Hyperledger Fabric Making Blockchain Real for Business Thanks, pleasure etc. There is much hype around Blockchain. Most of this relates to the use of Blockchain to underpin the Bitcoin crypto currency. Whilst IBM are not interested in Crypto currency, we are very interested in exploring the broader business application of Blockchain technology. This is a transformational opportunity for many of our clients This touches most all industries – we are making Blockchain REAL for business. © 2016 IBM Corporation

Linux Foundation’s Hyperledger Project Open Ledger Project announced December 17, 2015 with 17 founders, now over 80 members Hyperledger Project rebrand in February 2016 Collaborative effort 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 Open source, open standards, open governance QUICK FACTS Chairman Blythe Masters/DAH Executive Director Brian Behlendorf Technical Chair Chris Ferris/IBM Contribution 44,000 lines of code in February 2016 Sprint to one codebase with unified thinking Staged releases Enable adoption of shared ledger technology at a pace and depth not achievable by any one company or industry Steering Committee www.Hyperledger.org

Samsung have just announced they will be joining – like airbus this shows cross industry support © 2016 IBM Corporation Pag 3 As of 07 September 2016

Blockchain for business … Shared ledger Smart contract Append-only distributed system of record shared across business network Business terms embedded in transaction database & executed with transactions Ensuring appropriate visibility; transactions are secure, authenticated & verifiable All parties agree to network verified transaction Privacy Consensus … Broader participation, lower cost, increased efficiency So Blockchain technology comprises these four main blocks, that can lead to increased efficiencies, and cost reduction across the business network. We will “unpack” CONSENSUS PRIVACY & SMART CONTRACT in the next couple of slides. Shared LEDGER has been already covered, and a SMART CONTRACT enables the business rules implied by the contract to be embedded in the Blockchain and executed with the transaction

Records all transactions across business network 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 contract Business rules implied by the contract … embedded in the Blockchain and executed with the transaction Verifiable, signed Encoded in programming language Example: Defines contractual conditions under which corporate Bond transfer occurs

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 Not every member of business network can see all of the Blockchain Cryptography controls who can see what Implies user registration process to build trust network and access permission via certification management

… the process by which transactions are verified Consensus … the process by which transactions are verified Anonymous participants Bitcoin cryptographic mining provides randomized selection among anonymous participants Significant compute cost (proof of work) Known & trusted participants Commitment possible at low cost Byzantine fault tolerance (BFT) Multiple alternatives Proof of stake, where influence is determined by risk of validators Multi-signatures, validation needs consent from 3 out of 5 validators Industrial Blockchain needs “pluggable” consensus CRYPTOGRAPHIC consensus needed to support participant anonymity – this is NO TRUST system This is expensive, giving a COST to anonymity. When there is TRUST in a business network this become less, in the limit superfluous So as TRUST increases then cost of consensus decreases or in the limit can be eliminated Once participants identity

Hyperledger Overview: System Context Roles & Participants Membership & Network Entities <uses > <to access> Solution Provider Network Proprietor Membership Service <is-a> End User <is-a> Register Users Issue Certificates E-Cert T-Cert Chain Transactor Chain Validator Manage User Certs. Chain Network Validating Node Construct Transactions <node in> Initiate Transactions Query Transactions Validate Transactions V Forward Transactions Audit Transactions <node in> Non-Validating Node Maintain Ledger Chain Network <types of> Execute Consensus & Update Ledger Industry Network Regional Network Application Network <is-a> Network Auditor Chain Auditor

Hyperledger Reference Architecture Hyperledger Interface is REST APIs Secured and lightweight way to sandbox the “Smart Contract” execution on the validating nodes. SDK with support for Go, Java and Node.js Managing identity, privacy, confidentiality and auditability PKI-based infrastructure to enable a permissioned Blockchain Manage the distributed ledger through a peer-to-peer protocol, built on HTTP/2. Pluggable consensus algorithm. Default consensus based on PBFT/Sieve

Hyperledger Security Overview Audit Support Permissioned Blockchain: PKI-based Certificates Privacy-preserving Authentication Transaction Confidentiality Crypto Secured Identity & Role Management: Two Level (E-Cert, T-Certs) Transaction Privacy: Anonymity + Un-linkability TLS Certificates for System-System Messaging

Hyperledger Chaincode implements Smart Contract Chaincode is application code deployed as a transaction to be distributed in the network, managed by validating nodes, and implemented as Docker containers. Chaincode implemented in Go language. Deploying Chaincode Chaincode State World State V PUT_STATE GET_STATE DEL_STATE RANGE-QUERY_STATE Deploy Transaction Chaincode States <launch> V Chaincode <gRPC Link> Chaincode Invoke Query Register with Validating Node using ChainCodeID Call Invoke on Chaincode Interface to initialize Each Chaincode can define its own persistent state variables (key-value) Chaincode can update the state based on Invoke Tx World state refers to collection of states of all deployed chaincode Organized as a bucket-tree to enable efficient crypto-hash

Hyperledger Ledger Message Block{ } Message BlockTransactions{ } <Hash> Linked List of Blocks } Message BlockTransactions{ List of Tx World State Hash } Hash of the Block based on FIPS 202

Hyperledger Pluggable Consensus Framework Practical Byzantine Fault Tolerance (PBFT) If there are f failures then need 3f+1 replicas in an asynchronous network to ensure data integrity Interfaces all consensus plugins need to implement consensus Identifies consensus plugin used by validating peers SIEVE controller Extends PBFT to handle non-deterministic transactions by leveraging Execute-Verify (EVE) replication mechanism. Enables consensus plugin to interact with OBC stack (e.g. message handling) helper

membership peer orderer Hyperledger Fabric v1.0 Architecture membership keys Endorser Committer Ledger Events Chaincode state Proposal enroll No SPoF No SPoT peer SDK Submit Tx orderer Order TXs in a batch according to consensus Relay Batch

Thank you! © 2016 IBM Corporation

IBM & Hyperledger – Selected References HSBC, Bank of America, IDA Trade Finance - Letter of Credit ABN AMRO Financial Restructuring & Recovery Crédit Mutuel Arkéa Consortium Shared Ledger Japan Exchange Group (JPX) Post Trade Mizuho Digital Currency IBM Global Finance Shadow Chain for Dispute Resolution Everledger Diamond provenance Bank of Tokyo – Mitsubishi UFJ Business Partner Contracts CLS Bilateral netting service UBS Digital trade finance COMPLETE LIST with references. Master list is here > http://ibm.biz/BlockPubRef HSBC, Bank of America, IDA: http://www.coindesk.com/hsbc-bank-america-blockchain-supply-chain/ ABN AMRO: https://www.abnamro.com/en/newsroom/blogs/arjan-van-os/2016/walking-the-walk-exploring-the-power-of-blockchain.html Crédit Mutuel Arkéa: http://www.coindesk.com/ibm-completes-blockchain-trial-french-bank-credit-mutuel/ JPX: http://www.ibm.com/press/us/en/pressrelease/49088.wss Kouvola Innovation: http://www.ibm.com/press/us/en/pressrelease/49029.wss London Stock Exchange: http://www.ibtimes.co.uk/linux-foundation-blockchain-consortium-digital-asset-ibm-credits-london-stock-exchange-board-1533798 Mizuho: http://www.coindesk.com/mizuho-digital-currency-powered-blockchain-settlement/ IBM Global Finance: http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/ Everledger https://www-03.ibm.com/press/us/en/pressrelease/50169.wss Bank of Tokyo Mitsubishi https://www-03.ibm.com/press/us/en/pressrelease/50544.wss China UnionPay http://www.coindesk.com/ibm-china-unionpay-blockchain-loyalty-exchange/ CLS http://www.coindesk.com/cls-to-develop-blockchain-payment-service-on-ibm-fabric/ UBS http://www.coindesk.com/ubs-blockchain-prototype-trade/ IBM GF: http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/

Further Information – Use case Links HSBC, Bank of America, IDA: http://www.coindesk.com/hsbc-bank-america-blockchain-supply-chain/ ABN AMRO: https://www.abnamro.com/en/newsroom/blogs/arjan-van-os/2016/walking-the-walk-exploring-the-power-of-blockchain.html Crédit Mutuel Arkéa: http://www.coindesk.com/ibm-completes-blockchain-trial-french-bank-credit-mutuel/ JPX: http://www.ibm.com/press/us/en/pressrelease/49088.wss Kouvola Innovation: http://www.ibm.com/press/us/en/pressrelease/49029.wss London Stock Exchange: http://www.ibtimes.co.uk/linux-foundation-blockchain-consortium-digital-asset-ibm-credits-london-stock-exchange-board-1533798 Mizuho: http://www.coindesk.com/mizuho-digital-currency-powered-blockchain-settlement/ IBM Global Finance: http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/