Blockchain is a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining processes in business networks. Think of it as an operating system for interactions between participants in a business network. It has the potential to vastly reduce the cost and complexity of getting things done

1. © 2016 IBM Corporation
IBM’s Open Blockchain
Making Blockchain Real for Enterprises
Anthony O’Dowd, STSM IBM Blockchain Labs
Christopher Ferris, CTO Open Technology, IBM
IBM Blockchain – April 2016

2. © 2016 IBM Corporation 2
Blockchain Business Terminology
Business Networks
• Participants who are customers,
suppliers, banks, partners
• Cross geography & regulatory
boundary
Wealth is generated by the flow of
goods & services across business
network
Markets are central to this process
• Public: fruit market, car auction
or
• Private: supply chain financing,
bonds
Ledgers
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 and off
of 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)
Assets
Anything that is capable of being
owned or controlled to produce value
Two fundamental types of asset
• Tangible, e.g. a house
• Intangible e.g. a mortgage
Intangible assets subdivide
• Financial, e.g. bond
• Intellectual e.g. patents
• Digital e.g. music
Cash is also an asset
• Has property of anonymity

3. © 2016 IBM Corporation 3
The Blockchain Solution – a shared, replicated, permissioned ledger
Counter-party
records
Bank records
Party C’s Records Auditor records
Party B Records
Party A’s Records
Ledger
Ledger
Ledger
Ledger
Ledger
Ledger

4. © 2016 IBM Corporation 4
Blockchain defined
Blockchain is a technology for a new generation of transactional applications that establishes trust,
accountability and transparency while streamlining processes in business networks. Think of it as
an operating system for interactions between participants in a business network. It has the potential
to vastly reduce the cost and complexity of getting things done.
Blockchain is a design
pattern made famous by its
use in Bitcoin. But its uses
go far beyond.
Blockchain can reimagine
the world's most fundamental
business interactions and
open the door to invent new
styles of digital interactions.
IBM is applying Blockchain
to a very broad range of
business applications

5. © 2016 IBM Corporation 5
IBM’s point-of-view on Blockchain
1. Blockchain is a new-style distributed-database technology that enables enterprises to
interact more efficiently and securely across a wide variety of business application
2. Blockchain is not bitcoin; and while it was made popular by bitcoin, the computer science
behind blockchain has been in development for the past two decades
3. Blockchain must be built in the open. IBM supports the Linux Foundation’s Hyperledger
project because of it’s focus on balanced governance methodology and open source
meritocracy. This approach will lower risk of adoption and has lead to record adoption by
top industry companies and regulators.
4. Blockchain must be made ready for enterprise applications with a focus on privacy,
confidentiality, auditability, performance and scalability. IBM OBC fabric, is built from the
ground up with these attributes and was donated to the Hyperledger project
5. Blockchain must be permissioned to ensure greater trust across members, while
enabling more optimized forms of consensus which avoids the need to mine, which
comes are great cost in compute power and performance. Hence, IBM’s view of
blockchain does not include mining of coins, fuel, or any form of currency.

6. © 2016 IBM Corporation 6
IBM’s point-of-view on Blockchain
6. Blockchain must be extensible to enable experimentation that will lead to innovations in
consensus algorithms, storage, integration and performance. Hyperledger supports a modular
architecture which allows 3rd parties to create and plug-in new value that they can either
monetize or place back into the community.
7. Cloud-based deployments will provide the automation needed to quickly and accurately enable
developers and operator to adopt blockchain
8. Use-cases for blockchain range from bold ideas to imagine (or re-imagine) business processes
to more humble usage patterns to adopt sooner (2016) versus later. IBM defines four styles of
usage with increasing level of difficulty: compliance ledger, asset exchange, consortium ledger
and high value market ledger.
9. IBM Blockchain is conducting business in 2016 across three areas:
– Community development (Hyperledger)
– Cloud deployment which expands Hyperledger with value added features
– Client engagement via the Blockchain Garage.
10. IBM is engaging government and regulators to educate, demonstrate and encourage the broad
adoption of Blockchain for Enterprise usage.

7. © 2016 IBM Corporation 7
Key Concepts and Benefits of Blockchain for Business
Smart
Contract
Smart
Contract
PermissionsPermissions
Shared
Ledger
Shared
Ledger
ConsensusConsensus
Ensuring appropriate
visibility; transactions are
secure, authenticated &
verifiable
Ensuring appropriate
visibility; transactions are
secure, authenticated &
verifiable
Business terms embedded
in transaction database &
executed with transactions
Business terms embedded
in transaction database &
executed with transactions
All parties agree to
network verified
transaction
All parties agree to
network verified
transaction
Append-only distributed
system of record shared
across business network
Append-only distributed
system of record shared
across business network
SavesSaves
Time
Transaction
time from days
to near
instantaneous
LowersLowers
Cost
Overheads and
intermediary
costs
ReducesReduces
Risk
Tampering, fraud &
cyber crime
Benefits:
Key Concepts:

8. © 2016 IBM Corporation 8
Shared Ledger and Smart Contracts
Shared Ledger
• Records all transactions
across business network
• Shared between participants
• Participants have own copy
through replication
• Permissioned, so participants
see only appropriate
transactions
• THE shared system of record
Smart Contracts
• Business rules implied by the
contract …embedded in the
Blockchain &
• Executed with the transaction
• Verifiable, signed and encoded in
programming language
• Example:
– Defines contractual conditions
under which corporate Bond
transfer occurs

9. © 2016 IBM Corporation 9
Privacy and Pluggable Consensus
Permissions for Privacy
• Ledger is shared, but participants
require privacy
• Participants need:
– Transactions to be private
– Identity not linked to a
transaction
• Transactions need to be
authenticated
• Cryptography central to these
processes
Consensus to verify transactions
• Anonymity is expensive
– Bitcoin cryptographic mining
• Participants known & trusted
– Lowers cost of consensus
• Pluggable Consensus alternatives
– Proof of Stake
– Multi-Signature (e.g. 3 of 5)
– PBFT (cross checked secure
message exchange)

10. © 2016 IBM Corporation 10
Blockchain
User
Certificate
Authority
Blockchain
Developer
Blockchain
Network
Operator Traditional
Processing
Platforms
Traditional
Data
Sources
Blockchain
B2B
transactions
access to logic
access
to data
creates
applications
operates
accesses
security
certificates
Regulator
performs
oversight
The Participants in a Blockchain Network
R
U
D
O


11. © 2016 IBM Corporation 11
Validating
Node B
Validating
Node B
Validating Node CValidating Node C
Validating
Node A
Validating
Node A
Validating
Node D
Validating
Node D
Validating
Node E
Validating
Node E Blockchain Network A chain network that services
solutions built for a particular industry.
Shared Ledger: Records all transactions across business network
Consensus: Transaction validation & commitment
Non- Validating
Node
Non- Validating
Node
ChaincodeChaincode
StateStateLogicLogic
ChaincodeChaincode
ChaincodeChaincode
ChaincodeChaincode
Proprietor(s) setup and define the
purpose of a chain network. They are the
stakeholders of a network.
Auditors(s): Individuals or organizations
with the permission to interrogate
transactions and the blockchain network.
Solution Users: end users typically initiate transactions
on a chain network through applications made available
by solutions providers.
Non-Validating node: Constructs
transactions and forwards them to
validating nodes. Peer nodes keep
a copy of all transaction records
so that solution providers can
query them locally.
Solution Provider: Organizations that
develop mobile/web applications for
solution users to access chain networks.,
they own either NV or Validating node.
Public transactions:
transactions with its
payload in the clear
Membership Service (PKI)
ECAECA TCATCA TLS-CATLS-CAReg. AReg. A
Registration Authority: Assigns registration username & registration password pairs to network
participants. This username/password pair will be used to acquire enrollment certificate from ECA.
Enrollment CA (ECA): Issues enrollment certificates (ECert) to network participants that have already
registered with a membership service. ECerts are long term certificates used to identify individual entities
participating in one or more networks.
Transaction CA (TCA): Issues transaction certificates (TCerts) to ECert owners. An infinite number of
TCerts can be derived from each ECert. TCerts are used by network participants to send transactions.
TLS CA: Issues TLS certificates to systems that transmit messages in a chain network. TLS certificates are
used to secure the communication channel between systems.
Chaincode (Smart Contract): Application
logics stored and executed on the blockchain.
Chaincode State: Chaincodes access
internal state storage through state APIs.
States are created and updated by
transactions calling chaincode functions with
state accessing logic.
Confidential transactions:
transactions where its payload is
encrypted and is only visible to
stakeholders of this transaction
Confidential chaincode:
chaincodes that only pre-defined
subset of validators can view and
execute
The Blockchain Network

12. © 2016 IBM Corporation 12
Blockchain Technical Terminology
Membership
Smart Contract Systems Management
Events
Consensus Network Wallet
Shared Ledger
contains the current world state of the ledger and
a Blockchain of transaction invocations
encapsulates business network transactions in
code. transaction invocations result in gets and
sets of ledger state
a collection of network data and processing peers forming
a Blockchain network. Responsible for maintaining a
consistently replicated ledger
manages identity and transaction certificates, as
well as other aspects of permissioned access
creates notifications of significant operations on the Blockchain
(e.g. a new block), as well as notifications related to smart
contracts. Does not include event distribution.
provides the ability to create, change and monitor Blockchain
components
securely manages a user’s security credentials
responsible for integrating Blockchain bi-directionally with external
systems. Not part of Blockchain, but used with it.
Systems Integration

13. © 2016 IBM Corporation 13
BlockchainforBusiness–IBMStrategy
Open Source Code: Blockchain built
from the ground up for business;
Permission | Privacy
Confidential | Auditable
Open Governance – 40 member
board.
Blockchain value-added
manged service on SoftLayer
and System Z:
Identity | Consensus | Audit |
System Integration |
Hardware-assist for
Performance & Security.
Blockchain Solutions for
Financial Services;
Trade Finance | Capital Markets
Blockchain Garage
NY | London | Singapore | Japan
Blockchain GBS Practice
IBM Blockchain
Linux
Hyperledger Project
Blockchain Solutions
Blockchain Garage
Community + Code Cloud Clients

14. © 2016 IBM Corporation 14
IBMBlockchainPlatform
Capabilities
• Complete DevOps Lifecycle via Bluemix
• Smart contract language and API standards
• Enterprise-grade identity, security and privacy
• Seamless hybrid integration with legacy systems
• Market leading performance and scalability
IBM Differentiators
• Deep cryptography: skills, assets, IP from Research
• Hybrid Integration: WebSphere gateway & connectors
• Optimization: on Z with crypto hardware & blue cores
• Industry & domain expertise manifest in IBM solutions
• Future: Analytics & cognitive leadership on blockchain

15. © 2016 IBM Corporation 15
IBM Blockchain Architecture &
Code offered to Linux Foundation
Openchain Services
Openchain APIs, SDKs, CLI
CHAIN-CODE
Chain-code
Services
AP
Membership
Services
Registration
Attributes
Reputation
Blockchain Services
Consensus
Manager
Distributed
Ledger
P2P
Protocol
Ledger
Storage
Secure
Container
Secure
Registry
TRANSACTIONS
BLOCKCHAI
N
MEMBERSHIP
Event HubEvent Hub
MEMBERSHIP
Identity, Privacy and Auditability of
blockchain participants.
BLOCKCHAIN | TRANSACTIONS
Distributed transaction ledger
whereby the ledger is updated by
consensus
CHAIN-CODE
“Smart Contracts”, provide ability to
run business logic against the
blockchain
APIs, SDKs, CLI
Gives developers the ability to
programmatically control the
blockchain networkOpen Source Code: Blockchain built from the ground up for business;
Permission | Privacy | Confidential | Auditable

16. © 2016 IBM Corporation 16
Blockchain – Perfect for Open Source
● New, potentially revolutionary technology
● Requiring multiple specialized skills to develop
● Used by multiple parties
● Controlled and monetized by no one
● Strong governance model
So the Hyperledger Project was created at the Linux Foundation

17. © 2016 IBM Corporation 17
Introducing Hyperledger
A collaborative effort created to advance blockchain
technology by identifying and addressing important
features for a cross-industry open standard for
distributed ledgers that can transform the way
business transactions are conducted globally.

18. © 2016 IBM Corporation 18
NEWLY ANNOUNCED

19. © 2016 IBM Corporation 19
Election Announcements
Blythe
Masters
CEO
Board Chair:
Technical Steering
Committee Chair:
General Member Board
Representatives:
Chris Ferris
CTO Open Technology
Craig Young
CTO
Charles
Cascarilla
CEO

20. © 2016 IBM Corporation 20
Connecting with the Hyperledger Project Community
• Mailing Lists: http://lists.hyperledger.org/
• Github : http://www.github.com/hyperledger
• Slack (if you need an invite, please click https://slack.hyperledger.org/)
• Wiki: https://github.com/hyperledger/hyperledger/wiki
• IRC: #hyperledger on freenode.net
• Code of Conduct https://github.com/hyperledger/hyperledger/wiki/Hyperledger-
Project-Code-of-Conduct
• Working Group Meetings (Calendar)
https://github.com/hyperledger/hyperledger/wiki/PublicMeetingCalendar

21. © 2016 IBM Corporation 21
6 Proposed Code contributions

22. © 2016 IBM Corporation 22
60+ Developers Attended First Hackathon

23. © 2016 IBM Corporation 23
Consolidation begins?
Fabric
Sawtooth Lake

24. © 2016 IBM Corporation 24
Current activity
• Requirements & Use cases WG – Patrick Holmes, Intel
• Architecture WG – Ram Jagadeesan, Cisco
• Identity WG – Christopher Allen, Blockstream
• Whitepaper WG – Dave Voell, J.P. Morgan
• Fabric Incubator
• Sawtooth Lake Incubator
• Release Integration - TBD

25. © 2016 IBM Corporation 25

26. © 2016 IBM Corporation 26
What’s next?
• Monthly “hackathon”
• Hire an Executive Director
• Exploration of Sawtooth Lake Incubator
– What can Fabric learn from STL and vice-versa
• Initial draft of Whitepaper to be published
• Requirements review by Technical Steering Committee

27. © 2016 IBM Corporation
Please join us!
www.ibm.com/blockchain
www.hyperledger.org
@christo4ferris
@ajodowd

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