This document summarizes a presentation about blockchain on Azure. It discusses:
1. The four pillars of blockchain - secure, shared, distributed, and ledger.
2. Different types of blockchain networks including public, private, and consortium.
3. Why Microsoft is well-positioned for blockchain with its open ecosystem on Azure.
4. How blockchain is evolving from simple ledgers to incorporating smart contracts and external data access through cryptlets.
5. Examples of blockchain applications including supply chain management and social good projects.
2. Blockchain | 4 Pillars
Secure
Uses tried and true public/ private signature
technology. Blockchain applies this technology
to create transactions that are impervious to
fraud and establishes a shared truth.
Shared
Blockchain’s value is directly linked to the number of
organizations or companies that participate in them.
There is huge value for even the fiercest of competitors
to participate with each other in these shared database
implementations.
Distributed
There are many replicas of the Blockchain
database. In fact, the more replicas there are, the
more authentic it becomes.
Ledger
The database is a read/write-once
database so it is an immutable record of
every transaction that occurs.
A cryptographically secure, shared, distributed ledger
3. Consortium
Woodgrove
Financial
Contoso
Bank
Northwind
Traders
Bank b
Insurance c
Investment
consortium c
Bank A
Blockchain
Location 1
Location 2
Location 3
Location 4
Department
A
Department
B
Public ConsortiumPrivate
• Many, unknown participants
• Writes by all participants
• Reads by all participants
• Consensus by Proof of Work
• Known participants from one organization
• Write permissions centralized
• Reads may be public or restricted
• Multiple algorithms for consensus
• Known participants from multiple
organizations
• Writes require consensus of several
participants
• Reads may be public or restricted
• Multiple algorithms for consensus
Public
blockchain
Persona
Woodgrove
Financial
Person B
Northwind
Traders
Bank 6
Bank 1
Consortium
6
Source: Ethereum blog by Vitalik Buterin https://blog.ethereum.org/author/vitalik-buterin/
Blockchain | Network Types
4. General Propose Chain
General Propose Chain
Blockchain | Multiple Chain Types
Blockchains
Alternative
blockchains (altchains)
(Decentralized
Transport)
(cryptocurrency) (cross-industry collaborative)
(cross-industry collaborative)
(FSI consortium)
open platform for
developers and devops
to build blockchain apps
(banking industry collaborative)
(Social News
Blockchain DB)
(IBM Open Blockchain )
5. Why Microsoft for Blockchain?
Azure
• Open Blockchain Ecosystem
• Our platform will integrate with your investments
• Regulatory and Compliance Ready (including Financial Services)
6. Microsoft Azure | Open Cloud
Applications Management Clients
Web App Gallery
Dozens of .NET & PHP CMS and Web apps
Infrastructure Databases App Frameworks
SQL Server
+Hundreds of community supported
images on VM Depot
Azure BaaS
HyperScale
EnterpriseGrade
Hybrid
9. That decentralizes data in a trustless environment
Traditional System
Centralized system
with stored ledger
Blockchain System
Distributed system
with distributed ledger
Traditional ledgers are centralized and use third parties and middlemen to approve and record transactions
Blockchain safely distributes ledgers across the entire network and does not require any middleman
The technology maintains multiple replicas like P2P torrent file sharing
10. Evolution of Blockchain
Smart Contracts are unable to access external data or events based on time or market conditions. Calling code or
data outside of a Smart Contract or blockchain breaks the general trust barrier and authenticity of transactions.
Cryptlets will allow the blockchain to access external data securely, while maintaining the integrity of the blockchain.
Blockchain 2.0 – Introducing Smart Contracts
12. Microsoft Treasury and Microsoft BaaS (Blockchain as a service team) worked with
Bank of America to automate the issuance and advising of the SBLC process using
Blockchain. This was done as a Proof of Concept (PoC) project and PWC was used
for building this solution.
Blockchain based SBLC process:
Trade Finance in a blockchain world
Speed and Efficiency
of Execution
Real-time data and
Audit Trail
Transparency across
all participants
This PoC was a collaborative effort to reflect a “true” SBLC scenario, and included the following parties:
• Beneficiary (Seller) : Microsoft
• Applicant (Buyer/Customer) : Sample Customer
• Issuing Bank (Buyer/Customer) : Sample Bank
• Advising Bank : Bank of America
Financial
13. Evolution of Blockchain
Smart Contracts are unable to access external data or events based on time or market conditions. Calling code or
data outside of a Smart Contract or blockchain breaks the general trust barrier and authenticity of transactions.
Cryptlets will allow the blockchain to access external data securely, while maintaining the integrity of the blockchain.
Blockchain 3.0 – Microsoft evolving the ledger to address the big problem
14. Blockchain 3.0 | State-of-the-art cryptlets innovation
Blockchain 2.0 introduced the power of Smart Contracts…
…but Smart Contracts are unable to access external data or events based on time or market conditions
₋ Calling code or data outside of a Smart Contract or blockchain breaks the general trust barrier and authenticity of
transactions
Cryptlets will allow the blockchain to access external data securely, while maintaining the integrity of the blockchain
Cryptlets are a Microsoft innovation and solve a significant hurdle to enterprise blockchain adoption
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15. PRODUCER
Food Processor
Milk producer supplies Milk to
Food Processing Company
SMART CONTRACT
IoT Enabled
The package has to be
maintained at :
Temperature < 10º C
Humidity < 65%
The terms of shipping are
registered using a smart
contract on the Blockchain
Origin
8ºC
60% Warehouse Carrier 2 Store
CARRIER 1
Warehouse
CARRIER 2
Retail Store
9ºC
64%
9ºC
64%
11ºC
66%
At various points in the journey, the IoT device from the package sends the Temperature & Humidity data which are recorded on the blockchain
SMART CONTRACT
UPDATED
11ºC
66%
The conditions of the contract
have been violated.
Carrier 3 is liable for penalty as
the temperature of the package
when it reached the retail store
was above the prescribed limit
Detailed Use case - Supply Chain with IoT and blockchain
The Food product is sealed in an
IoT enabled package for shipping
SHARED LEDGER
Blockchain IoT
20. Blockchain For Social Good
The United Nations World Food
Programme (WFP) is deploying cutting-
edge blockchain technology to make cash-
based transfers faster, cheaper and more
secure.
21. 21
SETUP BLOCKCHAIN NETWORK FOR PILOT OR TEST SCENARIO
How do you
get started?
START BUILDING OUT SCENARIOS AND APPS
LEARN FROM PILOT and DEVELOPMENT FOR BLOCKCHAIN
BLOCKCHAIN BUSINESS IDEATION WORKSHOP
22. You can download the presentation from LinkedIn
Nuri Cankaya
Microsoft
Notas do Editor
2
With the new process for SBLC we took the time to process applications down from 3-5 weeks to hours. The traditional process was transformed from 26 steps down to 5 where everyone has visibility of the application and where it currently sits for approval. Other benefits from the process were we were able to spend more time on the relationships with the other banks and the customer instead of manual processing and low value activities. We have a record of the process end to end that was easy to audit. This is one of example of a B2B2B process that shows how Blockchain can transform. There are thousands of these processes in every financial institution .
The success criteria was called out as follows:
Automate the workflow and record keeping of the SBLC lifecycle to provide an immutable audit trail of all activity
Real-time storage of reference data in blockchain
Real-time immutable record of the transaction to build conditional decision logic within the smart contract
Real-time view of all transaction events that impact a firm’s liquidity, credit exposures, and cash in/out flows
The blockchain that enabled this transformation was built on Microsoft Blockchain service and presented in the SIBOS conference during Sep 2016.
Improves process speed, efficiency and effectiveness
Reduces time, effort and costs for all blockchain-enabled participants (Trade is paper-based, manually intensive and therefore costly)
Near real-time collaboration for all parties reduces rework and time, thus accelerating decision making and allowing for resources to be reallocated to more value-add activities
Improves credit decision-making through the combination of better analytics and more reliable counterparty information
Facilitates more predicable working capital
Shifts operating model from transactional (i.e., process) to relational (i.e., service) focus
Enhances multi-party transparency
Lowers adoption barriers by satisfying bank security requirements through on-chain vs. off-chain differentiation
Secure industry environment
Test in production in industry leading cloud allows for enterprise-ready scaling/adoption