmation time / performance / throughput – Fixed or dynamic block sizes – Limits on size of a ‘transaction’ or ‘smart contract’ on the blockchain – Contract expressiveness, run time system and language – Interfaces with clients and other ecosystem components – Open source or proprietary
  24. 24. 24November 4, 2016Copyright © 2016 Blockchains utilise distributed “consensus” protocols • The Byzantine General Problem analogy – From systems fault tolerance to consistent database transactions & beyond to blockchain • Proof of work – Repeatedly run hashing algorithms or other mathematical puzzles to validate transactions – In the Bitcoin blockchain, for example, significant energy/electricity costs are incurred by ‘miners’, some of which operate large scale data centres for the purpose • Proof of stake – Asks users to prove ownership of a certain amount of their cryptocurrency or crypto-tokens (their ‘stake’) – Proof of stake currencies can be orders of magnitude more computing efficient than proof of work mining • Proof of space, proof of bandwidth – Similar to proof of work, but focussed on providing a dedicated amount of memory, disk space or bandwidth instead of CPU time • Proof of ownership – Algorithms that focus on the consensual provable ownership of a digital asset • Proof of authority – For private chains, authorised notes are able to collaborate to create / validate new secured blocks on the chain Each protocol type has variations, for example to define the next valid block in the chain
  25. 25. 25November 4, 2016Copyright © 2016 Standardisation …. the Hyperledger Project • A Linux Foundation project, a collaborative effort created to – Advance blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledgers – Not dependent on ‘mining’ for ‘proof of work’ (as in Bitcoin), consensus based on the Practical Byzantine Fault Tolerance Algorithm (PBFT) – Transform the way business transactions are conducted globally – An operating system for trusted, accountable and transparent interactions • Actively involved include Accenture, IBM, Intel, JPMorgan, R, financial institutions www.hyperledger.org http://www.coindesk.com/stellar-ripple-hyperledger-rivals-bitcoin-proof-work/
  26. 26. 26November 4, 2016Copyright © 2016 Chain • The team at Chain has built products at Google, Salesforce, Visa, Microsoft, Square, and Heroku • Chain partners with leading organizations to build blockchain networks that transform markets – Chain is a collaboration between financial firms and a team of SV engineers, cryptographers and data scientists • The Chain Open Standard optimizes for security, privacy, and scalability in highly regulated environments – Real use cases across payments industry, banking and capital markets • Comprehensive framework covering protocols and medium including: chain.com Chain approach to standards development Issuance Payments Bilateral trade Order book Loans Auctions Assets Smart contracts Privacy Metadata Data model Consensus
  27. 27. 27November 4, 2016Copyright © 2016 Chain Open Standard chain.com/os
  28. 28. 28November 4, 2016Copyright © 2016 Chain Core, OS and Sandbox • Enterprise blockchain software for production deployment • The software implementation of the Chain Open Standard • Designed to run in or with enterprise IT environments • Enables institutions to initiate, operate, or connect to a blockchain network • More than a blockchain node - enterprise-grade distributed system to build secure, scalable, highly available blockchain networks chain.com/core chain.com/showcase
  29. 29. Copyright © 2016 Examples
  30. 30. 30November 4, 2016Copyright © 2016 Coinbase • A Bitcoin wallet and platform for merchants and customers – Aiming to be the trusted brand in the Bitcoin marketplace – Integrate Bitcoin into many product and service categories • $106m funding including Andreessen Horowitz, NYSE, IDG Ventures, Y- Combinator • 5.6M wallets deployed, 43,000 merchants, $3.5B in Bitcoin exchanged, 3.8M customers served, 8000 API developers – Mobile wallet – Bitcoin insurance protection – Instant Bitcoin exchange to local currency – Secure off line storage – Full user control of private keys • Multi-signature vault – Support for recurring buys / subscription economy www.coinbase.com
  31. 31. 31November 4, 2016Copyright © 2016 Circle • A social payments app – Send money as easily as sending an email, a txt message or a Facebook like – e.g. “Txt your flatmate half the electric bill” • Aiming to use open Internet standards, and blockchain, to make “payments” easier to use, safer and more convenient • Embedding innovative approaches to risk, including machine learning • Partnership with Barclays, granted an e-money license by the UK Financial Conduct Authority • $76M VC funding including Goldman Sacks www.circle.com
  32. 32. 32November 4, 2016Copyright © 2016 Kraken • A prominent trusted bitcoin exchange (bitcoin, Ethereum, others) • Used by professional bitcoin traders – long or short positions • Provides bitcoin liquidity – bitcoin dark pool • Leveraged trading possible up to 5x, shorting allowed • Stop loss order controls, automated • Trading in and out of bitcoin from USD, Canadian dollars, British pounds and Japanese yen • First bitcoin exchange to have trading price and volume displayed on a Bloomberg Terminal • First to pass a cryptographically verifiable proof- of-reserves audit • Acquiring other otherwise non-viable exchanges www.kraken.com
  33. 33. 33November 4, 2016Copyright © 2016 EverLedger • A blockchain based fraud detection system, overlaying big data from closed sources such as insurers and law enforcement • Permanent, immutable, a ledger for diamond certification & transaction history • Verifiable by insurance companies, owners, claimants and the police • Extensible technology to track any asset that carries a unique identifier and which is difficult to destroy or replicate • API provides access to certificates, policy and claims information – REST, JSON, resource-oriented URLs, standard HTTP verbs – Client requests require signed HMAC-SHA512 signatures • API key and Secret key www.everledger.io
  34. 34. 34November 4, 2016Copyright © 2016 Supply chain commerce SKUChain • Blockchain solutions for B2B Trade and Supply Chain Finance • Frictionless collaborative commerce – Direct relationships • Pos, invoices, Inventory, forward payment obligations, loans – Deep tier financing • Real time views, linked to ‘Oracles’ BlockFreight • Blockchain solutions for global freight – Connecting banks, insurers, freight forwarders, shipping carriers, port operators and regulators • Built on Ethereum – Smart contracts to encode bill of lading process, payment terms and cargo – Tradeable token for transaction fees – Storage of freight information sets (bill of lading, supporting documentation) using the Interplanetary File System (IPFS) www.skuchain.com www.blockfreight.com
  35. 35. 35November 4, 2016Copyright © 2016 R3 • R3 is a financial innovation firm that leads a consortium partnership with over 40 of the world's leading banks • Design and deliver advanced distributed ledger technologies to global financial markets • Collaborates with partner banks on research, experimentation, design and engineering – Pillar 1: Base layer reference architecture to underpin financial grade Blockchain ledgers – Pillar 2: Secure, multi-institution collaborative lab to test and benchmark blockchain based technologies and services – Pillar 3: Run use cases to identify and design “up the stack” commercial blockchain applications • Activities: – Crypto 2.0: Intelligent application of cryptographic technology and distributed ledger-based protocols within global financial markets – Exchanges: New execution solutions which redefine the trading experience for existing and evolving asset classes – Ventures: Targeted early stage investments in forward thinking companies that seek to shape the next generation of financial services r3cev.com
  36. 36. 36November 4, 2016Copyright © 2016 Ripple • A blockchain based Global Settlement Network • Cryptographically secure end-to-end payment flow with transaction immutability and information redundancy – 10 of the top 50 banks work with Ripple – CGI and Accenture acting as Integrators – Distributed financial technology allows for banks around the world to directly transact with each other without the need for a central counterparty or correspondent – Compress operational costs and offer new services for cross-border payments • Instant, certain, low-cost international payments – Cross currency settlement – FX market making ripple.com
  37. 37. 37November 4, 2016Copyright © 2016 Ripple architecture ripple.com/technology The Ripple network contains the Ripple Consensus Ledger (RCL), a secure distributed ledger that uses the consensus process to settle transactions. Because of its distributed nature, it does not require a central operator, and offers transaction immutability and information redundancy. RCL holds the order book with bid/ask offers from payment initiators and market makers. Its path-finding algorithm enables it to find the lowest foreign exchange rate across all order books and currency pairs. Ripple Stream is an interface for market makers to submit bid/ask offers to the Ripple network. It uses FIX and .NET APIs to plug into the market makers’ existing systems, allowing for an easy interface with their trading clients. Ripple Stream can be used by FX trading desks within your bank for an internal market making use case. For corridors that your bank does not have an internal FX trading capability, you can allow external market makers to provide liquidity for your cross-border payment customers. Ripple Connect is a plug-and-play module that processes international payments for banks. It connects to the receiving bank’s Ripple Connect to exchange KYC and risk information, fees, payment details and expected time of funds delivery. It communicates with the Ripple network to get the lowest currency quotes. It packages this information and presents the entire cost structure to the sending bank, providing unprecedented visibility into the total costs of the transaction. Once the sender approves the transaction, it interfaces with RCL to settle the trade and notifies all parties of the transaction confirmation.
  38. 38. 38November 4, 2016Copyright © 2016 Ripple implements the XRP cryptocurrency • Banks perceive cryptocurrencies as tokens representing digital assets • Ripple in conjunction with a consortium of banks have demonstrated the viability of XRP (Ripple’s native asset) – Reduce the cost of liquidity operations – Enhance liquidity • Demonstrates the possibility of removing the need for local currency – So called nostro accounts • Participating banks included Barclays, CIBC, Intesa Sanpaolo, the Royal Bank of Canada and Santander – Control of their own wallets and transactions • The trial adhered to local (national) regulations http://www.coindesk.com/global-banks-test-ripples-digital-currency-new-blockchain-trial/
  39. 39. 39November 4, 2016Copyright © 2016 Align Commerce • Venture funded by KPCB and other prestigious investors – “Rethinking B2B wire transfers” • Blockchain powered wire transfers, no intermediary banks involved – Just like a FedEx package, track your funds transfer with a great Web UX – 60 countries now served, 1 to 3 days transfers, account to account, zero fees • Many small and medium business struggle with cross border payments – Most banks cannot send funds transfers directly as transactions – The blockchain under the AlignCommerce hood is invisible to the UX – Blockchain protocol with end points as bank accounts, API coming http://www.kpcb.com/blog/the-real-reason-why-blockchain-technology-is-worth-investing-in www.aligncommerce.com
  40. 40. 40November 4, 2016Copyright © 2016 Axoni • Axoni develop blockchain infrastructure for Capital Markets • Blockchain ‘smart contract’ equity swaps demonstrated with Barclays, Citi, Credit Suisse and JP Morgan (October 2016) – Automated lifecycle management and synchronisation of single stock, index, and portfolio swaps – A diverse set of 133 structured test cases to assess the functional and non-functional capabilities of the blockchain technology, 100% success rate – Million active trade contracts onto the network, 100s of thousands of new trades and updates in a matter of minutes – Ability to query that data on a system-wide view in real time – More than 50 tests of the underlying Axoni Core infrastructure, adding and removing permissions for participants, and the ability to update the protocol in a simulated live environment. – Reduction in reconciliation costs reduced risk of a payment not being made on time because of disputes over what it's meant to be – A standardised framework for firms to connect into - even if the swaps remain custom • Historically a gold record for any OTC trade has required a trusted third party like the DTCC or a clearing house – Integrated market data feeds from Thomson Reuters blockchain to facilitate automated, synchronized life cycle calculations like accruals and margin payments related to changes in prices and corporate actions • "The proof of concept has shown that blockchain technology lends itself well to solving for the operational complexity and volumes of Equity Swaps lifecycle processing.“ – Credit Suisse • “Banks now looking for opportunities to apply smart contracts and shared ledgers to drive process simplification including increasing both standardization and the degree of straight- through-processing” - Barclays • “Swaps are generally customised by dealers for the individual clients. Not only is it costly to maintain these systems, but you also frequently have what's known as a payment break; one party thinks they are supposed to receive X, but their counterparty believes they owe Y. Reconciliation on this is some of the most complex, difficult and costly in the industry.“ -- Axoni http://www.ibtimes.co.uk/axoni-delivers-blockchain-equity-swaps-barclays-citi-credit-suisse-jp-morgan-1586964 axoni.com
  41. 41. 41November 4, 2016Copyright © 2016 Symbiont • Enterprise ready Issuance and Trading platform, helping Wall Street get on board the blockchain ecosystem • Symbiont Assembly, a distributed ledger component • Easily model complex financial instruments and contracts and digitize to a blockchain • Corporate required actions are stored in the distributed ledger • Allows for manual or automatic/self executing terms and conditions • Crytographically authorised custom workflows for any multi-party process – sufficient to support the entire lifecycle of a financial instrument • Share the current state of an instrument with the market in a tamper proof and controlled manner symbiont.io
  42. 42. 42November 4, 2016Copyright © 2016 Factom • A scalable data layer for the blockchain • Using the technology behind Bitcoin to change how businesses manage data and keep records – Audit systems, medical records, supply chain management, voting systems, property titles, legal applications, and financial systems • Factom maintains a permanent, time-stamped record of your data in the Blockchain – Reduce the cost and complexity of conducting audits, managing records, and complying with government regulations. 1. Proof of existence: Document existed in this form at a certain time 2. Proof of process: Document is linked to this new updated document 3. Proof of audit: Verifying the changes in the updated document factom.org Factom white paper
  43. 43. 43November 4, 2016Copyright © 2016 MasterCard announce blockchain public API/lab • MasterCard have opened up APIs into their blockchain development lab • Draw in developers / SMEs around the implications of blockchain that MasterCard view as relevant to their business, including – P2M payments – P2P payments – B2B payments – Trade Finance chains – Supply chain commerce https://developer.mastercard.com/product/mastercard-blockchain
  44. 44. 44November 4, 2016Copyright © 2016 Blockchain in defence industry Use case 1 • Secured messaging system / apps via a ‘permissioned’ blockchain • Decentralised ledgers for military applications, including battlefield processes – Map business logic of DoD ecosystem onto network of known entities – Smart contract send/receive reducing exposure to active hackers, with prosaic objectives of simplifying and speeding otherwise complex communications, including back office • Interesting features including repudiation, deniability, perfect forward and backward secrecy, time to live/self deleting messages, one time view messages Use case 2 • Secure sensitive information to enhance “information integrity” – Track when a system, device or piece of data has been viewed or modified – Know who is inside the castle and what they are doing – Critical oversight of sensitive databases, e.g. nuclear systems command and control DARPA. DoD and NATO have put out requests for military applications of the blockchain Galois formal mathematical verification of the Guardtime blockchain
  45. 45. 45November 4, 2016Copyright © 2016 Guardtime • An industrial blockchain platform powering digital transformation • 100 cryptographers, developers and security architects • Defending networks from nation- state attack – Telecommunications, A&D, financial markets, insurance, eGovernment • Black Lantern network security appliance – KSI blockchain service (Keyless Signature Infrastructure) – State of all instrumented digital assets registered on blockchain – Mathematically verifiable baseline image of network or software defined network – Verification of network remaining in a clean state, detect changes and act when compromise detected • Firmware, operating systems, routing tables, switch and router configurations, event logs, data stores, memory www.guardtime.com
  46. 46. 46November 4, 2016Copyright © 2016 Blockchain APIs in the cloud? Yes. • BlockCypher is an infrastructure fabric for blockchain applications – Developers and businesses • Partners include Deloitte, CapGemini, EY and pwc • Multiple data centers, REST APIs, robust hosted blockchains / nodes, 24/7 support www.blockcypher.com
  47. 47. 47November 4, 2016Copyright © 2016 21 Inc. • Vision to build software and devices to enable blockchain / bitcoin applications on any device – Building a global network of machines (Internet of Things) that are “financially” connected to each other via Bitcoin – A micropayments marketplace, a new system resource for the machine economy • $116M investment (as of March 10, 2015) including Andreesen Horowitz, Khosla Ventures, eBay and PayPal founders • Andreessen Horowitz compared the ambitions of 21 Inc to the development of 56-kilobit Internet modems and wireless Internet towers • Working with the community to foster bitcoin programming design patterns and applications – The 21 Bitcoin Computer is “the fastest way for developers to learn Bitcoin. It has everything you need to build your first app in a weekend: a micropayments server, a full copy of the Blockchain, and a command line interface for programmatically mining, buying, and selling digital goods for bitcoin.” – BETA download for putting Bitcoin on any device – Ping21 for experimenting with the bitcoin enabled IoT • 21 Inc. is developing the sort of structure that could eventually power decentralised versions of many cloud-based computing services – “decentralized Bitcoin-incentivized grid computing that are qualitatively different from -- and complementary to -- what you can get from centralized cloud computing” 21.co https://21.co/learn/
  48. 48. Copyright © 2016 Moving onto Smart Contracts, Ethereum et al
  49. 49. 49November 4, 2016Copyright © 2016 Introducing the terminology of “Smart Contracts” Technology • Programmable currency – Cryptographic tokens with programmatic behaviours • Smart contracts(*) – Self-executing contractual (consistent) states, a.k.a. distributed business logic – Abstracting distributing programming to represent meaningful social or commercial contracts (beyond simple coin exchange between two parties) – Trusted, shared execution • Smart property – Digital Assets that understand their ownership and can be exchanged P2P – Physical Assets, a Ledger of Things, linking smart contracts to IoT • Dapps – decentralised applications – Same code + same data = same result – Implemented smart contracts and smart property as trusted tamper proof code on a blockchain Higher level concepts • DAO – decentralised autonomous organisation – Implemented as a set of Dapps • DAC – decentralised autonomous corporation – Well formed DAO that can operate as a business: for profit or non-profit – Examples: Uber without Uber, eBay without eBay, Facebook without Facebook – Includes automatic markets, trade nets … • DAS – decentralised automatous society – Community without Community Makers – Governance without Government * The word “contract” does not imply a commercial contract at the business level, but blockchain based solutions may lead to this
  50. 50. 50November 4, 2016Copyright © 2016 Monax (was Eris Industries) • Described as ‘process automation for enterprise ecosystems’ – B2B processes/Web services/microservices without central authority or system • Software and ‘legal engineers’ build a ‘smart contract’ library to – Reduce time to market for new processes – Increase certainty in transactions and processes • Customers include Swift, Deloitte, Accenture, R3 CEV, EY, Microsoft, AWS • Targeting ecosystem processes in claims management, supply chain management and B2B certification • A platform for building, testing and operating ecosystem applications with a blockchain back end – easing the way to smart contracts – Glue for 2B blockchain applications monax.io
  51. 51. 51November 4, 2016Copyright © 2016 Monax • Verifiable execution – Transaction engine – Consensus engine monax.io/platform https://monax.io/2016/03/02/eris-and-tendermint
  52. 52. 52November 4, 2016Copyright © 2016 Ethereum • “A worldwide decentralised computer with theoretically unlimited power and few barriers to entry” www.ethereum.org
  53. 53. 53November 4, 2016Copyright © 2016 Blockchain 2.0 as described by Ethereum.org • A decentralised platform that runs smart contracts – Applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference – Unstoppable applications, running a distributed virtual machine able to execute and integrate with an all–purpose (Turing complete) programming language – Run on a custom built blockchain globally shared infrastructure that can move value around and represent the ownership of property • Ethereum developers can – Develop many different kinds of applications – Create markets – Store registries of debts or promises – Move funds in accordance with instructions given long in the past (similar to the role of a will or futures contract) – All without a middle man or counter party risk • In a traditional architecture, every application has to set up its own servers in isolated silos, making sharing of data hard – And if a single app is compromised or goes offline, many users and other apps are affected
  54. 54. 54November 4, 2016Copyright © 2016 Ethereum concepts A simple smart contract might be a bet between two parties about tomorrow’s temperature at midday. The contract could be automatically completed by a software program checking the official temperature reading from weather.com, with the result of a transfer of bitcoin held in escrow from the loser to the winner’s account. Adapted from page 23, The Blockchain, Blueprint for a New Economy, O’Reilly
  55. 55. 55November 4, 2016Copyright © 2016 Solidity and Dapps • A blockchain app platform for ‘unstoppable’ applications, including DAOs – Distributed Autonomous Organizations – Smart Contract execution (distributed peer-to-peer) • Create tradeable digital tokens – Use as a currency, a representation of an asset, a virtual share, a proof of membership or anything at all • Smart contracts run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference – Developers can create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middle man or counterparty risk • Solidity, a new programming language for smart contracts and DAOs – MIX an IDE for the Blockchain era, create: – Tradeable token networks with fixed supply – Central “banks” that can issue money – Puzzle-based crypto currency or surrogate applications – Autonomic crowd funding and auction models – Virtual organizations where members vote on issues – Transparent associations based on shareholder voting – Delegative democratic systems, unchangeable constitutions dapps.ethercasts.com
  56. 56. 56November 4, 2016Copyright © 2016 DAOs and The DAO • DAO, a Distributed Autonomous Organization – Digital democratization of business • The DAO, a DAO curated by the Ethereum Project – Comparable to an autonomic cooperative, bank, VC, hedge fund – Bylaws hard-coded into a set of blockchain protocols – Executable smart contract engine – Cloud based “financial” code • Proposals for new smart contracts including: – Blockchain + IoT for a new decentralised “sharing” economy – P2P car rental, fully autonomous self-renting vehicles daohub.org
  57. 57. 57November 4, 2016Copyright © 2016 Synereo • Began life as a life to build a truly distributed social network with ‘attention’ economics as opposed to centralised models (Facebook et al) • Scalable functional block stack, with a strong and provable distributed processing model – Sharded and composable – All subprocesses run in parallel, leading to potential infinite scalability – A proof of stake (not mining) consensus protocol • Rholang smart contract language – Based on process calculi (specifically a variant of the pi calculus) – Predictable reliable and provable programs – Allows for the scalable (composable) development of very complex Dapps – More than a scripting language Technology vision and blueprint https://docs.google.com/document/d/1xmRvAjJEQ72-sR9luS34TG0BOpPn_6ztZjYBFCByKxo synereo.com
  58. 58. Copyright © 2016 Dark, Anonymity and Social Directions
  59. 59. 59November 4, 2016Copyright © 2016 From the dark web, to dark coins and dark orgs https://letstalkbitcoin.com/blog/post/darkcoin-anonymity-is-now-fully-functional-and-open-source-instant-transactions-on-the-way
  60. 60. 60November 4, 2016Copyright © 2016 Nxt.org is trying to anonymise and decentralize the future • Open Source (GPL v2), decentralised crypto platform and API • Nxt builds on and improves the basic functionality of pioneering cryptocurrencies such as Bitcoin • “Cryptocurrency and financial systems are the first widely used applications of blockchain technology, but the blockchain and its associated technology can be used for so much more.” • Build new applications directly on the blockchain itself – Nxt gives users complete freedom to create their own applications, e.g. Russia experimenting with a Nxt based e-proxy voting system, central securities depository – Create your own asset exchange for secure peer to peer trading – Launch your own digital currency or token system for any purpose, including exchange, trading, hedging, voting, contract processes – The Nxt blockchain provides data storage, publication and verification – Create decentralised autonomous organizations using multi-signature blind accounts • Alias System, one piece of text to be substituted for another, so that keywords or keyphrases can be used to represent other things
  61. 61. 61November 4, 2016Copyright © 2016 Going ‘dark’ may not be such a bad thing • The Darkcoin open source foundation was re-branded “Dash” (Digital Cash) in March 2015 – Disassociation from the Darkweb – Bitcoin does not guarantee anonymity, unlike physical cash • The Dash mission remains the same however, to be the world’s first privacy centric crypto-currency – Private, instant, secure, peer to peer, global – Dash founders believe privacy is a universal human need, and not a haven for criminals – Many people have apprehensions about privacy vs accountability – Dash may be able to address both? www.darkcoinfoundation.org www.dashfoundation.io www.dash.org https://cointelegraph.com/news/darkcoin-is-now-dash-and-not-a-moment-too-soon “Recently it became apparent that our branding was getting in the way of our mission, so we started investigating rebranding. We believe Dash, which stands for digital cash, is a great representation of what we want to become.” “Dash is what Bitcoin would be if Bitcoin had a transaction mixer (tumbler) built into its protocol, and if its confirmation times were instant.”
  62. 62. 62November 4, 2016Copyright © 2016 Z.Cash • First open, permissionless financial system employing zero-knowledge security • ‘Genesis block’ was minted on October 28, generating a price frenzy, pushing its value over that of BTC (Bitcoin) – Effective anonymity of transactions, hiding sender, recipient and value – View keys under user/participant control, without central authority – Employs a zero-knowledge proof construction called a zk-SNARK • Dash responds: 1. Governance 2. Trajectory of infrastructure 3. Independence of development 4. Privacy for user 5. Double spend protection in real time 6. User friendliness at the protocol level https://z.cash/ “If Bitcoin is like http for money, Zcash is https” https://www.youtube.com/watch?v=591J9KcKgHM
  63. 63. 63November 4, 2016Copyright © 2016 Identity for the digital era? The blockchain passport concept
  64. 64. 64November 4, 2016Copyright © 2016 A new global citizenship? • From e-Estonia to BITNATION – Digital nations without borders? – Or nations providing “e-Residency” access to Government services? – e-Estonia using blockchain to secure healthcare records (Guardtime) • BITNATION “provides the same services traditional governments provides, from dispute resolution and insurance to security and much more – but in a geographically unbound, decentralized, and voluntary way” – Bitcoin 2.0 – a cryptographically secured public ledger distributed amongst all of its users – Global Citizenship IS, Public Notaries, Embassies, Consulates, Refugee Emergency, Education Network, Bitcoin Services Etc. https://e-estonia.com/ https://bitnation.co e-Estonia and BITNATION now collaborating, but that’s another story for another time!
  65. 65. 65November 4, 2016Copyright © 2016 Trend Society • Nations are becoming e-Nations – e-Estonia led the way • Borders will become e-Borders – e-Residency has value • e-Nations will compete with e- Services for: – Citizens, Businesses – e-Residents, e-Businesses – Valuable Migrant Skills, Labour – Refugee services – Global citizen fluidity • Reciprocal relationships between Nations and e-Nations – Spreading governance best practices Technology • Blockchains as – The shared systems of record, identity and ownership – The modernisation technology for previous generation ‘digital government’ • Initially adjunct to existing integration architectures, SOA, Web services • Smart contracts as – The shared data/code of rules of governance and interaction • Blockchain based DAOs as – A new organising principle for governance and value-added e- Government services Additional slide deck available
  66. 66. Copyright © 2016 How fast are things moving?
  67. 67. 67November 4, 2016Copyright © 2016 Examples of blockchain activity in the IT Services industry Projects • Accenture launches blockchain practice – Capital markets, investment banks – Proposes ‘editable’ blockchain, filing a new patent • Chameleon hash • Capgemini publishes position papers – Incubating solutions with selected technology partners – Claims to be building 100 person strong team of blockchain specialists • CGI implements a Ripple Validator node – Launches blockchain lab for trade finance – Blockchain enables payment solutions • Cognizant talking about the blockchain disruption – Banking, finance, smart contracts – Defining solution propositions • IBM – Establishes Blockchain technology group and research, puts blockchain on Z series – Incubating solutions around specific business issues, e.g. Loyalty points, IoT products, Finance – Private Blockchain via Bluemix PaaS for developer experiments (Monax / Eris technology) – Collaborating with Digital Currency Group (DCG) Services • AWS – Blockchain-as-a-Service (BaaS) – Monax / Eris technology – https://aws.amazon.com/marketplace/pp/B01BTB1EP8 • IBM – Bluemix blockchain services/API – HyperLedger technology – http://www.ibm.com/blockchain/bluemix.html • Intel – Sawtooth Lake (IntelLedger) – https://intelledger.github.io/ • Microsoft – Azure Blockchain-as-a-Service (BaaS) – Monax / Eris technology – https://azure.microsoft.com/en-gb/solutions/blockchain/
  68. 68. 68November 4, 2016Copyright © 2016 Ernst & Young blockchain start up challenge • Mentors from the accounting firm to build products focused on digital rights management and energy trading • Aimed at ensuring intellectual property rights can be more easily managed and to make it easier for new business models to evolve in the energy trading space • Selected startups include – Adjoint, BitFury, BlockVerify, BTL Group LTD, JAAK and Tallysticks
  69. 69. 69November 4, 2016Copyright © 2016 IBM Adept and the IoT Blockchain • An IoT research project led by IBM – Machine-to-machine commerce – Cost, monetisation, interoperability, discoverability, authentication, scale – To support long term service commitments/customer experiences • Smart connected products transacting on the blockchain and participating in smart contracts – Autonomous devices, inter-device commerce – Decentralisation of ownership and control/interaction – Inter device / stakeholder agreements, payments and services • Related efforts – Filament, 21 Inc IBM Institute of Business Value
  70. 70. Copyright © 2016 Ecosystems, Hype and Bubbles
  71. 71. 71November 4, 2016Copyright © 2016 Funding and funding bubbles • In 2015, Bitcoin and Blockchain-related startups raised over $1B in total investment • 21 Inc. raised $116M and Coinbase raised $75M, dwarfing the investment in start ups that drove the early days of the Internet • Financial institutions (banks, insurers, market makers) are investing millions in blockchain related projects • VCs are betting on more than the financial sector, investing in promising non-financial applications, for example, smart contracts – e.g. the Ethereum blockchain
  72. 72. 72November 4, 2016Copyright © 2016
  73. 73. 73November 4, 2016Copyright © 2016
  74. 74. 74November 4, 2016Copyright © 2016 Peak of hype: Where are we with blockchain according to Gartner?
  75. 75. 75November 4, 2016Copyright © 2016 The ‘Let’s Talk Payments’ Blockchain Momentum infographic 2016 • Use cases of blockchain in the financial and non- financial sector (2015) • Study of sectors in which blockchain activity is growing or lagging (2016) – Companies (startups, unicorns) operating in each sector – Deals and partnerships struck – Funding raised by these companies https://letstalkpayments.com/ltp-blockchain-momentum-2016-infographic/ Also see: https://angel.co/blockchains
  76. 76. Copyright © 2016 Challenges and Futures
  77. 77. 77November 4, 2016Copyright © 2016 Expect bumps in the road • In June 2016, The DAO, a platform for the autonomous governance of investment capital built on a public Ethereum blockchain, was found to contain an unexpected code path allowing one sophisticated user to withdraw funds (Ether cryptocurrency) from the chain, at the time valued at $50m USD – Ether transferred to a clone of the DAO chain (“childDAO”) under control of the user – With no central authority, community consensus decided a course of action • Close The DAO • Hard fork the Ethereum-based blockchain, with no possibility to reverse the fork (no backward compatibility) • Partial return of funds, with some controversy – Cast a shadow over the immutability of blockchains At approximately 14:30 UTC July 20 2016, China-based Ethereum miner BW.com mined the Ethereum blockchain's 192,000th block. Seconds later the mining pool also mined the first block on the new blockchain, which returned funds lost in the collapse of The DAO to an account available to its original investors. http://www.coindesk.com/ethereum-executes-blockchain-hard-fork-return-dao-investor-funds/ http://www.coindesk.com/understanding-dao-hack-journalists/
  78. 78. 78November 4, 2016Copyright © 2016 Are concerns about the vision real? Questions • Are we really on the cusp of solving long standing theoretical problems in distributed computing? – Claims that blockchains and smart contracts work at small scale but, by design, break at large scale – Trying to reconcile two conflicting directions – 1) put more data in the chain and 2) reduce the time for the chain to be globally consistent – Can we run untrusted code with 100% guarantee that it won’t crash other applications? – Are we putting complexity in the network, which is the enemy of security? – Verifying the blockchain from the beginning would require running every single computation that every user even run, from the genesis code forward – Will this design choice limit end to end scalability? Directions • Not to solve these problems would effectively stop the chain from making forward progress – Is Ethereum Turing complete? – Are Ethereum smart contracts verifiable? – Do we need to solve these problems at a fundamental level? • Languages – Ethereum Solidity – Synereo Rholang • Reflexive higher order processes (pi-calculus formalism) – What about Tezos’ direction?
  79. 79. 79November 4, 2016Copyright © 2016 Accenture proposed an editable (redactable) blockchain • Accenture files patent that allows an authorised third party to edit or delete information stored in a permissioned blockchain, governed by agreed upon rules/policy – Proposal and prototypes aims to make blockchain more practical for use in real world financial applications • The Accenture proposed method utilizes a “chameleon hash” to allow authorized administrators to edit a single “block” while not compromising the integrity of the entire chain – Financial services providers need a means to quickly correct errors on the blockchain, since in the real world there are non-technological reasons why revisions may be required – The Accenture proposal is controversial because blockchain was conceived by design to be an immutable, tamper proof ledger, eliminating the need for such central authorities – Accenture claim immutability is not needed in permissioned blockchains because everything is overseen by a central authority, many of which are Accenture clients – Blockchain purists point out that Accenture’s proposal for a mutable blockchain loses it ability to act as a non- refutable record for legal purposes and that the mechanism could be exploited by hackers – Accenture believe that allowing for forks in the chain, without having to disrupt the ongoing operations in the overall chain, is needed for practical applications – Blockchain technologists propose that the edit feature is unnecessary in any case, since multi-party smart contracts could be implemented on an immutable chain allowing for whatever ‘corrective’ actions to be implemented as robust processes, themselves immutable and tamper proof
  80. 80. 80November 4, 2016Copyright © 2016 Challenges ahead for blockchain • Throughout – Bitcoin processing 7 tps (2015), VISA 2,000 tps, 10,000 peak, Twitter, 10,000tps • Latency – 10 minutes to clear, with longer wait recommended for large transactions, VISA takes seconds at most • Size and bandwidth – The bitcoin blockchain grew by 14GB in 2014 to 45GB in 2016, 1 to 2 days to download. At VISA transaction rates it will grow by 1.42PB/year. At global currency exchange rates by >200PB/year. • Security – Architecture leads to centralisation of mining, 51% mining control attacks, double-spend attacks, extreme user spoofing, core Elliptic Cryptography cracked by new techniques • Wasted resources – Electricity, energy used by data centre scale bitcoin mining (“proof of work”) operations – push for alternate consensus protocols • Usability – Wallets, applications, APIs, identities • Versioning, forks and multiple chains – Proliferation of competing blockchains, availability of clouds, potential to bring >51% compute resources to bear from multiple chains to a smaller target chain/application or side chain of interest to a criminal • Ecosystem – Applications may not be accepted or viable until there is a full ecosystem of interoperable solutions or alternative solutions – especially complex for crypto-infostructures – Blockchain fabric analogy to the development of viable IaaS cloud solutions: messaging, transport, protocols, address management, administration, operations • Privacy – Pervasive use of blockchain applications in society may lead to identity theft to the degree that you no longer have your identity at all!
  81. 81. 81November 4, 2016Copyright © 2016 Lightning Network • Addressing scalability of blockchain using persistent bitcoin-based micropayment channels • Lightning-fast blockchain payments without worrying about block confirmation times – Security is enforced by blockchain smart- contracts without creating a on-blockchain transaction for individual payments – Payment speed measured in milliseconds to seconds – Capable of millions to billions of transactions per second across the network – Attaching payment per action/click is now possible without custodians – By transacting and settling off-blockchain, allows for exceptionally low fees – Which allows for emerging use cases such as instant micropayments, ‘streaming money’ – Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules lightning.network/lightning-network-paper.pdf Scalability
  82. 82. 82November 4, 2016Copyright © 2016 Thunder Network • Lightening.Network moves from the theoretical to the practical • Alpha version of the Thunder Network – Off chain Bitcoin payments that settle back to the main Bitcoin blockchain – Instant Payments that are irrevocable the moment you use them – Scale: Tests indicate 11K TPS, better than Visa with only a few 1000 nodes – Extremely low payment overheads https://blog.blockchain.com/2016/05/16/announcing-the-thunder-network-alpha-release/ https://blog.blockchain.com/2016/05/16/transaction-0/ www.blockchain.com/thunder/index.html
  83. 83. 83November 4, 2016Copyright © 2016 Tezos • A self-amending (evolving) blockchain – Decentralised technology governance – Preventing unnecessary forks or side chains – Allow for innovation to occur • Consensus governs more than state (as with BTC and ETH) – Base (seed) protocol determines how the protocol and the nodes should adapt and upgrade – Deliberately conservative initial rules • A layered cryptographic ledger – Network layer – Consensus layer – Transaction layer • Decoupling allows the protocol to evolve in a decentralised fashion https://tezos.com/ Think of this as using a blockchain to govern the evolution of another blockchain https://www.youtube.com/watch?v=3mgaDpuMSc0
  84. 84. 84November 4, 2016Copyright © 2016 But won’t Apple Pay (and its ilk) be enough? Evolution • A mobile payment and digital wallet from Apple on iPhones and Watches • Can work with existing contactless payment terminals • Based on EMV Payment Tokenisation Specification • 1 million credit cards registered on Apple Pay in the first 3 days of its availability, 220,000 vendors launched • Interoperability between payment instruments may be the name of the game, including cryptocurrencies as and when they are more accepted as legal tender Revolution • Is Bitcoin, Dash or ZCash actually needed? Will they be trusted? • Bitcoin today is not a currency (backed by capital, insurances with options to intervene in markets in order to improve the health of an economy) • Bitcoin and other altcoins are more like convertible commodities, such as gold or diamonds, in which one can speculate and trade – Thus subject to the applicable laws • Blockchain is more than any payment system, and more important than bitcoin • Apple Pay is not a platform for distributed computing/ smart contracts https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country
  85. 85. 85November 4, 2016Copyright © 2016 Beware the hype but understand the potential • Disintermediating central authorities from industry processes is not so easy, and will take time, because customers would need to join the new ‘chains • Central authorities provide valuable services in a market or ecosystem, which may not be so simple to programmatically magic away using a ‘smart contract’ on a blockchain – Financial experts report • Many central mechanisms mutualise risk and this is an not an inherent feature of a technology, but may be programmed at some higher level • Complex markets involve many kinds of value-added participants, some processes can be unbundled from central players, but this may not mean they go away or the value they bring is irrelevant – There may be markets and processes that depend on the role of intermediaries for entirely valid reasons accepted by those who join the party • Programmatic self executing and enforcing software (smart contracts) can be rigid in the way rules are applied, as anyone knows who has programmed a rules engine, and can lead to unexpected behaviours via tight coupling and feedback loops – Analogy of automated trading on the financial markets • Human actors in a process will still be necessary in many instances, despite the technologists natural desire to push to machine learning on the blockchain! It is perfectly reasonable, therefore, to use blockchain technology as an improved (lower cost, less mutable) substitute for existing processes without the need to overturn decades of learning
  86. 86. 86November 4, 2016Copyright © 2016 Finally, let’s not forget • Bitcoin (and all other tokens/ currencies) is not the same as the blockchain • Blockchains can be public, private or hybrid • There will be several blockchain implementations / distributions – Open source, claiming open source and deliberately commercial – Advancing the technology, increasing scalability, adding features, layers • Blockchains, like databases before them, are places to build applications – Smart contracts, distributed applications (dApps), distributed organisations (DAOs) – Remember: real world solutions take a long time to mature • Expect all the usual ecosystem players around blockchain technologies – Originators / communities – Developers / integrators – Consultants / support partners – Solution providers / specialists – Blockchain infrastructure (as a service) providers, API providers – Blockchain-powered SaaS applications etc. • Development of the public blockchains will continue in parallel with maturing blockchain-based enterprise applications – Regulation in each vertical sector will no doubt put a brake on some commercial applications, at least initially
  87. 87. Copyright © 2016 Appendix A: Blockchain applications & markets
  88. 88. 88November 4, 2016Copyright © 2016 More and more applications are envisaged • App development: Proof of ownership of modules in app development • Company incorporations: Digitizing company incorporations, transfer of equity/ownership and governance • Decentralized storage: Decentralized storage using a network of computers on blockchain • Decentralized Internet and computing resources: Decentralized Internet and computing resources to cover every home and business • Digital content: Proof of ownership for digital content storage and delivery • Digital identity: Provides digital identity that protects consumer privacy • Digital security trading: Ownership and transfer • Digitizing assets: Improves anti-counterfeit measures • Digitization of documents/contracts: Digitization of documents/contracts and proof of ownership for transfers • Enables authenticity of a review: Enables authenticity of a review through trustworthy endorsements for employee peer reviews • Escrow/custodian service: Escrow/custodian service for the gaming industry; loan servicing and e-commerce • Home automation: Platform to link the home network and electrical devices to the cloud • IT portal: A smart contract IT portal executing order fulfilment in ecommerce/manufacturing • Marketplace for sales and purchases of digital assets: Proof of ownership and a marketplace for sales and purchases of digital assets • Patient records: Decentralized patient records management • Prediction platform: Decentralized prediction platform for the share markets, elections, etc. • Reputation management: Helps users engage, share reputation and collect feedback • Ride-sharing: Points-based value transfer for ride-sharing Source: William Mougayer
  89. 89. 89November 4, 2016Copyright © 2016 In more and more sectors Crucial Blockchain Properties • Cryptoledger • Decentralized network • Trustless counterparties • Independent consensus-confirmed transactions • Permanent record • Public records repository • Notarization time- stamping hashes • Universal format • Accessibility Government & Legal • Transnational orgs • Personalized governance services • Voting, propositions • P2P bonds, land titles • Tele-attorney services • IP registration and exchange • Tax receipts • Notary service and document registry Markets • Currency • Payments & Remittance • Banking & Finance • Clearing & Settlement • Insurance • FinTech • Trading & Derivatives • QA & Internal Audit • Crowdfunding IOT • Agricultural & drone sensor networks • Smarthome networks • Integrated smartcity, connected car, smarthome sensors • Self-driving car • Personalized robots, robotic companions • Personalized drones • Digital assistants • Communication (messaging) • Large-scale coordination • Entity ingress/egress • Transaction security • Universal format • Large-scale multi- data-stream integration • Privacy and security Real-time accessibility Health • Universal EMR • Health databanks • QS Data Commons • Big health data stream analytics • Digital health wallet • Smart property • HealthToken • Personal development contracts • Large-scale infrastructural element for coordination • Checks-and- balances system for ‘good-player’ access • Community supercomputing • Crowd analysis • P2P resourcenets • Film, dataviz • AI: blockchain advocates, friendly AI, blockchain learners, digital mindfile services Science, Art, AI Source: Melanie Swan
  90. 90. 90November 4, 2016Copyright © 2016 Financial and Public Records Applications • Financial instruments 1. Currency 2. Private equities 3. Public equities 4. Bonds 5. Derivatives Commodities 6. Spending records 7. Trading records 8. Mortgage/loan records 9. Servicing records 10. Crowdfunding 11. Microfinance • Public Records 1. Land titles 2. Vehicle registries 3. Business incorporations 4. Criminal records 5. Passports 6. Birth certificates 7. Death certificates 8. Voter Registration 9. Voting Records 10. Health/safety inspections 11. Building permits 12. Court records 90 http://forum.ethereum.org/discussion/1402/how-to-get-started-your-first-dapp-under-one-hour Source: Melanie Swan
  91. 91. Copyright © 2016 Appendix B: Ethereum’s Solidity
  92. 92. 92November 4, 2016Copyright © 2016 Ethereum • A (complex) blockchain based distributed computing platform – “Smart contract” functionality – Robust tamper proof decentralised applications • A decentralised virtual machine (EVM) – Computationally “Turing” complete, unlike simple Bitcoin VM (share data not behaviour) – Ability to run any coin, protocol or blockchain – Executes peer to peer “contracts” using a crypto token called an ether • Solidity, a JavaScript-like programming language, compiled to EVM bytecode – Possibility to translate other languages to Solidity, e.g. VB, C# to Solidity • Truffle, IDE – Development environment, testing framework and asset pipeline for Ethereum • Ethereum platform + Solidity applications = – Decentralised Autonomous Organisations (DAOs) defined via smart contracts
  93. 93. 93November 4, 2016Copyright © 2016 A Solidity cheat sheet
  94. 94. Copyright © 2016 Appendix C: The role of “Oracles”
  95. 95. 95November 4, 2016Copyright © 2016 Operation of smart contracts • Smart contracts track performance in real time and can take immediate action based on their predefined conditions; replacing costly human error and fraud prone processes • They need access to external data that won’t necessarily be available on the blockchain in a practical sense www.smartcontract.com
  96. 96. 96November 4, 2016Copyright © 2016 Oracles in Smart Contract architecture • “Oracles” sit between a smart contract and the external world, providing the data needed by the smart contract to prove performance, while sending its commands to external systems – Inbound oracles provide smart contracts with data from external data feeds so they can make a determination about events outside the smart contract network in which they are required to run e.g., Ethereum, Bitcoin, etc. – Outbound oracles allow smart contracts to send commands to your internal systems and traditional payment methods that release payment to a recipient in their preferred local currency Source: about.smartcontract.com
  97. 97. Copyright © 2016 hsmith23@csc.com @smithh #blockchain www.csc.com

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