1. Microsoft Ignite NZ
25-28 October 2016
SKYCITY, Auckland

2. Blockchain - The Internet of Trust
M250
Richard Knight
Global Black Belt (Asia) – Azure

3. Blockchain – secure, shared, distributed ledger
9/20/2018 6:48 AM
Blockchain – secure, shared, distributed ledger
Shared
Blockchain value directly linked to number of participating organizations - allowing competitors to collaborate through shared ledger
Secure
Uses cryptography to create transactions impervious to fraud and establishes shared truth
Distributed
Existence of many replicas of blockchain ledger - more replicas make the system more authentic
Ledger
Database is append only – creating immutable record of every transaction that occurs
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4. Blockchain uses distributed ledger to track transactions
9/20/2018 6:48 AM
Blockchain uses distributed ledger to track transactions
Traditional ledger - write only database commonly used in accounting
Digital distributed ledger - same copy of the data across all participating nodes
New transactions are encrypted and broadcast across the blockchain network of nodes
Participating nodes verify transaction is valid and writes to the ledger
FROM TO
PROPERTY
VALUE
Alex
Katie
Payment
$500
Jim
Sally
$300
Garth
Asset
Car
Tony
$100
Molly
Paula
Message
Phone
bill paid
Entire participating node has the same ledger
Example ledger
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5. Transactions are connected within a chain of blocks
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Transactions are connected within a chain of blocks
Transactions grouped together in blocks in order of transactions happening
Blocks linked to one another – initial block known as ‘genesis” block
Transaction chain tracks ownership changes, block chain tracks order of transactions
Block 0 (0x23e…)
Transaction 1
Transaction 2
Transaction 3
Confirmed new block
Block 1 (0x5ef…)
Transaction 4
Transaction 5
Transaction 6
Previous Block 0x23e…
Block 1 (0x976…)
Transaction 7
Transaction 8
Transaction 9
Previous Block 0x5ef…
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

6. What does it mean to be decentralized?
9/20/2018 6:48 AM
What does it mean to be decentralized?
Traditional ledgers are centralized - use 3rd parties and middlemen to approve/record transactions
Blockchain distributes ledgers across network or participating node – no central authority required
Similar to peer-to-peer torrent file sharing
Blockchain System
Distributed system with distributed ledger
Traditional System
Centralized system with ledger
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

7. 9/20/2018 6:48 AM
Decentralization has great benefits & changes fundamental processes & models
Eliminates Intermediaries
Allows industries to redefine or create new business models.
Reduces Fraud
Highly secure and transparent, making it nearly impossible to change historical records.
Increases Efficiency and Speed
Simplifies transactions and enables T+Zero settlement time.
Increases Revenue and Savings
Potential savings and new revenue opportunities through more efficient processes and reduced costs.
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

8. However, removing a central authority is risky
Who can really be trusted?
Who maintains the record of transactions?
How do you prove that a transaction is valid?
How do you come to an agreement (consensus) in a decentralized system where some of the participants could be lying?
Blockchain replaces AUTHORITY with CRYPTOGRAPHY (security)
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System | Oct 31, 2008

9. 9/20/2018 6:48 AM
Blockchain needs cryptographic one-way hash functions to timestamp everything
Digital assets (everything from transactions to owners) are protected via signatures & hashes
Digital signatures & hashes are created by cryptographic one-way hash functions - no way of deriving the input from the output)
Digital signatures and hashes allow blockchains to remain secure while being distributed
Username/Password + Fingerprint + Phone Number
Cryptographic
One-Way Hash
Digital signature 0x23e423s3234…
Product serial number + manufacturer
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

10. 9/20/2018 6:48 AM
Basic blockchain to track financial transactions Example - Alex wants to send Katie $500 via a financial transaction blockchain system Tx
Signature Tx
Signature
FROM TO
PROPERTY
VALUE
Alex
Katie
Payment
$500 Tx
Signature Tx
Signature
Transaction (Tx)
From: Alex (0xf5e…)
To: Katie (0x992…)
Amount: $500
Digital signature 0x23e423s3234…
2. Transaction is confirmed though mining. Tx
Signature Tx
Signature Tx
Signature
3. Confirmed transaction gets pushed to network
1. Transaction information goes through hash functions (to secure it as well as create a time stamp)
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

11. Previous transactions
9/20/2018 6:48 AM
Blockchains create a transaction chain that maintains the history of ownership of an asset
Ledger does not keep track of digital asset account balances - it records transactions
Instead of balances, ownership of digital assets is verified by links to previous transactions - immutable history available in a blockchain solution
Current transaction
Previous transactions
Transaction
From: Garth (0xas2…)
To: Alex (0xf5e…)
Amount: 200
Inputs: 0xtd6…, 0xj7d…
Digital signature 0x56e…
Transaction
From: Alex (0xf5e…)
To: Katie (0x992…)
Amount: 500
Inputs: 0x56e…, 0x987…
Digital signature 0x23e423s3234…
Transaction
From: Sally (0xkj5…)
To: Alex (0xf5e…)
Amount: 300
Inputs: 0xkf7…, 0x9dh…
Digital signature 0x987…
FROM TO
PROPERTY
VALUE
Alex
Katie
Payment
$500
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

12. All digests of parts are combined into one unique digest for the phone
9/20/2018 6:48 AM
Blockchain to track assets Example – A smartphone and its components captured in a blockchain system used to track assets
Unique identifier for smartphone is created based on all the parts making up the smartphone
This unique identifier for the smartphone can be used to track that unique item within a blockchain
Digests of Parts
0x23e423s3234…
0x4e
0x98d2a
Smartphone Digest
0x48e423s3234…
All parts get a hash (digest) based on inputs (e.g. product serial number + manufacturer)
All digests of parts are combined into one unique digest for the phone
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

13. Blockchain with Smart Contacts
9/20/2018 6:48 AM
Blockchain with Smart Contacts
Blockchain simple ledger that records transactions in sequence
Blockchain 2.0 – introduction of Smart Contracts - computer code representation of a legal contract
Smart Contracts execute various terms written in the contract based on reaching agreed-upon conditions
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

14. Blockchain in Financial Services & Insurance
9/20/2018 6:48 AM
Blockchain in Financial Services & Insurance
Cross Border Payments
Insurance Claims Processing
Facilitating claims management for property and casualty insurers on DLT can automate processing through smart contracts, improve assessment through historical claims information and reduce potential for fraudulent claims
Conducting international money transfers through DLT could provide real-time settlement and reduce costs, enabling new business models (e.g. micropayments), and institute newer models of regulatory oversight
Equity Post-Trade
‘Know your Customer’ Digital Identity
Utilizing DLT and smart contracts to facilitate post-trade activities can disintermediate processes, reduce counterparty and operational risk and, potentially, pave the way for reduced settlement time
Real-time and on-demand AML/KYC compliance for global payments can use data available on DLT to reduce high cost of customer acquisition, decrease new account creation process and allow individuals to have control over their own data
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

15. Blockchain in Supply Chain Management
9/20/2018 6:48 AM
Blockchain in Supply Chain Management
Linking Digital and Physical
Secure, Open Registry
Fraud Detection
Provenance data can be linked to any physical product - through labelling, smart tags and through embeds for your website or app - tracking provenance to wherever your products are - online and on product
Traceability system for materials to ensure data is trustworthy - able to track the attributes and journey of every material thing - powering a system everyone in the supply chain can be part of.
Implementing supply chain certification on blockchain - having a system to assign and verify certifications of certain properties of physical products; e.g. organic or fair trade.
Transactional activities of the supply chain - identify items that are fakes (e.g. non-authorized use of a brand, coupled with poor quality), non-approved items (e.g. regulatory approval not traceable), products that have not engaged in a recall program (e.g. embedded software that needs to be changed in order to avoid a potential fire) and much more.
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

16. Microsoft in Blockchain – DevTest Labs
9/20/2018 6:48 AM
Microsoft in Blockchain – DevTest Labs
Developers can quickly create Blockchain environments in Azure while minimizing waste and controlling costs
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

17. Microsoft in Blockchain – Azure Marketplace
9/20/2018 6:48 AM
Microsoft in Blockchain – Azure Marketplace
Develop, test, and deploy blockchain applications leveraging ISV applications in the Azure Marketplace
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

18. Demo – DevTest Labs and Azure Marketplace
Microsoft Ignite 2016
9/20/2018 6:48 AM
Demo – DevTest Labs and Azure Marketplace
Jay Swaminathan
Global Black Belt (Asia) – Azure
© 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

19. Microsoft in Blockchain – “Bletchley” Roadmap
9/20/2018 6:48 AM
Microsoft in Blockchain – “Bletchley” Roadmap
Healthcare
Retail & CPG
Public Sector
Manufacturing
Financial Services
Media
Distributed Ledger Stacks
Azure/Azure Stack
Horizontal SaaS & Adapters
3rd Party
1st Party DL Stack
1st Party
Virtual Machine
Adapters
Smart Contract-based
UTXO-based or other
Middleware Tier
3rd Party DL Stack B
…..
Industry Solutions
Blockchain Resource Provider
CryptoDelegate and Cryptlet Architecture
Professional Services & Support
Identity & Key Services
Crypto Services
ML & BI
Services
Distributed Ledger Gateway Services
3rd Party DL Stack A
3rd Party DL Stack C
Base Platform Tier
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

20. Microsoft in Blockchain – “Bletchley”
9/20/2018 6:48 AM
Microsoft in Blockchain – “Bletchley”
Azure Resource Manager (ARM) quick start template to provision a fully configured blockchain network topology consisting of Ethereum nodes
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

21. Demo – “Bletchley” template on Azure
Microsoft Ignite 2016
9/20/2018 6:48 AM
Demo – “Bletchley” template on Azure
Jay Swaminathan
Global Black Belt (Asia) – Azure
© 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

22. Microsoft in Blockchain - Partners
9/20/2018 6:48 AM
Microsoft in Blockchain - Partners
Startup Partners
Consulting Partners
System Integrator
Partners
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

23. Microsoft Partner Blockchain Solution
9/20/2018 6:48 AM
Microsoft Partner Blockchain Solution
Real-time payments platform for end-to-end delivery of international currencies in seconds - includes highest security for KYC/AML, and pathfinding algorithm for efficient market rates.
ASSET
MANAGERS
BANKS
INSURERS
STANDARD MESSAGING LAYER
REAL TIME
PAYMENTS
SMART
CONTRACTS
RECORDS MANAGEMENT
PROTOCOL ABSTRATION LAYER
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

24. Microsoft Partner Blockchain Solution
9/20/2018 6:48 AM
Microsoft Partner Blockchain Solution
Mobile wallet for POS usage with transaction top up involving bitcoin and crowdfunding; Integrated with loyalty rewards; Extended into corporate mobile wallets
Identity and Access Management
Regulatory Reporting
EMPLOYEES
ENTERPRISE
BANK
Treasury/Fx/Limits
Perform corporate payments using mobile wallets instead of paying by cash
Track monthly spends against the entitled categories & request for exception approvals
Faster approval process with the ability to approve from the app / wearable device
Get consolidated view of employee spends
Set whitelists for preferred vendors and suppliers
Prevent unauthorized transactions by blacklisting the unwanted vendors
Provide a single window to corporates & SMEs to manage transactions
Establish a marketplace of preferred suppliers & buyers
Track the company level transactions to derive unique insights
Core Banking System
Card Systems
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

25. Microsoft Partner Blockchain Solution
9/20/2018 6:48 AM
Microsoft Partner Blockchain Solution
Cross border currency transfer originated through a mobile wallet and transported and settled using Blockchain on Azure
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

26. Microsoft Partner Blockchain Solution
9/20/2018 6:48 AM
Microsoft Partner Blockchain Solution
Cashless transactions between insurer, policy holder and third party repairers providing and fuss-free repair process
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

27. Blockchain | Industry Relevance
9/20/2018 6:48 AM
Blockchain | Industry Relevance
23%
15%
77%
54%
38%
23%
Decentralized Coordination
Finance
Identity
Property Title
Communication
Privacy
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

28. How do you get started with Blockchain?
9/20/2018 6:48 AM
How do you get started with Blockchain?
SIGN UP FOR AN AZURE ACCOUNT
SETUP BLOCKCHAIN ON AZURE
PLAY AROUND WITH VARIOUS TEMPLATES
KEEP UP TO DATE WITH BLOCKCHAIN DEVELOPMENTS
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

29. 9/20/2018 6:48 AM
© 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.