blockchain-introduction-pistoia-alliance

September 18, 2018
So that’s what a blockchain is!
An in-depth introduction
Presented by Wolfgang Prinz and Wolfgang Gräther, Fraunhofer FIT
Hosted by Richard Shute

This webinar is being recorded

Audience Q&A
Please use the GoToWebinar Question panel to submit questions.
Questions we do not get to during the presentation, will be answered in
writing after the webinar and posted with the recording on our website.

©PistoiaAlliance
Agenda
4
• Connections & set-up ... 1st Poll
• Introduction to blockchain technology (45 mins): What it is; how it
works; etc ... 2nd Poll
• Current uses of blockchain in other industries (15 mins) ... 3rd Poll
• Knowing when to use and when not to use blockchain. How to
identify good use-cases for blockchain tech (15 mins) ... 4th Poll
Break (5 mins)
• Demo (15 mins)
• Final questions and discussion (10 mins) ... 5th Poll
• Close

5
Poll Question 1: What is your familiarity with blockchain?
A. I am using blockchain
B. I am experimenting with blockchain
C. I am aware of blockchain
D. I know next to nothing about blockchain

6
Poll Question 2: What is your organization’s familiarity
with blockchain?
A. Actively using blockchain
B. Experimenting with blockchain
C. Aware of blockchain
D. Not sure about my organization

©PistoiaAlliance
The Presenters
7
Prof. Wolfgang Prinz, studied informatics at the University of Bonn and received
his PhD in computer science from the University of Nottingham. He is vice chair
of Fraunhofer FIT in Bonn, division manager of the collaboration systems
research department in FIT, and Professor for cooperation systems at RWTH
Aachen. His research department at FIT is addressing the challenges and
potentials of digitization offered by new cooperation platforms in combination with
mixed reality and flexible communication infrastructure as well as the
investigation of application areas such as mobility and digital energy. In the
context of the Fraunhofer FIT Blockchain Lab, Wolfgang Prinz investigates the
technical foundations as well as the development and analysis of blockchain
based applications.
Wolfgang Gräther, is a senior researcher at Fraunhofer FIT, the Institute for
Applied Information Technology of the Fraunhofer-Gesellschaft. He has worked
in several national and EU research projects as well as industrial contract
research. Currently he is a project manager of the Blockchain for Education
project. His expertise spans cooperation systems, social media, design thinking
and blockchain technology.

© Fraunhofer-Institut für Angewandte Informationstechnik FIT© Fraunhofer-Institut für Angewandte Informationstechnik FIT
Blockchain - Introduction
Wolfgang Prinz, Wolfgang Gräther
Fraunhofer FIT, RWTH Aachen University
Webinar 18. Sept.- 2018

Current Projekts of our Lab
 Blockchain and Smart Grids
 Distributed Media Production
 Blockchain and Mobility
 BT4P – Blockchain and Industry 4.0
 Blockchain, Internet of Things and Pay per Use
 Logistics and Supply Chain
 Industrial Data Space
 Education Certificate in A Blockchain

Past Generations of the World-Wide-Web
Internet of
Information
Internet of
Services
Internet of
Things
?

Who ensures the execution and irreversability of value transactions?
11

Platform replaced by a network
12

Transaction Data is replicated
Special data stucture for irreversability and comprehensability
13

TTransactions are distributed within the network
14
A->B: 10
A->B: 10
A->B: 10
A->B: 10
A->B: 10
D->E: 20
D->E: 20

Proof of Work applied by all network nodes to add a new list of transactions
But only one node can win the race.
15
A->B: 10
Solution of
the crypto
puzzle

Mining Prozess
Properties:
• Solution is easy to control
• Can only by solved by
experimenting
• Easy to parallize
• Adoptable diificulty
• Blocksensitiv (Links)
16
SHA256(SHA256(Block-Header + Nonce))
Hashwert<Threshold
(Difficulty)
Nonce + 1
Distribute Block to all Neighbours

The new block is accepted by all network nodes
and appended to the blockchain
17

Smart Contracts turn a passive Blockchain in
distributed computing ecosystem
 Smart Contracts are
 represented as programm code.
 represented as scripts within the transactions.
 executed within the blockchain system.
 Smart Contracts
 enable the creation of a new ecosystem.
 make the blockchain IoT ready.
 Smart Contracts may also become a nightmare
 of administration.
 of uncontrolled/able and irreversible autonomous activities.
18
If X>Y
and
Z < 20
then A->B: 10

What makes the Blockchain technology attractive?
Consensus building in a network
Representation and transfer of value and rights
Comprehensible and irreversible protocol of transfer
Automatisation potential by smart contracts

Blockchain the next generation as an internet of value and trust?
Internet
of
Informatio
n
Internet
of Services
Internet
of Things
Internet
of Value

BUT …
21

Bitcoin Energy Consumption
22

Important Terms
• Technology for distributed account and transaction
managementDistributed Ledger
• Technology for a decentralied, comprehensible and
irreversible management of transactionsBlockchain
• Executable Code that is is part of a transactionSmart Contract
• Crypto currency based on Blockchain TechnologyBitcoin/Ether/ICO
23

Blockchain unchained – The Blockchain IT Landscape
 Distributed systems: Networks
 Cryptography
 Software Engineering: Smart Contracts
 Data Structures: Blockchain
 Consensus methods: Proof of Work

Blockchain Datastructures
25

Consensus building methods
Proof of Work
• Validation by
solving a
Crypto-puzzle
• Requires energy,
computing
performance,
time
Proof of Stake
• Validation by
nodes who own
a large share –
„trust the
bosses“
• Faster, but
moves trust
from algorithms
to institutions
Lottery Protocol
• Randomly
selected nodes
• Requires trusted
lottery
mechanism –
Hardware?
Explicit
Validation
Nodes
• Selected nodes
own validation
competence.
z.B. BigchainDB,
erisDB
• Controlled
Blockchain
access
Open, Public
Performance

The Blockchain Design Space
Ethereum
Hyperledger
Fabric
BTC BigchainDB
Unpermissioned
Permissioned
Transaction oriented
Logic oriented
27

Which Blockchain is appropriate for me?
It depends …
… Analysis of the application and use case
… Identification of the transaction data
… Transparency or consortia / business process privacy
… Scalability
… Automation
28

A Blockchain in Practice
Sensor / Oracle Integration
Identitymanagement
A Blockchain is not a database!
Who am I and how many?
29
Data
Registration
Private:
Assetmgt
Public:
Ownership and
Financial Transactions

Poll Question 3: What do you consider the most relevant aspects
of blockchain in healthcare and life sciences (choose TWO) ?
A. The decentralized approach to replace platforms & intermediaries
B. The immutability of data
C. The ability to implement a cryptocurrency
D. The transparency
E. The automation potential through smart contracts

© Fraunhofer
Application industries
 Financial sector
Optimization of processes, bills-free transaction, foreign currency
exchange
 Media industry
Shared spaces of content and license information
 Public sector
Ledger for land registry, who owns what
 Legal sector
New types of contracts, cost reduction for micro payments
 Medical engineering
Immutable decentralized documentation of medical records, access to data
defined by user-specific roles

© Fraunhofer
Application areas
 Internet of Things
Automated contracts and payments
Example: Smart lock
 Smart Grid
Comprehensible transactions and automated trade
Example: Micro grid in Brooklyn, NY
 Proof of origin
Irreversible documentation and proof of constraints
Example: Blockchain for Education
 Supply Chain
Autonomous decisions and transactions
Example: food chain

© Fraunhofer
Use Case:
Smart Lock
 Blockchain technology used in internet of things
 Intelligent locks can be opened or closed via smart contract
 User transfers appropriate amount of money to rent an object
 Bike, car, house …
 Smart contract is executed, allowing the user to access a virtual key to
open the smart lock

© Fraunhofer
Use Case:
Micro Grid Brooklyn
Source: siemens.com
Source: siemens.com

© Fraunhofer
Use Case:
Blockchain for Education

© Fraunhofer
Use Case:
Food chain
Sandra Andrea Klein, Wolfgang Prinz, Wolfgang Gräther (2018). Blockchain for Food Safety.
In Proceedings of International Congress One Health and Food Safety, p.90, 2018.

© Fraunhofer
Example: Blockchain and Production
Intermediary Data and process
integrity
Decentral
network
Transfer of
values
and rights
Automation

© Fraunhofer
 CPS Microcontracts
 Delivery and Payment
 Machine 2 Machine
Communication
 Certificates: User and
machine
 Quality Control
Supply Chain
 Copyright
 Ownership
 Orders and
Transactions
 Network vs Platform
 Flexible Supply Chain
Networks
 Shareconomy
Intermediary Data and process
integrity
Decentral
network
Transfer of
values
and rights
Automation

©PistoiaAlliance
Poll Question 4: What do you consider to be the biggest barrier
to adoption of blockchain technology in healthcare and life
sciences?
A. Too difficult to understand
B. Too much electrical energy consumption
C. No added value beyond a traditional database
D. Too little security
E. Lack of access to blockchain-skilled personnel

© Fraunhofer
Identifying and exploring relevant Blockchain opportunities
Sandra Klein, Wolfgang Prinz, and Wolfgang Gräther. 2018. A Use Case
Identification Framework and Use Case Canvas for identifying and exploring relevant
Blockchain opportunities.
DOI: 10.18420/blockchain2018_02
Use Case CanvasUse Case Identification Framework

© Fraunhofer
Applying the Identification Framework
Use Case: Smart Lock
Use Case Use Case
REPLACE
ESTABLISH
MY BUSINESS MODEL
Replace
Establish
My Business Model
Replace
Establish
My Business Mod
… needs to be prepared for the new situation
TA
… have to be immutable
Very important
Important
Very important
Important
… where trust between stakeholders is missing
… to provide a save and stable basis for
transactions for flexible and temporary
cooperation partners
… can be replaced
Use Case Identification Framework for Blockchain
INTERMEDIARY
… to save time
… to reduce costs
… to simplify processes

© Fraunhofer
MY BUSINESS MODEL
Very Hardly Very
Does the Use Case profit from
Blockchain technology?
My Business Model My Business Mo
PROCESS
… can and should be performed autonomously
while following given rules
… can be automated by using Smart Contracts
100% automatable
67% automatable
33% automatable
0% automatable
100% automa
67% automa
33% automa
0% automa
… needs to be prepared for the new situation
DATA … have to be immutable
… have to be saved permanently and transparently
Very important
Important
Rather unimportant
Unimportant
Very importan
Important
Rather unimpo
Unimportant
cooperation partners
… can be replaced
INTE

© Fraunhofer
Applying the Canvas
Added value Data and Process Integrity Decentral Network Values and Rights
Use case name:
R Data R Partners R Values | Rights
Use Case Canvas for Blockchain
Whose tasks are being supported? Which
processes are being improved? Which unique
characteristic is being achieved?
Which data have to be managed securely? Who is a partner in the network? Which value or which right is being
Smart Lock
Task | Process | Unique
characteristic
Renting objects without having to transfer
a physical key
Deposit Amount People owning smart locks to rent objects
Right to use an object for a specific pri
and duration
h
l
m
h
h
l
m
h
h
l
m
h
Use case name:
R Data
Smart Lock
characteristic
a physical key
Deposit Amount
Guaranteed money transfer from the
tenant to the landlord
Rental Price
Virtual Key
Rental Duration
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m

© Fraunhofer
Applying the Canvas
Data and Process Integrity Decentral Network Values and Rights Automation
R Data R Partners R Values | Rights R Automation
What can be automated?
anvas for Blockchain
pported? Which
oved? Which unique
ieved?
Which data have to be managed securely? Who is a partner in the network? Which value or which right is being transferred?
Smart Lock
que
ving to transfer
Automation of the key transfer in the
beginning and the end of the rental per
Right to use an object for a specific price
and duration
h
l
m
h
h
l
m
h
h
l
m
h
h
l
m
h
Use case name:
R Data R Partners
Smart Lock
characteristic
a physical key
Rental Price People renting objects from the owner
Virtual Key
Rental Duration
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m

© Fraunhofer
Applying the Canvas
ntegrity Decentral Network Values and Rights Automation
R Partners R Values | Rights R Automation R
What can be automated?anaged securely? Who is a partner in the network? Which value or which right is being transferred?
People owning smart locks to rent objects
beginning and the end of the rental period
and duration
h
l
m
h
h
l
m
h
h
l
m
h
h
l
m
h
Use case name:
R Data R Partners R Values | Rights
Smart Lock
characteristic
a physical key
and duration
Virtual Key
Rental Duration
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
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h
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h
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h
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m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m

© Fraunhofer
Applying the Canvas
k Values and Rights Automation
R Values | Rights R Automation R
What can be automated?etwork? Which value or which right is being transferred?
to rent objects
and duration
h
l
m
h
h
l
m
h
h
l
m
h
R Data R Partners R Values | Rights R Automation
Which unique
?
Smart Lock
o transfer
m the
Automation of the re-transfer of the
deposit amount
and duration
Virtual Key
Rental Duration
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
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h
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h
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h
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h
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h
l
m

© Fraunhofer
Applying the Canvas
s Automation
R Automation R
What can be automated?ght is being transferred?
a specific price
h
l
m
h
h
l
m
h
R Partners R Values | Rights R Automation R
People owning smart locks to rent objects
People renting objects from the owner
Automation of the re-transfer of the
deposit amount
and duration
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
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h
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h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m
h
l
m

© Fraunhofer
Value of Framework and Canvas for Practitioners
Identification Framework
• Suitability
• Prioritization
Use Case Canvas
• How would the
Blockchain work?
Practitioner A
Practitioner B
Several Use Cases
Specific Use Case
Highly prioritized
Use Cases
How Blockchain
improves Use Case
Input for Proof of Concept
Can be applied
separately, but
work together
very well

© Fraunhofer
Summary
Blockchain relevance for network based processes:
 Irreversibility and comprehensibility
 Automation
 Decentral approach
50
What needs to be done?
 Process and business model analysis
 Identification of relevant use cases
 Proof of Concept
 Market observation
 Network organization
Kontakt:
Prof. Wolfgang Prinz, PhD
Fraunhofer FIT
Schloss Birlinghoven
53754 Sankt Augustin
Tel: 02241 – 14 2730
wolfgang.prinz@fit.fraunhofer.de
Blockchain Lab: http://www.fit.fraunhofer.de/de/fb/cscw/blockchain.html

©PistoiaAlliance
Poll Question 5: Within healthcare and life sciences, in which
ONE of these areas do you think blockchain technology will have
the greatest impact within the next 2-5 years?
A. Medicines supply chain
B. Scientific data sharing market
C. Electronic medical records
D. Clinical trials management
E. Regulatory submissions

©PistoiaAlliance
Demo Blockchain 4 Education
• Registration of Education Certificates in a Blockchain
• Open Standards: Open Badges
• Simple Validation of a Certificate
• More information:
– s.fhg.de/fit-b4e

©PistoiaAlliance
Poll Question 6: Where is your organisation currently on its
journey to blockchain adoption?
A. Not yet started / have no plans to adopt
B. Planning blockchain proof-of-concept in next 12 months
C. Working on proof-of-concept
D. Completed proof-of-concept
E. Implementing blockchain more widely

©PistoiaAlliance
Pistoia Alliance US Conference October 10, 2018 in Boston
54
We are pleased to announce the agenda
for our 2018 US Conference on 10th October
2018 in Boston.
You can review agenda and register at the
Pistoia Alliance events page
(https://www.pistoiaalliance.org/eventdetails/
pistoia-alliance-us-conference-2018/)
Technology is driving change in life sciences R&D and Healthcare. The Pistoia Alliance 2018 Annual USA
Conference will offer a unique opportunity for its members to come together to debate important
developments across the pharma and life science R&D value chain.
Key themes that will be addressed will range from “Lab of the Future” through “Artificial Intelligence” and its
underlying disciplines to “Real World Data” along with an update on the current Pistoia Alliance project
portfolio, including “Blockchain”.

©PistoiaAlliance
Blockchain Bootcamp – Boston Oct 8-9, 2018
55
Are you ready to roll up your sleeves and actually build some apps on a blockchain? If so, this event is for
you!
The first day will focus on Hyperledger Fabric training, while the second day will offer hands-on coding of
some life-sciences-related use cases.
Plan to bring your computer, your curiosity and your creativity!
Event Instructor will be Kris Bennett, of the Blockchain Training Alliance
Please register at Pistoia Alliance events page:
https://www.pistoiaalliance.org/eventdetails/blockchain-boot-camp/
Pistoia Alliance members can attend at no-fee. Non-members are welcome, and will be charged a fee to attend.
There is still time to sign up for the Pistoia Alliance Blockchain Bootcamp

info@pistoiaalliance.org @pistoiaalliance www.pistoiaalliance.org

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