Blockchain 101

Blockchain 101

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An Introduction to Blockchain for Healthcare, State & Local Government and Education

Alan Dickman, IBM Mark Lucente, Zilker Technology

Blockchain education series

Explained

Solutions

V5.3 Public Sector, January 17, 2018 © 2018 IBM Corporation

Composed

Architected

Explored

Next Steps

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Agenda Approximate Time

Description

9:30 – 9:45

Welcome and introduction

9:45 – 10:15

What is Blockchain • Underlying Capabilities • Benefits Why is it relevant?

• Healthcare Use Cases • State & Local Government Use Cases • Demo - Immunichain Getting started with Blockchain • What makes for a good project • Design Thinking and the Garage Method • IBM’s Blockchain Offerings Q&A

10:15 – 10:45

10:45 – 11:15

11:15 – 11:30 © 2018 IBM Corporation

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Contents

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What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my Business networks, wealth/value and integration

– Business Networks benefit from connectivity • Participants are customers, suppliers, banks, partners • Cross geography & regulatory boundary

– Wealth or Value is generated by the flow of goods, services or information across business network in transactions and contracts – Integration or Markets are central to this process: • Public (fruit market, car auction), or • Private (supply chain financing, bonds) © 2018 IBM Corporation

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Ledgers are key

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Ledger is THE system of record for a business.

Business will have multiple ledgers for multiple business networks in which they participate.

– Transaction – an asset transfer onto or off the ledger • John gives a car to Anthony (simple)

– Contract – conditions for transaction to occur • If Anthony pays John money, then car passes from John to Anthony (simple) • If car won't start, funds do not pass to John (as decided by third party arbitrator) (more complex) © 2018 IBM Corporation

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Participant Bank records

Participant

Insurer records

Š 2018 IBM Corporation

Regulator records

Auditor records

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Participant Bank records

Participant

Blockchain

Insurer records

Š 2018 IBM Corporation

Regulator records

Auditor records

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Blockchain for business Append-only distributed system of record shared across business network

Ensuring appropriate visibility; transactions are secure, authenticated & verifiable

Š 2018 IBM Corporation

Shared ledger

Privacy

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Smart contract

Trust

Business terms embedded in transaction database & executed with transactions

Transactions are endorsed by relevant participants

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www.blockchainhq.blogspot.my Hyperledger Fabric: Distributed Ledger Platform

– An implementation of blockchain technology that is a foundation for developing blockchain applications – Emphasis on ledger, smart contracts, consensus, confidentiality, resiliency and scalability.

– V1.0 released July 2017 – 159 developers from 27 organizations – IBM is one contributor of code, IP and development effort to Hyperledger Fabric

© 2018 IBM Corporation

http://hyperledger-fabric.readthedocs.io/ www.blockchainhq.blogspot.my 9

www.blockchainhq.blogspot.my Permissioned vs Non-Permissioned Blockchains

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For its use in government and large scale industry applications – a Permissioned Blockchain will need to be leveraged – –

•

Permissioned Blockchains will also be the right point to include adding of the Consumer/Citizen – –

•

Non-Permissioned Blockchains – such as bitcoin – use “Proof of Work” and other mechanisms to establish trust (because there is no central authority) Permissioned Blockchains have specific characteristics that will be required for Government’s use of Blockchain

Can leverage either an existing identity management solution or building this capability into Blockchain itself Adding Consumer/Citizen interaction in the Blockchain unlocks a whole new set of use cases and value

The Hyperledger Project defines an open standard and open source solution for a Permissioned Blockchain - https://www.hyperledger.org/

© 2018 IBM Corporation

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Blockchain underpins Bitcoin

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is: • An unregulated shadow-currency • The first blockchain application

• Resource intensive Blockchain for business differs in key areas: • Identity over anonymity • Selective endorsement over proof of work

• Assets over cryptocurrency

© 2018 IBM Corporation

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Contents

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What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation

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Blockchain eliminates these challenges • Eliminates data silos • Allows organizations to share networks without compromising data privacy, security or integrity.

• Supports data encryption and permission settings for participants and third parties • Provides provenance of what happened when

© 2018 IBM Corporation

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• Allows a auditors or regulators to view transactions at any time and be certain they are looking at the single version of the truth • Ensures immutability of the chain which eradicates fraud and abuse • Enables immediate deployment of policy to all members of a network at the same time

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www.blockchainhq.blogspot.my IBM Blockchain

Common Use Case: Supply chain What

How

• Provenance of each component part in complex system hard to track

Blockchain startup Everledger is tapping Watson and other IBM • Manufacturer, production date, batch and even the technologies to underpin its tracking of manufacturing machine program the provenance of more than 1.2 • Blockchain holds complete provenance details of million diamonds globally. each component part

• Accessible by each manufacturer in the production “This is what the blockchain does at its core. It is a shared ledger process, the aircraft owners, maintainers and government regulators technology that allows participants in Benefits

• Trust increased, no authority "owns” provenance

• Improvement in system utilization • Recalls "specific" rather than cross fleet © 2018 IBM Corporation

a business network to transact assets where everyone has control but no one person is in control,” - Leanne Kemp, Founder & CEO @ Everledger www.blockchainhq.blogspot.my14

www.blockchainhq.blogspot.my IBM Blockchain

Common Use Case: Audit and compliance What

How

Benefits

• Data in large organizations is dispersed throughout many divisions and geographies • Audit and Compliance needs indelible record of all key transactions over reporting period • Blockchain collects transaction records from diverse set of systems • Append-only and tamperproof qualities create a high confidence audit trail • Privacy features to ensure authorized user access • Lowers cost of audit and regulatory compliance • Provides “seek and find” access to auditors and regulators • Changes nature of compliance from passive to active

© 2018 IBM Corporation

Delaware has announced that it expects to introduce “smart UCC” filings that “will (1) automate the release or renewal of UCC filings and related collateral, (2) increase the speed of searching UCC records, (3) reduce mistakes and fraud and (4) cut cost.” https://www.forbes.com/sites/northwesternmutual/2018/10/12/whymore-companies-are-offering-financial-wellness-benefits/#40a737f54709

UCC

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Uniform Commercial Code

www.blockchainhq.blogspot.my IBM Blockchain

Common Use Case : Shared reference data

What

How Benefits

• Competitors/collaborators in a business network need to share reference data • Each member maintains their own codes, and forwards changes to a central authority for collection and distribution • An information subset can be owned by organizations • Each participant maintains their own codes within a Blockchain network • Blockchain creates single view of entire dataset • Consolidated, consistent dataset reduces errors • Near real-time access to reference data • Naturally supports code editing and routing code transfers between participants

© 2018 IBM Corporation

Patient Cost Liability Estimation • Use blockchain to bring together provider pricing, insurance eligibility, and claims data in real-time to provide transparency into cost estimates • Aggregate data for common procedures or services along with claims data to create 16 standard models for pricing www.blockchainhq.blogspot.my

www.blockchainhq.blogspot.my IBM Blockchain

Common Use Case: Identity What

Allow consumers, patients and citizens to easily assert identity Make it faster, easier and more secure to verify identity, for example, opening a bank account or apply to rent an apartment

How

Use Blockchain technology to create its identity management solution

Benefits

Frictionless you-are-you experience

Reduction in identity theft & fraud © 2018 IBM Corporation

SecureKey innovates consumer identity protection with IBM Blockchain technology “When I show up at a bank and I want to create a bank account, I have to prove that I am who I say I am,” explains Greg Wolfond, Chief Executive Officer (CEO) of SecureKey. “Sometimes I bring a driver’s license or other documents. But it takes 30 minutes. And there are lots of opportunities for fraud. For example, someone can have a fake driver’s license issued in my name, be able to pretend to be me, and open a fraudulent bank account using my credentials... Identity is much more valuable than money... We turned to blockchain and started working on Hyperledger because we didn’t see another technology that could solve this problem the way we www.blockchainhq.blogspot.my17 wanted.”

Catalog of Use Cases

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Healthcare

State & Local Government

• Consumer-mediated health data exchange & digital health wallet • Medical/Clinical Treatment Adherence • Claims Settlement, Adjudication and Billing Management • Clinical trials innovation • Drug Supply Chain Integrity with Remote Auditing • Other Healthcare use cases

• Delaware Blockchain Initiative for Uniform Commercial Code • Illinois Blockchain Initiative (multiple use cases) • Regulation of the Marijuana Industry • Verifying eligibility for welfare payments • Other State & Local Government use cases

© 2018 IBM Corporation

Banking, Finance & Treasury • Clearance, Settlement & Account Reconciliation • Comprehensive Annual Financial Report (CAFR) • Customer Identity / Know Your Customer (KYC) • Other Banking & Treasury use cases

Education

Transportation

• Academic and Medical Credentials • Educational Services

• Shipping • Vehicle Maintenance www.blockchainhq.blogspot.my

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Healthcare/Life Sciences Use Cases • • • • • •

© 2018 IBM Corporation

Consumer-mediated health data exchange & digital health wallet Medical/Clinical Treatment Adherence Claims Settlement, Adjudication and Billing Management Clinical trials innovation Drug Supply Chain Integrity with Remote Auditing Other Healthcare use cases

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www.blockchainhq.blogspot.my IBM has identified 4 aims for our Healthcare efforts

Better Outcomes

Improved Patient Experience

Lower Costs

Improved Provider Experience

© 2018 IBM Corporation

How can Blockchain help?

• Reduce information silos and increase data visibility • Enforce consistency through smart contracts • Decrease paperwork • Decrease audit, verification and reconciliation

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www.blockchainhq.blogspot.my Consumer-mediated health data exchange & digital health wallet

Challenges • •

Patients do not have access to their longitudinal health data Patients do not have the ability to share their data with whom they want in real-time

Solution •

•

Personal health data from patients would be held by patients themselves with access and consent managed by a trusted third party.

Patients would have the ability to access their own data and give access to others (such as a new provider) when they choose. Also a possibility of monetizing this data as an incentive for patients to share.

Benefits • Improved access and sharing of patient health data with security and privacy © 2018 IBM Corporation

21 www.blockchainhq.blogspot.my Patientory Leads Tokenization of Healthcare To Deliver Blockchain-Based Patient Care Model

Medical/Clinical Treatment Adherence

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Challenges • •

Non-adherence accounts for 125,000 deaths in the U.S. alone and costs the country $300B each year Reasons for non-adherence include: • Patients stop treatment when they feel better • The treatment regimen is too complex • A pharmacy doesn’t have the product in stock

Solution •

• •

Use Blockchain to capture medications, monitor adherence and provide patient reminders If a pharmacy runs out of a product, the medication will be automatically delivered to the patient’s home Incentivizes patients to interact with the medication reminder platform through a reward based systems

Benefits • •

Healthcare providers spend more time educating Low adherence patients increase their chances to correctly take the treatment

© 2018 IBM Corporation

www.blockchainhq.blogspot.my22 Blockchains and Pharmacies: a New Way of Leveraging Medication Adherence

Claims Settlement, Adjudication and Billingwww.blockchainhq.blogspot.my Management Challenges • •

Fraud: Healthcare fraud costs the nation between $68 billion and $230 billion annually (between 3-10 % by varying estimates) Errors: health insurance companies are averaging a 19.3 percent error rate

Solution • • •

Automate claim adjudication and payment processing with Blockchain Consensus enables disintermediation and trustless exchange with predefined smart contracts Pay for outcomes and incentive-based behavioral health programs, leveraging smart contracting features

Benefits •

Significantly improve inefficiencies in billing and insurance-related (BIR) activities • Direct payment of incentive and health tokens toward positive and healthy behavior by members/patients • Reduced number of disputes/ frauds regarding claims settlement by eliminating the human judgment factor to speed up claim processing • Improve healthcare revenue cycle management and reduce payment inefficiencies for providers www.blockchainhq.blogspot.my23 © 2018 IBM Corporation

Clinical trials innovation

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Challenges • •

•

Clinical trial data often sits in silos and cannot always easily understand how therapies work in real patient populations Clinical trials are very controlled and may not provide data on valuable areas like growth rate kinetics Trials also often exclude critical populations like pregnant women.

Solution • • •

Use blockchain to aggregate real-time real-world patient data and report out to researchers Data could be patient-reported or collected from patient follow ups Data collected in clinical trials shared across NIH, FDA, academia, industry is stored in Blockchain.

Benefits •

•

Improved sharing of data could lead to increased opportunities to publish new studies or create new indications Better understand of the heterogeneity of effects of drugs or medical devices Blockchain technology for improving clinical research quality

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my Drug Supply Chain Integrity with Remote Auditing

Challenges • Counterfeiting: Pharma companies lose $200 billion annual due to counterfeit drugs globally; an estimated 30% of the drugs sold in developing countries are counterfeit • Theft: Drugs account for about 15% of the estimated $8 billion to $12 billion in annual cargo theft, according to FreightWatch International Solution • Blockchain-based chain-of-custody log to track each step of the supply chain by individual product/drug (Provenance) • Remote process auditing with Blockchain verified source of truth (Smart contracts) Benefits • Improved drug traceability across the supply chain; check drug counterfeiting, thus reducing industry losses.

• Health authorities and regulatory institutions can safeguard citizens by requiring proof of identity (or license) to detect/minimize counterfeit drugs • Patients can directly participate in medication adherence and loyalty programs to avail incentives © 2018 IBM Corporation

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Other Healthcare Use Cases for Blockchain

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– Healthcare Cost Estimation for Patients and Providers/Insurers

– Drug & Medical Device Supply Chain – Clinical Trial Identity Matching – Genetic Treatment Provenance

– Medical Research Provenance – E2E Serialization – Provider Credentialling

– See Illinois Blockchain Initiative – Cyber Security and Healthcare IoMT See also: Hyperledger Wiki of Use Cases © 2018 IBM Corporation

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State & Local Government Use Cases • • • • •

© 2018 IBM Corporation

Delaware Blockchain Initiative for Uniform Commercial Code Illinois Blockchain Initiative (multiple use cases) Regulation of the Marijuana Industry Verifying eligibility for welfare payments Other State & Local Government use cases

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Three Government imperatives are underpinning the vision of Blockchain

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Open Government As Government agencies increasingly collaborate with private sector and NGOs to drive economic growth and vitality, the need for transparency and trust in data becomes all the more important.

Cyber Security and Privacy As cyber attacks on Government agencies increase, security of Government systems and data becomes fundamental to the Governments ability to provide safe communities and protected critical infrastructure.

Š 2018 IBM Corporation

Regulations and Compliance Governments need to minimize regulations to enhance economic vitality while at the same time ensure regulatory compliance.

Governments will not only create but also need to manage the implementation of policy changes at speed. www.blockchainhq.blogspot.my 28

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Delaware Blockchain Initiative WHAT:

•

Delaware Blockchain Initiative (DBI)

• DBI allows for the application of distributed ledger technology to documents • The new legislation will allow companies to create and maintain corporate records, including stock ledgers, on a blockchain to better track and verify stock ownership, and improve transaction time and proxy voting using a distributed ledger • Delaware law ensures that businesses that utilize blockchain will not face new regulations

BENEFITS: © 2018 IBM Corporation

UCC filings and related collateral, (2) increase the speed of searching UCC records, (3) reduce mistakes and fraud and (4) https://www.forbes.com/sites/northwesternmutual/2018/10/12/whymore-companies-are-offering-financial-wellness-benefits/#40a737f54709

UCC Uniform Commercial Code.

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Illinois Blockchain Initiative WHAT:

• The goal of the initiative is to determine if this groundbreaking technology can be leveraged to create more efficient, integrated and trusted state services • Blockchain and distributed ledger technology has the potential to transform the delivery of public and private services, redefine the relationship between government and the citizen in terms of data sharing, transparency and trust, and make a leading contribution to the

BENEFITS: © 2018 IBM Corporation

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Illinois Blockchain Initiative Proofs of Concept

© 2018 IBM Corporation

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Using Blockchain to verify eligibility for welfare payments

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Citizen

Citizens give permission to agencies to access data Key Benefits One truth Single view of citizen across agencies

Citizens can set up rules with agencies

Secure Empower citizens to say who has access to data Efficient Faster processes and updates Provenance Near real-time ledger Immutable More accurate records builds trust across stakeholders

Agencies can access ledgers if they have the required permissions

Regulation Rules define situations where information is shared

Current situation

Smart contracts Agencies gain permission to access citizen data when predefined conditions are met.

Ledgers Individual blockchain ledgers are secured by key cryptography

In addition, 77% of improper payments are addressable by blockchain

30% of improper payments due to insufficient documentation to determine eligibility 26% of improper payments due to inability to authenticate eligibility or failure to verify data Estimated 30% reduction in administrative 21% of improper payments due to administrative or process errors made by federal, state, or local agency costs Social workers spend 60-80% of their time on administrative tasks

Š 2018 IBM Corporation

Estimate 20% reduction in improper payments www.blockchainhq.blogspot.my 33

Other State & Local Government Use Cases for Blockchain Potential use cases

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Citizen Identity Public addresses used to form unified citizen ID across departments and systems to maintain a source of truth.

City of Zug Demand-based Service Marketplace (Auctions) Marketplace for waste management, snow removal, etc.

Combine IOT sensors for increase automation and monitoring. Use smart contracts for agreed pricing/sourcing.

Voting Bring the voting process online to make it easier, more secure, and cost effective. See: State of Utah, Poland Revolutionizes Voting and Follow My Vote Energy Trading

Property Title Management Use blockchain for transferring and tracking property titles and other public records Chicago Cook County Tax Credits market visibility and to ensure asset provenance.

Grant Eligibility/Tracking Smart contracts simplify eligibility/approval process, trigger payments, monitor results and, optional, repayment.

Public Sector Supply Chain Logistics Add greater visibility and efficiency across the entire supply chain to deliver higher value to trading relationships.

Why Blockchain May Be Your Next Supply Chain

blockchain-based trades in wholesale power and natural gas markets.

Europe's Biggest Utilities Join Blockchain Energy Trading Š 2018 IBM Corporation

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Other State & Local Government Use Cases for Blockchain

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Community Transportation State/Local on-demand (self-driving) transportation services See Arcade City: https://arcade.city/

Vehicle Logistics & Tracking State/Local vehicle tracking, logistics and transport.

AOS and IBM developing logistics and transportation solution

Fraud & Compliance Increase the efficiency of government agency processes that requires data to be shared across a number of different agencies. Smart Dubai Agricultural Protections and Quality Control

Economic Development Facilitate the setting up of businesses, issuance of commercial licenses, protecting the rights of businesses and consumers, and promoting enterprise and trade.

Dubai Aims to Be a City Built on Blockchain

skyrocketing, but producers and manufacturers are often struggling to verify the accuracy of data from farm to table. Use Blockchain to ensure the provenance of food.

Walmart in China Trace food contamination with blockchain

Tourism Boost tourism through a blockchain-based program that would allow visitors to better earn and spend loyalty points. Norway and Dubai

Carbon Credits

(Non-Education) Credentialing of Professionals Managing credentials/certifications for healthcare workers, craftsmen, etc.

Carbon Credits in China

.

Blockchain: Top 10 Areas Ripe for Government Innovation Š 2018 IBM Corporation

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Education Use Cases • Academic and Medical Credentials • Educational Services

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my Academic & Medical Credentialing plus more

Academic Credentialing

Medical Credentialing

Challenges • Improve access to verifying academic credentials Solution • Illinois Universities to issue academic credentials and transcripts on Blockchain Benefits • Students, educational institutions and employers are able to track continuing education credentials with the Illinois Department of Financial and Professional Regulations (DFPR) and the University of Illinois

Challenges • Improve the efficiency and accuracy of the medical credentialing process while reducing operational costs Solution • Illinois provider medical licensing data will be entered into Blockchain Benefits • Allows providers to be identified in a secure, verifiable and scalable way • Credentialing bodies can reliably view and eventually attest to certifications • Providers can verify and maintain a single record • All interacting bodies can trust that the central record is valid, authenticated, and unique

In June 2018, MIT used certificates to issue diplomas for two cohorts of students at the MIT Media Lab (Media Arts and Sciences) and the Sloan School of Business. © 2018 IBM Corporation

• Accepts Bitcoin for tuition for any degree program at the university • Offers an accredited academic degree program, a Master of Science in Digital Currency, taught online in English • Issues academic certificates onto Blockchain

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Educational Services

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Challenges • Need to reduce/eliminate frictions associated with verifying academic credentials Solution • Sony has developed a new educational platform in partnership with IBM that uses blockchain to secure and share both primary and higher education student records Benefits • Allow educators to exchange information on student progress and achievements • The initial focus has been on school records but Sony plans to extend the application to support testing and other information

© 2018 IBM Corporation

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Transportation Use Cases • Shipping • Vehicle Maintenance

© 2018 IBM Corporation

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Shipping What

• Ninety percent (90%) of goods in global trade are carried by the ocean shipping industry each year • Tracking and management of tens of millions of shipping containers across the world is handled using paper – methods that are costly and wasteful

How

• Maersk will use Blockchain to manage and track tens of millions of shipping containers across the world by digitizing the end-to-end shipping process to enhance transparency and provide highly secure sharing of information among trading partners

• Reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management and © 2018 IBM Corporation ultimately reduce waste and cost

Benefits

“As a global integrator of container logistics with the ambition to digitize global trade, we are excited about this cooperation and its potential to bring substantial efficiency and productivity gains to global supply chains, while decreasing fraud and increasing security,” said Ibrahim Gokcen, chief digital officer, Maersk. “The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.” http://www-03.ibm.com/press/us/en/pressrelease/51712.wss

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Vehicle Maintenance "The immediate benefits of blockchain include an expanded level of security, visibility, and traceability. With many moving • Automated all reporting with inspection and maintenance parts in a supply chain from the How information of equipment throughout its lifecycle products to people, blockchain • Verification of the inspections, maintenance performance records and has the ability to allow multiple recall information could all be part of this blockchain parties to transfer and store data Benefits • Simplifies the asset management and utilization task in a space that is permanent and • Better connectivity between suppliers, customers, carriers and easily accessible. This simplifies others paper-heavy, disparate, • All relevant information to a particular supply chain is captured and the expensive, and logistically data is accessible to all parties involved • Allows for better tracking of pallets and trailers as they move between complex data systems." https://en.paperblog.com/blockchain-the-futuresupply chains or to the sales floor www.blockchainhq.blogspot.my 41 of-supply-chain-operations-1638444/ © 2018 IBM Corporation

What

• Drivers populate a DVCR (Driver Vehicle Condition Report) before and after the completion of a trip • Currently it is a very paper intensive process to convey the condition of transportation equipment to operations, safety and maintenance

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Banking, Finance & Treasury Use Cases • • • •

© 2018 IBM Corporation

Clearance, Settlement & Account Reconciliation Comprehensive Annual Financial Report (CAFR) Customer Identity / Know Your Customer (KYC) Other Banking & Treasury use cases

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Clearing, Settlement & : Account Reconciliation What

• State Treasuries maintain funds at multiple in-state banks • Treasuries and in-state banks must reconcile accounts monthly • Account reconciliation is manual

How

• Credit/debit/transfer transactions are audited in real-time through Blockchain • Smart contracts assure that transactions succeed when all parties recognize the credit/debit/transfer • Discrepancies caught immediately and resolved quickly

• Real-time reconciliation • Reduction in costs associated with manual reconciliation costs for the State and private banks • Single source of truth for the State and participating © 2018 IBM Corporation banks

Benefits

Finance and Economics Discussion Series: Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C. Distributed ledger technology in payments, clearing, and settlement “The driving force behind efforts to develop and deploy DLT in payments, clearing, and settlement is an expectation that the technology could reduce or even eliminate operational and financial inefficiencies, or other frictions, that exist for current methods of storing, recording, and transferring digital assets throughout financial markets.”

Applying Blockchain to Clearing and Settlement “Clearing and Settlement is where all of the early action has been.” www.blockchainhq.blogspot.my 43

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Comprehensive Annual Financial Report (CAFR)

IBM Blockchain

Challenges Mean number of days to issue a CAFR • CAFRs are costly and time-consuming to prepare Larger Smaller • CAFR audits are difficult for the auditor and expensive to support by the audited organization States 199 N/A • How to build credibility with investors in CAFR integrity? Counties 172 244 Solution Localities 182 187 • Use Blockchain as a common, shared ledger across Independent School Districts 188 142 departments and place all debits/credits on the ledger Special Districts 129 181 Benefits • Simplifies and reduces the cost and time to prepare a CAFR • Improved financial credibility & reduced investor risk factors allow governments to pay lower 44 interest rates on bonds © 2018 IBM Corporation

www.blockchainhq.blogspot.my FORBES: The Technology That Will Change Accounting

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Customer Identity/ Know Your Customer (KYC) Challenges • Banks often have a variety of systems that separately manage customer identity for different services provided • How can banks federate silos of customer data to create a single, cross-businesses KYC platform to inform all of the banks processes?

Solution • Blockchain identifies and uses valid information and evidence stored in a bank’s multiple systems of record - mortgage applications, life insurance enrollment, bank accounts Benefits • Data silos broken down • Reinforced consistency, traceability and privacy of the information, which is critical in a highly regulated environment • Reduction in unnecessary duplication of information and requests • Banks are able to deliver proof of their identity to third-parties such as local utilities, retailers or regulated service providers © 2018 IBM Corporation

“Crédit Mutuel Arkéa applied IBM Design Thinking and agile development methods to turn a simple idea into a strategic, decentralized platform for collaboration. The availability of IBM Blockchain services and DevOps tools on IBM innovation platform IBM Cloud was key to accelerate the time-to-value during the development phase,” said Juliette Macret, IBM Financial Services Sector Business Development Director, IBM France. “As the foundation of a robust system of trust, blockchain technology can help businesses create frictionless business transactions that improve customer satisfaction and employee efficiency.”

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IBM and Crédit Mutuel Arkéa Pioneer the Use of Blockchain to Manage Customer Identity and Improve Customer Satisfaction

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Other Banking & Treasury Use Cases

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Securities - Post-trade settlement - Derivative contracts - Securities issuance - Collateral management

Retail Banking - Cross border remittances Trade Finance - Mortgage verification - Bill of Lading - Cross-currency payment - Mortgage contracts (smart contract) Syndicated Loans Public Records - Real estate records - Vehicle registrations - Business license and ownership records Š 2018 IBM Corporation

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Contents

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What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my Making blockchain real for business with over 400 engagements and multiple active networks Trade Finance

Pre and Post Trade

Complex Risk Coverage

Identity/ Know your customer (KYC)

Unlisted Securities/ Private Equity Funds

Loyalty Program

Medicated Health Data Exchange

Fraud/ Compliance Registry

Distributed Energy/ Carbon Credit

Supply Chain

Food Safety

Provenance/ Traceability

Š 2018 IBM Corporation

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Deployment Options

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Blockchain as a Managed Service on IBM Cloud Flexible membership plans enable each ecosystem’s unique needs for compute, performance and isolation. Participants in the network, join the network via one of several Membership Plans.

• Business ready platform that addresses the full life cycle Hyperledger Support (develop, govern, and operate) of a multi-organization blockchain network Run Hyperledger on premise: • Runs on our High Security Business Network • Business or regulatory policies restrict (HSBN) use of Cloud Services • Built on Hyperledger Fabric V1.0 leveraging • Easier a modular architecture to achieve Run Hyperledger in a 3rd Party Cloud enterprise levels of security, • Easier integration with cloud-native applications data integrity, scalability, Support options for IBM-Certified Hyperledger Images and performance • Available for IBM Certified Docker Images from IBM Docker Hub More Information • Entry: Mon-Fri 8am-5pm; 8 business hrs; 1 technical contact; no developer assistance More Information • Elite: 24x7X365: 2 business hrs; unlimited technical contacts; www.blockchainhq.blogspot.my49 © 2018 IBM Corporation 5 assists

About IBM Cloud DevOps Productivity

www.blockchainhq.blogspot.my DevOps Tooling

Integration and API Management

IBM Cloud Platform Your Own Hosted Apps / Services

Hybrid Integration Powerful, Accessible Data and Analytics

Rich Catalog of Application & Data Services

+

Cognitive Solutions Web

Data

Mobile

Cognitive

Analytics

IoT

Security

Choice with Consistency Choice of Run-Time Environments

are not required to relinquish rights to their

Instant Runtimes

Certifications:

ISO 9001, 14001, 27001 (IAAS/PAAS/SAAS), 27017-8, 22301, 31000, 5001 SOC 1-3, PCI, HITRUST, GSMA, IRAP, FERPA, CJIS, CSA, FFIEC, FISC, FISMA and more. © 2018 IBM Corporation

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HIPAA: Request the IaaS Bridge Letter through our customer portal.

Containers

Virtual Machines

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Choice of Infrastructure Public Cloud

Dedicated Cloud

On-Premise

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What makes a good blockchain use case?

– Identifying a good blockchain use-case is not always easy!

– However there should always be: 1. A business problem to be solved • That cannot be solved with more mature technologies 2. An identifiable business network • With Participants, Assets and Transactions 3. A need for trust • Consensus, Immutability, Finality or Provenance © 2018 IBM Corporation

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What makes a good first blockchain use case?

– First use-cases are even more difficult to identify!

1. A limited scope, but still solves a real business problem • Minimum Viable Product in a few weeks of effort 2. A smaller business network • Usually without requiring regulators and consortia 3. Allows for scaling with more participants and scenarios • Consider shadow chains to mitigate risks

Start small, succeed and grow fast! © 2018 IBM Corporation

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Rapid Immersion – Step 1

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Use the IBM Garage to your advantage •

Multiple Locations

•

Thought Leadership

•

Consistent Approach

•

Rapid Results

•

The “New IBM” approach

© 2018 IBM Corporation

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What happens at The Garage?

1. Guest Visit 2. Design Thinking Workshops 3. MVP Buildout (features pair programming) 4. Solution Architecture 5. Future Build Iterations (features pair programming)

Š 2018 IBM Corporation

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Rapid Immersion - Step 2 Use the HyperLedger Composer Playground on the cloud.

PARTICIPANTS

ASSETS TRANSACTIONS

© 2018 IBM Corporation

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3 Quick Examples 1. The Goal State (Immunization)

2. Fundamentals (Car Auction)

3. HealthIT Build In-Process (Blood Management)

Artifacts from an inprocess project will be shown live.

© 2018 IBM Corporation

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Engagement Model overview

Let’s Talk

Blockchain Hands-on

1. Discuss Blockchain technology

1. Understand Blockchain concepts & elements

2. Explore customer business model

2. Hands on Proof-ofTechnology with Blockchain

3. Show Blockchain Application demo

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First Project

Scale

1. Design Thinking workshop to define business challenge

1. Scale up pilot or Scale out to new projects

2. Agile iterations incrementally build project functionality

2. Business Process Re-engineering 3. Systems Integration

3. Enterprise integration

Remote Š 2018 IBM Corporation

Digital

Face to face

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IBM Blockchain Resources

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Hyperledger & Composer Resources: • Redbook “Zero to Blockchain”: http://www.redbooks.ibm.com/abstracts/crse0401.html?Open • • • • •

Github “Zero to Blockchain”: https://github.com/rddill-IBM/ZeroToBlockchain Youtube “Zero to Blockchain”: https://www.youtube.com/playlist?list=PLnJzIOiv6cVTjaJRtJ2srarhs-m4V3zs3 Hyperledger Composer Playground: https://composer-playground.mybluemix.net/login Github Repo: https://github.com/hyperledger/composer HyperLedger Project Page: https://www.hyperledger.org/

Blockchain Videos: • •

Ted Talk: https://www.ted.com/talks/bettina_warburg_how_the_blockchain_will_radically_transform_the_economy Island of Yap: https://www.youtube.com/watch?v=Fy8BfVrj4dk

Design Thinking/Garage Resources: • IBM Garage Pair Programming: https://www.ibm.com/cloud/garage/content/code/practice_pair_programming/ • IBM Garage Method: https://www.ibm.com/cloud/garage/category/practices • IBM Garage (General): https://www.ibm.com/cloud/garage/

© 2018 IBM Corporation

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Introducing Think 2018

Register today at ibm.com/think2018

March 19 22, 2018 Las Vegas, NV

Think is a first-of-its-kind global IBM event that gathers the

leaders, and thinkers in one place, to ask:

Tomorrow is happening here.

No matter how you come to IBM from AI to Cloud, IoT to Big Data, SaaS to Storage we are inviting all of our partners and customers to think together.

Entertainment Train Barenaked Ladies

What makes you think?

Join us for insightful answers to the most important questions: yours.

Learn more at ibm.com/think2018 > © 2018 IBM Corporation



Communities of people with a shared vision.



Technology that is changing the planet.



Place to learn, to play, to build, to grow.



Access to great minds and practical ideas.



Training and certification.

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Thank you

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Alan Dickman

Watson & Cloud Platform, Blockchain Technical Sales Phone: 1-303-324-9353 E-mail: adickman@us.ibm.com

Mark Lucente

Managing Partner, Strategy, Zilker Technology Phone: 1-215-913-9870 E-mail: mlucente@ztech.io ztech.io www.ibm.com/blockchain developer.ibm.com/blockchain www.hyperledger.org Š Copyright IBM Corporation 2018. All rights reserved. The information contained in these materials is provided for informational purposes only, and is provided AS IS without warranty of any kind, express or implied. Any statement of direction represents IBM's current intent, is subject to change or withdrawal, and represents only goals and objectives. IBM, the IBM logo, and other IBM products and services are trademarks of the International Business Machines Corporation, in the United States, other countries or both.

Other company, product, or service names may be trademarks or service marks of others. Š 2018 IBM Corporation

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© 2018 IBM Corporation

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videos Healthcare:

Government:

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(4:30)

Healthcare

https://youtu.be/_ibaTpBj7D4

Blockchain in health care data management (3:34)

https://youtu.be/42Pbx9JYcFA

How blockchain can revolutionize government (2:39)

https://youtu.be/ZouqkQko7hE

IBM's Arvind Krishna: Can Blockchain End Corruption? https://youtu.be/_o3OMDuWleo (1:06)

Education:

© 2018 IBM Corporation

Sony and IBM team to secure education data with blockchain (2:02)

https://youtu.be/GawgL7YIW08

Forecasting Part 3: Blockchain in education (3:16)

https://youtu.be/1uH0khBVs_4

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IBM Blockchain References

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London Stock Exchange Group | blockchain experimentation (link 1) leading to develop securities data blockchain solution for European SMEs (link 2) | http://www-03.ibm.com/press/us/en/pressrelease/49029.wss | http://www-03.ibm.com/press/us/en/pressrelease/52836.wss Kouvola Innovation | logistics / supply chain | http://www.ibm.com/press/us/en/pressrelease/49029.wss Japan Stock Exchange (JPX) | Central Securities Depository ledger with automating clearing & settlement | http://www.ibm.com/press/us/en/pressrelease/49088.wss ABN AMRO | property portfolio revaluation | https://www.abnamro.com/en/newsroom/blogs/arjan-van-os/2016/walking-the-walk-exploring-the-power-of-blockchain.html | https://www.computable.nl/artikel/nieuws/ecm/5902248/250449/abn-amro-en-ibm-testen-blockchain-in-vastgoedsector.html Credit Mutual Arkea | shared ledger of customer registration | https://www.finextra.com/newsarticle/29117/credit-mutuel-arkea-applies-blockchain-tech-to-verify-customer-ids?utm_medium=newsflash&utm_source=2016-6-30 | https://t.co/5uOn7Nf619 MIZUHO Bank, Japan | settlement with virtual currencies. https://www.cryptocoinsnews.com/mizuho-ibm-digital-currency-test/ IBM Global Finance | resolving supply chain transaction disputes. http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/ HSBC, Bank of America | trade finance - letter of credit replication | http://www.coindesk.com/hsbc-bank-america-blockchain-supply-chain/ Everledger | global certification system for diamonds, art and luxury goods | https://ibm.box.com/v/EverledgerUseCase | https://youtu.be/Sn7bILEJ-nY | https://www-03.ibm.com/press/us/en/pressrelease/50169.wss | https://www.comparethecloud.net/articles/diamonds-are-forever-especially-on-the-blockchain/ Bank of Tokyo-Mitsubishi UFJ | repository of the legal documents and approval histories | https://cointelegraph.com/news/ibm-and-bank-of-tokyo-start-blockchain-revolution-in-banking-aim-for-complete-automation China UnionPay | sharing loyalty bonus points among banks | http://on.ft.com/2cVASsi | http://fortune.com/2016/09/23/ibm-china-unionpay-block-chain/ CLS Group | payment netting service for foreign exchange | http://www-03.ibm.com/press/us/en/pressrelease/50615.wss RDW (NL Vehicle Licensing Agency) | electric bike registration | http://telegra.ph/Bikeblockchain-RDW-at-top-10-government-projects---RDW--IBM--Keylane-pitching-together-for-Computable-jury-05-11 UBS (Zurich) | novel, digital trade finance instrument | http://bit.ly/2cPU7TW | http://bit.ly/2dOcgjv Walmart (China) | food tracking experimentation | http://fortune.com/2016/10/19/walmart-ibm-blockchain-china-pork/ | http://www-03.ibm.com/press/us/en/pressrelease/50816.wss | One Page Flyer | Presentation Sumitomo Trust Bank (Japan) | finance, real estate and asset custody | http://www.coindesk.com/sumitomo-mitsui-trust-bank-testing-blockchain-ibm/ SBI Securities (Japan) | bond trading | http://www-03.ibm.com/press/us/en/pressrelease/50861.wss KYCK!​ (Singapore) | Know Your Customer | https://www-03.ibm.com/press/us/en/pressrelease/51054.wss | http://www.coindesk.com/ibm-bluemix-garage-kyck-singapore-blockchain/ Mahindra Group (India) | supply chain finance | http://www-03.ibm.com/press/us/en/pressrelease/51147.wss The Seam (US) | cotton trading consortium | http://www.forbes.com/sites/rogeraitken/2018/01/07/ibms-blockchain-consortium-with-the-seam-deploys-hyperledger-for-cotton-trading/#47ecf7593de2 DTCC (US, UK) | next generation trade information warehouse | http://www.forbes.com/sites/laurashin/2018/01/09/dtcc-selects-partners-for-blockchain-solution-for-credit-default-swaps/#3fc8df0fad88 DIACC (Canada) | corporation identity management | https://diacc.ca/wp-content/uploads/2014/08/DIACC-End-of-Year-Newsletter-December-2016.pdf Government of Dubai (UAE) | trade finance and logistics for import and re-export of goods | http://www-03.ibm.com/press/us/en/pressrelease/51541.wss Food and Drug Administration (USA) | secure, efficient and scalable exchange of health data | http://insidehpc.com/2018/02/ibm-collaborates-fda-blockchain-health-data/ Postal Savings Bank of China | asset custody system | http://www-03.ibm.com/press/us/en/pressrelease/51358.wss Northern Trust | private equity | http://www-03.ibm.com/press/us/en/pressrelease/51655.wss | Video Dubai Government | Blockchain Strategy | http://www.coindesk.com/dubai-government-ibm-city-blockchain-pilot/ Bank of Montreal (et al) | Managing customer's digital identities | https://www.americanbanker.com/news/canadian-banks-pick-ibm-blockchain-to-expand-digital-identity-project Maersk | Cross border supply chain | http://www-03.ibm.com/press/us/en/pressrelease/51712.wss Natixis and Trafigura | Commodity trade finance for US crude oil transactions | http://www-03.ibm.com/press/us/en/pressrelease/51951.wss Hejia (China) | supply chain financial services for pharmaceutical procurement | http://www.prnewswire.com/news-releases/ibm-and-hejia-launch-blockchain-based-supply-chain-financial-services-platform-for-pharmaceutical-procurement-300437935.html AOS | Truck-Tracking Solution | http://www-03.ibm.com/press/us/en/pressrelease/52665.wss | http://www.coindesk.com/ibm-announces-blockchain-truck-tracking-solution-with-colombian-partner/ AIG | Smart Insurance Contract | Video | http://www-03.ibm.com/press/us/en/pressrelease/52607.wss | http://www.coindesk.com/ibm-announces-blockchain-truck-tracking-solution-with-colombian-partner/ Santiago Exchange | Securities Lending | http://www-03.ibm.com/press/us/en/pressrelease/52407.wss Signzy Technologies | Customer Identification with Watson | http://www-03.ibm.com/press/us/en/pressrelease/52320.wss TenneT | Flexible Power Grid management in Netherlands & Germany | http://www-03.ibm.com/press/us/en/pressrelease/52243.wss | Video| Energy-Blockchain Labs (China) | Carbon Credit Management Platform | http://www-03.ibm.com/press/us/en/pressrelease/51839.wss INVICTUS (Singapore Start-up) | Order, Logistic & Payment (OLP) platform | http://www-03.ibm.com/press/us/en/pressrelease/51830.wss Digital Trade Chain Consortium (Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale, Unicredit) | Trade Finance Platform | http://www-03.ibm.com/press/us/en/pressrelease/52706.wss | http://www.coindesk.com/digital-trade-chain-banks-blockchain-2018/ AEON Financial Services | Financial Platform for Asian Market | http://www-03.ibm.com/press/us/en/pressrelease/52700.wss ANZ, Westpac & Scentre | Bank guarantees | http://www-03.ibm.com/press/us/en/pressrelease/52777.wss HSBC | Trade finance with Watson AI | https://ibm.biz/BdjF5Y KBank (Kasikornbank) | Letter of guarantee service | https://cointelegraph.com/news/major-thai-bank-and-ibm-co-launch-blockchain-platform-to-settle-letters-of-guarantee Sony | Store Academic Records | https://www.coindesk.com/sony-and-ibm-team-to-secure-education-data-with-blockchain/ | http://www-03.ibm.com/press/us/en/pressrelease/52970.wss ZF, UBS | Car Secure Payments “On The Go” | http://www-03.ibm.com/press/us/en/pressrelease/53122.wss China Construction Bank (Asia) | Bancassurance | http://www-03.ibm.com/press/us/en/pressrelease/53168.wss

© 2018 IBM Corporation

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Hyperledger vs. Etherium, Corda

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On the one side, there is Fabric and Ethereum. They both are highly flexible, but in different aspects. powerful smart contracts engine makes it a generic platform for literally any kind of application. However, permissionless mode of operation and its total transparency comes at the cost of performance scalability and privacy.

Fabric solves performance scalability and privacy issues by permissioned mode of operation and specifically by using a BFT algorithm and fine-grained access control. Further, the modular architecture allows Fabric to be customized to a multitude of applications. An analogy to a versatile toolbox can be drawn.

Corda is located at the other end. It has been consciously designed as DLT for the financial services industry. Most notably, it takes the highly regulated environment into account by augmenting smart contracts with legal prose.

Apparently, focus solely on financial services transactions simplified its architectural design compared to Fabric. Therefore, it might offer a more out-of-the-box experience. However, it might be possible that Fabric, due to its modularity, can be tailored to resemble feature set. Efforts exist that seek to integrate Corda into the Hyperledger project. Corda therefore cannot be seen as a competitor to Fabric but more as a complement.

https://medium.com/@philippsandner/comparison-of-ethereum-hyperledger-fabric-and-corda-21c1bb9442f6

Š 2018 IBM Corporation

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What Motley Fool Recommends

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“If you invest in a company going all-in on blockchain, you're exposing yourself to the risk of near-total loss.

That's why International Business Machines (NYSE:IBM), the century-old technology company, is the safest way to bet on blockchain.”

© 2018 IBM Corporation

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A Blockchain example: Citizen Identity, Data Management and Smart Contracts

Providing an accessible and self-verifiable source of truth for citizen-state interactions • Procurement Process Vendor Contracts • EMR/EHR (Patient controlled) • Employment Data • Deeds (Digital property titles) • DHS - Immigration Records • Secure E-Voting

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my IBM Cloud Approach to Blockchain Integration

© 2018 IBM Corporation

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www.blockchainhq.blogspot.my Blockchain Integration Reference Architecture

© 2018 IBM Corporation

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Blockchain Interoperability

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Blockchain to Blockchain Use Cases

Blockchain to Other Use Cases

• Asset interoperability – via IBM Master Data Management • Smart contract interoperability - the same unmodified smart contract can run on multiple fabrics, e.g. Hyperledger Sawtooth with Hyperledger Burrow, a modular blockchain client with a permissioned smart contract interpreter built in part to the specification of the Ethereum Virtual Machine (EVM) • Inter-chain payment provider e.g. Hyperledger Project Quilt – a trustless decentralized exchange and payment service.

• Network of networks – only ad-hoc approaches at the moment.

• Know Your Customer / Anti-Money Laundering (KYC/AML) – Private key chain (distributed identifiers) shared amongst members e.g. Hyperledger Indy as a base for self-sovereign ID

• Process interoperability – trigger a transaction in a shared process (e.g., IBM Process Manager) on a blockchain or trigger a private member process using Hyperledger events • Business rules interoperability – a blockchain calls an externalized business rule to run in place of a native smart contract with IBM Operational Decision Manager • ERP integration - unlocks the potential of the supplier’s data at source to drive a digital supply chain experience.

• Messaging protocol interoperability - e.g. EDIFACT or e-mail • IOT integration – integrate sensors such as temperature, location or weighbridges into supply chains on the blockchain via IBM Watson IOT or SmartAxiom • AI – and blockchain are converging and IBM Watson Analytics is already providing cognitive analytics for blockchain transactions • Portals – integrate the user interface and user experience

Blockchain Industry and legal standards • BiTA (Blockchain in Trucking Alliance) – supply chain and logistics • Accord Project – promoting the market wide adoption of smart legal contracts © 2018 IBM Corporation

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Hyperledger.Org Projects

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Frameworks • Hyperledger Fabric is a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to be plug-and-play.

• Hyperledger Burrow is a permissionable smart contract machine. Burrow provides a modular blockchain client with a permissioned smart contract interpreter built in part to the specification of the Ethereum Virtual Machine (EVM).

• Hyperledger Iroha is a business blockchain framework designed to be simple and easy to incorporate into infrastructural projects requiring distributed ledger technology.

• Hyperledger Indy is a distributed ledger, purpose-built for decentralized identity. It provides tools, libraries, and reusable components for creating and using independent digital identities rooted on blockchains or other distributed ledgers for interoperability.

• Hyperledger Sawtooth is a modular platform for building, deploying, and running distributed ledgers. Hyperledger Sawtooth includes a novel consensus algorithm, Proof of Elapsed Time (PoET), which targets large distributed validator populations with minimal resource consumption.

Tools • Hyperledger Composer is a collaboration tool for building blockchain business networks, accelerating the development of smart contracts and their deployment across a distributed ledger. Work with Hyperledger Composer here.

• Hyperledger Cello aims to bring the on-demand “as-a-service” deployment model to the blockchain ecosystem to reduce the effort required for creating, managing and terminating blockchains.

• Hyperledger Explorer can view, invoke, deploy or query blocks, transactions and associated data, network information, chain codes and transaction families, as well as any other relevant information stored in the ledger.

• Hyperledger Quilt offers interoperability between ledger systems by implementing Interledger Protocol (ILP), which is primarily a payments protocol and is designed to transfer value across distributed ledgers and non-distributed ledgers.

© 2018 IBM Corporation

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