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© 2016 IBM Corporation 1© 2016 IBM Corporation
Blockchain ExplainedBtSym ‘16
Percival Lucena IBM Research slideshare.com/plucena
V3.3, 12 July 16
IBM Research
▪ World’s largest IT Research organization ▪ 3000+ researchers ▪ 12 labs in the world - Rio, Sao Paulo ▪ +70.000 patents - 7355 patents in 2015 ▪ Nobel Prizes
▪ 1973 Leo Esaki, of the Thomas J. Watson Research Center, earned the Nobel Prize in Physics for work in semiconductors
▪ 1986 Gerd Bining and Heinrich Rohrer, of IBM Research – Zurich for the scanning tunneling microscope
▪ 1987 Georg Bednorz and Alex Müller, of IBM Research – Zurich for research in superconductivity ▪ 2014 - Dr. William E. Moerner Former IBM Research scientist has been awarded the 2014 Nobel
Prize for Chemistry “surpassing the limitations of the light microscope.”
IBM Research Areas
IntroductionBitcoin
Blockchain Hype-cycle
Source: Bart Suichies – December 21, 2015
Introduction
Key Concepts:
Benefits:
Key Concepts and Benefits
Introduction
Problem - Inefficient, expensive, and vulnerableSolution - Consensus, provenance, immutability and finality
Party A’s records
Bank records
Party A’s records
Party C’s records
Auditor records
Party B’s records
Party D’s records
Party C’s records
Auditor records
Party B’s records
Party D’s records
Bank records
Party A’s records
Shared, replicated, permissioned
Problem and Solution
Use Cases
▪ Securities ▪ Post-trade settlement▪ Derivative contracts
▪ Syndicated Loans ▪ Supply Chain ▪ Healthcare ▪ Digital Rights Management ▪ Financial Audit:
Triple Entry Accounting
▪ Retail Banking ▪ Cross border remittances▪ Mortgage verification & contracts▪ Fidelity Points
▪ Public Records ▪ Real estate records ▪ Vehicle registrations▪ Citizen Identity
▪ Digital Property Management
Financial Use Cases
Letter of Credit Microfinance▪ Increase the speed of
transactions execution
▪ Reduce cost and risk.
▪ Allows all counter-parties to have the same validated record of transaction and fulfillment.
SmartContracts can be combined with IoT:
▪ Peer-to-peer money lending for subprime
▪ Social and conomic inclusion for development Countries
Non-Financial Use Cases
Media Publishing Electronic Medical RecordsCollect and distribute money to songwriters and copyright holders
▪ Patients have full access to their own data
▪ Grant access to health-care providers
Introduction
Time
Ledger
Blocks of Transactions
Block 11
Proof of work: 0000005647kjp
Previous block: 000000432qrza1
Transaction lk54lfvx
Transaction 09345w1d
Transaction vc4232v32
Block 12
Proof of work: 000000ahpoka9
Previous block: 0000005657kjp
Transaction dd5g31bm
Transaction 22qsx987
Transaction 001hk009
Block 13
Proof of work: 00000090b41bx
Previous block: 000000ahpoka9
Transaction 94lxcv14
Transaction abb7bxxq
Transaction 34oiu98a
Block 13
Block 12
Block 11
Blocks of Transactions
Consensus Algorithms
Process work to validate
transactions
Node ....Transactions to be processed Transactions already validated (and in the chain)
NodeNode Node
...
Example of work: find right code to open the lock. Difficult to find the code, easy to verify it.
Algorithm
1. Retrieve group of transactions from pending transactions to be validated
Group to be validated
2. Process work to generate proof (e.g. lock code) 3. Broad cast proof-of-work to all nodes (e.g. code to open the lock)
4. Write transactions into the blockchain if proof-of-work is valid for majority of nodes (e.g. nodes can open the lock)
Proof of Work
Introduction
Source: CoinDesk and IBM LA Client Center
LA Blockchain Mkt (estimate) in M$
0.0
75.0
150.0
225.0
300.0
2016 2017 2018 2019Conservative Somewhat Bullish Bullish
Blockchain & Bitcoin – Addressable Market
Bitcoin & Blockchain
Hardware & Storage
Merchants
Investments & Banking
Wallets
Payment Processors Blockchain Technology
Exchange
Blockchain Enterprise Solutions
Blockchain Development
Financial Services
Mining
Media & Advocacy
EcosystemOverview
Ecosystem
Reference: fintechinfo.com
EcosystemBlockchain Related Startups
▪ Collaborative program ▪ Headed by the Linux Foundation
▪ Announced December 17 2015 w/ 17 founders ▪ Now w/ 100 members
▪ Members are IT and/or Financial players ▪ IBM is a key contributor
▪ Work together to improve Blockchain technology ▪ As a cross-industry open standard for distributed ledgers ▪ On the path to rewrite how we do business transactions
▪ Open source ▪ Open standards ▪ Open Governance
Linux Hyperledger Project
Linux Hyperledger Project
Community + Code Linux Hyperledger Project
Open Source Code: Blockchain for business; Consensus | Provenance Immutability | Finality Open Governance – 40 member cross industry board
Cloud IBM Blockchain
Blockchain managed service on IBM Cloud and z Systems; Identity | Consensus | System Integration | Hardware-assist for Performance & Security IBM Blockchain on Bluemix
Clients Blockchain SolutionsBlockchain Garage
Making Blockchain real for business Blockchain Garage; New York | London | Singapore | Tokyo Blockchain Services Practice
Blockchain for Business – Our Point of View
Future Trends▪ DAPPS: dUbber, dCarzip, dAirBnb ▪ Multiple Chains Integration
▪ Proof of stake implementations for consensus
▪ Analytics
▪ Search engine
▪ Oracles, Autonomous Agents
▪ Natural language contracts
▪ Proof of stake
"On the Blockchain, no one knows you're a fridge"
Richard Brown – IBM Executive Architect for Banking and Financial
Future Trends
▪ DAOs – Decentralized Autonomous Organizations
▪ No central control
▪ Virtual
▪ Transparent
▪ Delegative democracy
▪ Proposal based
▪ Device Democracy ▪ Autonomously managed
▪ Device to device messaging
▪ Agreement between devices
3134
Future Trends
Pratical Example:Explore Watson IoT with Blockchain
Businnes Contract
Pratical Example:Explore Watson IoT with Blockchain
Demo Link
Pratical Example:Explore Watson IoT with Blockchain
Recommendations & Closing RemarksPatterns for Customer Adoption
Closing Remarks ...Do You Even Need a Blockchain?
Source: Bart Suichies – December 21, 2015
24Page© 2016 IBM Corporation
Not for all …Blockchain is not …§ Suited to high performance (millisecond)
transactions § For just one participant (no business
network)§ A replicated database replacement§ A messaging solution§ A transaction processing replacement
§ Suited for low value, high volume transactions
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