IBM Blockchain Solutions Explained v0.6

1. Solutions Explained IBM Blockchain Networks V0.6, 8 August 2019 Blockchain Explained Series Blockchain Explained IBM Blockchain Platform Explained Solutions Explained Labs Explained What’s New IBM Blockchain Usage Patterns

2. IBM Solutions • Food Trust • TradeLens • World Wire • Digital Identity Your Solution

3. 3 IBM Solutions • The aim of this presentation is to provide introductions to IBM blockchain solutions • It is suitable for clients and IBMers wishing to find out more about one or more of these solutions • See also the Client References presentation that gives summary information on many more blockchain projects

4. 4 Food Trust

5. • Text or image• Text or image • Text or image• Text or image Only 1 in 4 Consumers Trust the Food Ecosystem 1 out of 10 people get sick each year, and 420,000 die from foodborne illness 80% of CPGs business are partially or entirely paper-based 1 / 3 of fresh food is thrown out because it is considered unacceptable 1 in 5 seafood samples mislabeled worldwide (43% mislabeled in NYC) 5© 2019 IBM Corporation The root of these issues, and many others, are the lack of trust and transparency Food Safety Supply Chain Inefficiency Food Waste Food Fraud

6. 6 The Problem: • Data is siloed within each company and accessing it requires a request and time • Exchange of information takes place between a pair of partners; to get information from a distant partner may require intermediaries, time, resources • Most transactions are still paper-based, creating inefficiencies and opportunities for fraud • Because everyone maintains their own record of transactions, differences take time and resources to reconcile Today, traditional system constructs limit transparency 6 The food industry today Grower Manufacturer Retailer Restaurant Logistics Inputs

7. 7 Blockchain transforms systems with trust and transparency The Solution: • Because blockchain provides an independent data- sharing platform, participants trust it • Once data is shared in a single data-sharing platform, everyone has instant transparency into the transactions they are authorized to view; no intermediation required • Data immutability creates an auditable record of all transactions, disincentivizing fraudulent behavior • Dispute resolution from the shared ledger can be automated saving time and resources 7 The food industry with blockchain Grower Manufacturer RetailerRestaurant Logistics Inputs

8. 8 Introducing IBM Food Trust TM built on Blockchain technology • The IBM Food Trust solution is a set of modules providing traceability to improve food transparency and efficiency • Blockchain is used to create a trusted connection with shared value for all ecosystem participants, including end consumers • The solution offers connectors for interoperability and leveraging existing standards (e.g., GS1) • Blockchain properties come together to create a more trusted, transparent, and efficient data-sharing platform. Distributed Ledger Digital Transactions Immutable Data Efficiency Trust Transparency

9. 9 IBM Food Trust offers industry-specific functionality targeted at key pain points 9 Fresh Insights • Access real-time and aggregate supply chain data to extend product freshness and shelf life Trace • Trace the location and status of food products upstream and downstream across the supply chain Certifications • Enable reliability and accountability with instant access to digitized records and documents Third-party • Partner to expand functionalities and deliver new value across the food system Food Supply Ecosystem Blockchain Technology IBM Blockchain Platform Hyperledger Fabric Capabilities Information- sharing Platform

10. 10 Trace Last year, there were at least 456 food safety recalls globally due to contamination, with each recall estimated to cost an average of $10 million. Functionality • Securely and transparently trace the location and status of food products upstream and downstream in seconds. Impact • Improve food safety • Conduct surgical recalls • Identify ingredient provenance • Reduce Food Fraud 10

11. 11 Certifications Driven by today’s food system complexity, food fraud is a global business estimated to cost $40 billion annually. Functionality • Easily digitize and share inspections, quality certifications, and registrations. Impact • Improved brand trust • Reduced food fraud • More sustainable ecosystem 11

12. 12 Fresh Insights 40-50% of root crops, fruits and vegetables are wasted annually. Food losses and waste amounts to roughly $680 billion in industrialized countries. Functionality • Real time insights on inventory flow, average dwell time, time-since-harvest. Enables root-cause diagnosis and provides alert capabilities. Impact • Supply chain efficiencies • Reduced food waste • Increased Shelf Life • More sustainable ecosystem 12

13. 13 IBM Food Trust provides value to the entire food ecosystem Farmers / Producers § Prove farm is not a source of outbreak § Ease of connectivity to the supply chain Consumers § Learn about recalls and increased transparency § Reduce risk of being victimized by food fraud Regulators § Identify contamination quickly § Reduce unnecessary testing Food Service § Assure customers food supplied Is safe § Reduce wasted food Food Logistics § Enhance ability to meet compliance standards § Reduce manual processes Food Retailers § Assure customers food supplied is safe § Conduct targeted recalls quickly Certification Bodies § Reduce fraudulent certificates § Increase renewal speed Food Manufacturers / CPGs § Instill trust between retails, suppliers & customers § Automate & reduce manual certificate management Wholesalers/ Distributors § Conduct targeted recalls § Enable internal data sharing

14. 14 How long does it take to trace a package of sliced mangoes back to the farm? Typical manual, mixed digital and paper-based method IBM Food Trust digital solution 6 days 18 hours 26 minutes 2.2 seconds Pilot Test Case Supply Chain Results The effectiveness of the IBM Food Trust solution was demonstrated with a Walmart mango pilot

15. 15 Momentum is growing 15 Sep 24, 2018 Walmart asks leafy green suppliers to join Nov 1, 2018 FDA encourages latest technology to trace Oct 8, 2018 IBM Food Trust generally available Jan 31, 2019 Majority of Walmart suppliers join 80+ clients Today, we have full in-production capability after over a year of testing: • One of the largest non-crypto blockchain networks in the world • 5M+ food products on retail shelves • ~1,200 SKUs/items digitized, representing 4M+ transactions • 200K traces conducted to date

16. The only enterprise-class blockchain solution for the food system 16 Governance Model Built and maintained with the collaboration of industry thought leaders • Data Ownership • Membership • Trust Model • Interoperability • 3rd Parties • And more Business Value Designed so every participant can see a positive ROI Standards & Interoperability Built to interoperate with blockchain and non-blockchain solutions leveraging existing standards Technology Innovative enterprise-class technology: • Security / Privacy • Reliability • Scalability • Resilience • Auditability Ecosystem Open to all participants in the food ecosystem 3rd Parties It is more than just blockchain technology; five pillars underpin a successful blockchain ecosystem

17. 17 Range of onboarding offerings Premium onboarding Assisted onboarding Virtually guided onboarding Self guided onboarding For clients needing process reengineering in addition to IBM Food Trust onboarding Clients receive a dedicated expert to guide them through the onboarding process Clients interact with an expert in pre-defined education modules and as-needed to answer onboarding questions Clients onboard independently using self-service education, digitally available tools, documentation, chat and discussion forums IBM Led IBM Led Client Led Client Led Target: enterprise § Process Improvements § App Connect Integration § 1 supply chain process (2-100 SKUs) onboard Target: mid § Single process data mapping and process map § 1 supply chain process (2-50 SKUs) onboard Target: mid § 1 supply chain process (2-20 SKUs) onboard § Add on time as needed Target: mid & small § Self-onboarded ongoing SKUs & Certificates $150K $35K $5K + add-ons No cost IBM Assisted

18. 18 Onboarding on to the Food Trust Network IBM Food Trust You select initial product(s) Onboarding IBM Food Trust You onboard remaining products Post-Onboarding IBM Onboarding Team Walkthrough IBM Support Team Support After the initial product(s) onboarding with IBM, you will be able to onboard more products, data events, and ecosystem partners to the blockchain independently of the IBM Onboarding team. Onboard Process Outcomes ü Walk you through how to identify product(s) that can be traced on blockchain ü Identify data events and elements that will be integrated into the blockchain ü Push product(s) from client systems to the integration environment and perform combo testing with your testing partner ü Work with technical staff in the integration of your system to Food Trust

19. 19 Onboarding Outcomes The onboarding process will enable you to continue using the solution after the onboarding is complete. You will be enabled to map business process events to GS1 messages gain access to IBM Food Trust support onboard additional product(s) extend data visibility to trading partners

20. 20 Onboarding: Overall Process and Approach IBM Onboarding Team IBM Support Team GS1 Event Mapping Sample Generation Integration Development Data Linkage Validation UI Testing Discovery Workshop Promoted to Production Hand-off to Support Post-onboarding questions The IBM Onboarding Team will walk you through the onboarding process for your initial product. After the data for your first product has been pushed to the blockchain, the IBM Support Team will help support you as you onboard your remaining products. The IBM Support Team is available to help after the initial onboarding process. Continuous training for the onboarding process Identify client’s onboarding requirements Ensure client readiness for onboarding Start Production Operations Discovery (Sprint 1) Preparation (Sprints 2-5) Launch (Sprint 6) Client fully informed and prepared for onboarding Assist client to develop integration requirements. Start pushing live data to blockchain Discovery Workshop: Readiness Assessment Post-Onboarding Onboarding Knowledge Transfer Seek client feedback and begin independent onboarding

21. 21 TradeLens

22. 22 • IBM and Maersk are developing the platform under a joint collaboration, with significant input from and participation by the industry • The platform empowers faster and more efficient, transparent and secure global trade • TradeLens is built for the industry and offers benefits to trade participants from across the supply chain ecosystem • An Advisory Board is being formed to help shape the platform and drive standards • TradeLens is live in production today, processing millions of transactions per day An open and neutral blockchain-based platform that is digitizing the global supply chain and transforming trade September 2018 TradeLens Limited Availability Release December 2018 TradeLens Commercial Release 1.5 million events per day published to the platform January 2019 Latest production release includes new document sharing, permissioning and notification features. Working with more than 100 ecosystem participants August 2018 Formal launch of the TradeLens platform 92 participants signed on January 2018 Beta release of the platform and launch of Early Adopter program; trials underway OURJOURNEYTradeLens

23. 23 The Collaboration Model • A collaboration team has been established to lead the initiative and drive industry adoption – Maersk has established an operational subsidiary to manage staff assigned to the collaboration; this subsidiary also ensures TradeLens independence from other Maersk business units – IBM has assigned dedicated staff from across its Blockchain, Cloud, consulting, and sales units • IBM and Maersk jointly own the IP created from the collaboration • IBM hosts, operates and supports the platform • An Industry Advisory Board will be formed by ecosystem participants to help shape the platform and establish open standards • Network Members, including ocean carriers, ports, inland transportation, and country authorities, are invited to participate on terms that give them access to the core platform, in exchange for the data they originate; they may enter into participation agreements with either IBM or Maersk • IBM and Maersk independently market, sell and contract TradeLens through their own sales channels • Third parties build and deploy applications on and sell services through the TradeLens Application Marketplace • Maersk business units including Maersk Line, Hamburg-Sud, APMT, and Damco participate on the same terms as other participants with no special treatment or access to competitor data IBM and Maersk have jointly developed the TradeLens platform and will continue to invest in it

24. 24 The cost of global trade is estimated at $1.8 trillion annually1 with potential savings from more efficient processes of ~10% 24 More than $16 trillion in goods are shipped across international borders each year 80% of the goods consumers use daily are carried by the ocean shipping industry By reducing barriers within the international supply chain, global trade could increase by nearly 15%, boosting economies and creating jobs2 In many cases the administrative cost of moving a container is higher than the cost of physically moving it 1) Maersk Strategy Group (May 19, 2016) based on World Bank data for World Trade Costs 2) The World Economic Forum: Enabling Trade Valuing Growth Opportunities 2013

25. 25 Global trade is highly inefficient and burdened by paper- based processes Data trapped in organizational silos Information is held in paper and various digital formats across dozens of service providers along the supply chain, requiring complex, cumbersome, and costly peer-to-peer messaging. The result is inconsistent information across organizational boundaries, latency in obtaining shipment visibility, and blind spots that hinder the efficient flow of goods. Manual, time-consuming, paper-based processes The collection and processing of up-to-date data, as well as inefficient trade document exchange, requires manual checks and frequent follow-ups and results in errors, delays and high compliance costs. Late filings are common due to missing information. Clearance takes too long and is often subject to fraud Risk assessments by customs authorities lack sufficient and trusted information resulting in high inspection rates, added prevention measures against fraud and forgery, and delayed customs clearance. High costs and poor customer service These challenges have significant downstream repercussions. The inability to forecast and plan effectively, address supply chain disruptions in real-time, and share trusted information across the supply chain leads to excessive safety stock inventory, high administrative costs, operational challenges, and ultimately poor customer service. Inland Transportation Shippers / Beneficial Cargo Owner Supply Chain Visibility Systems Trade Association s Supply Chain / Transportation Management Systems Authorities Financial / Insurance Services Port Community Systems; Terminal Operating Systems Ports and Terminals Freight Forwarders / 3PLs Customs Systems Ocean Carriers Customs Brokers

26. 26 The TradeLens Platform - Digitizing the global supply chain Connects the ecosystem Brings together all parties in the supply chain - including traders, freight forwarders, inland transportation, ports and terminals, ocean carriers, customs and other government authorities, and others - onto a Blockchain- based platform with a secure permission and identity framework Drives true information sharing Provides for the seamless, secure sharing of real-time, actionable supply chain information across all parties to a trade - encompassing shipping milestones, cargo details, trade documents, the structured data embedded in trade documents, customs filings, sensor readings, and more Fosters collaboration and trust Enables the digitization and automation of the cross-organization business processes integral to global trade, including import and export clearance, with Blockchain ensuring secure, auditable, and non-repudiable transactions Spurs innovation Lays the foundation for ongoing improvement and innovation through an open, non-proprietary API, the use of standards and promotion of interoperability, and the launch of an Applications Marketplace that parties can use to build and deploy TradeLens-powered applications for themselves, their partners, and their customers Inland Transportation Shippers / Beneficial Cargo Owner Supply Chain Visibility Systems Authorities Financial / Insurance Services Port Community Systems; Terminal Operating Systems Freight Forwarders / 3PLs Customs Systems Customs Brokers THE PLATFORM IS BUILT ON AN OPEN TECHNOLOGY STACK AND IS UNDERPINNED BY BLOCKCHAIN TECHNOLOGY Ports and Terminals Ocean Carriers Trade Associations Supply Chain / Transportation Management Systems

27. 27 The TradeLens ecosystem Primary consumers and beneficiaries of the platform ⦿ Shippers (BCOs, retailers, manufacturers, etc.) ⦿ Freight forwarders, customs brokers, 3PL ⦿ Financial institutions TRADELENS PLATFORM Clients Applications Marketplace Network Members Provide and gain access to end-to- end supply chain information ⦿ Ocean carriers ⦿ Ports and terminals ⦿ Government authorities ⦿ Inland transportation ⦿ Freight forwarders / 3PLs ⦿ 3rd party data providers Offer value added services to the ecosystem through a platform marketplace ⦿ TradeLens offerings ⦿ Offerings from third party ISVs ⦿ Offerings from Network Members and Clients

28. 28 28 PORTS/ TERMINAL OPERATORS OCEANCARRIERS GOVERNMENT AUTHORITIES INLAND TRANSPORTATION FREIGHT FORWARDERS/ 3PL SHIPPERS/ BENEFICIAL CARGOOWNER FINANCIAL SERVICES Benefit from pre-built connections to shipping lines and other actors, end-to-end visibility across shipping corridors, and real-time access to more information to enrich port collaboration and improve terminal planning Provide information about the disposition of shipments within the boundaries of the port / terminal Benefit from reduced customer service and network integration cost, less revenue leakage, and less mis-declared cargo due to a digital audit trail of end-to-end shipment events and source documents Provide information about the disposition of shipments across the ocean leg Benefit from more informed risk assessments, better information sharing, less manual paperwork, and easier connections to national single window platforms Provide information about the export and import clearance status for shipments into and out of the country Benefit from improved planning and utilization of assets (e.g., less queuing) given real-time access to end-to-end supply chain events for shipments Provide information on the disposition of shipments carried on trucks, rail, barges, etc. Benefit from a streamlined and improved supply chain allowing for greater predictability, early notification of issues, full transparency to validate fees and surcharges, and less safety stock inventory Engage with the platform as a consumer of shipping information and means to streamline clearance Benefit from pre-built connections to the ecosystem, improved tools for customs clearance brokerage function, and real-time access to the end–to-end supply chain data to improve effectiveness of track-and-trace tools Provide the transportation plan, inland transportation events, information on intermodal handoffs, and document filings Benefit from access to a definitive, real-time, and immutable source of information for trade finance and trade insurance Engage with the platform as a consumer of supply chain information Benefits to the ecosystem

29. 29 NETWORK Comprised of the TradeLens network members, such as carriers, ports, and customs authorities, that connect to and provide data to the platform TradeLens - Solutions Landscape PLATFORM Accessible via an open API, the TradeLens Platform brings together the supply chain ecosystem and enables the industry to share information and collaborate; Blockchain and cloud technologies power the platform APPLICATIONS AND SERVICES An open marketplace that allows both TradeLens and third-parties to publish fit-for- purpose services atop the TradeLens platform TRADELENS

30. 30 Network geographic Coverage - as of April 2019 • •• • • • • • • •• • • • • •• ••• • • • • • •• • • • •• • • • • •• • •• Los Angeles Lazaro Callao Valparaiso Montreal Houston Mobile Philadelphia Halifax Elizabeth Buenos Aires Itajai Santos Pecem Onne Cotonou Tangier • Algeciras Valencia Barcelona Bilbao Grangemouth Liverpool Avonmouth • Newcastle Immingham Maasvlakte Felixstowe • Izmir Gothenburg• Poti Bahrain Pipavav Visakhapatnam Singapore Hong Kong Manila Fremantle Melbourne Brisbane Auckland Tauranga Napier • Sydney •• Pyeongtaek Gunsan Kwangyang Pohang Incheon Busan Ulsan Apapa Hull Teesport • Xiamen

31. 31 Append-only distributed system of record shared across business network A network of industry participants maintains a distributed, permissioned ledger with copies of document filings, relevant supply chain events, authority approval status, and full audit history; every change results in a new, immutable block Shared business logic governing what transactions may be written to the ledger Cross-organizational business processes, such as import and export clearance, are pre- programmed and built into Blockchain and distributed to and executed on the network, preventing any member from changing the business logic Ensuring appropriate visibility; transactions are secure, authenticated and verifiable Cryptography enables permissioned access so only the parties participating in a specific shipment can submit, edit or approve related data Transactions are endorsed by relevant participants Information such as documentation filings and authority approvals can only be changed if endorsed by the parties taking part in the shipment; full audit history maintained on the Blockchain TradeLens and Blockchain SHARED LEDGER SMART CONTRACT PRIVACY TRUST Blockchain addresses the underlying challenges inherent in collaborating across a distributed, fragmented supply chain ecosystem

32. 32 • TradeLens is available today for both Clients and Network Members. – Clients can get up and running quickly and gain access to near real-time, high-fidelity shipping milestones via the TradeLens web app or by consuming data via subscription – Network Members must provide data, and can get access to data, according to the published TradeLens Data Sharing Specification • Interested participants should contact their local IBM or Maersk sales representatives. • The Early Adopter Program remains open for selected participants who would trial and help test beta features under development. Participating in TradeLens Clients • Obtain a quotation from IBM or Maersk • Sign SaaS agreement with IBM or Maersk • Initiate onboarding steps with TradeLens onboarding team Network Members • Review the TradeLens Data Sharing Specification and the Swagger API for publishing / subscribing to events: https://docs.tradelens.com/ • Sign the Network Member Agreement with IBM or Maersk • Initiate onboarding steps with TradeLens onboarding team NEXT STEPS

33. 33 MORE INFORMATION • www.TradeLens.com • TradeLens documentation: – https://www.tradelens.com/documentation/ • TradeLens demonstration video: – https://www.youtube.com/watch?v=-QgPQzwyrCA • Blockchain and supply chain: – https://www.ibm.com/blockchain/industries/supply-chain • TradeLens news: – https://www.tradelens.com/news/ 33

34. 34 World Wire

35. Total annual cross border payment transaction and FX flows $100’s of Trillions Total payments-related revenue within 5 years $3.0 Trillion Payments revenue represents 38% of total banking revenue globally; and a critical customer relationship channel 38% of Bank Revenue Cross border payment revenue is half of global payment revenue with 20%+ growth rates $1 Trillion @ 20% growth • Revenue is moving away from banks to non-bank financial firms • Payment margins are exposed, with major regional differences • In US, UK, and Europe, margins are under increasing pressure from Fintech’s Economic Trends • Faster / Immediate Payments, Real Time Settlement • Regulation & Legislation (PSD2, GDPR) • Blockchain / DLT Seen as Enabler • New Forms of eMoney: Central Bank Digital Currencies and Stable Coins Market Trends Payments: Trends Source: McKinsey, 2018

36. © IBM Corporation / Confidential36 IBM Blockchain World Wire™ Traditional Payment Rails Cards Credit, Charge Debit, Prepaid Checks Cash Wires Domestic: RTGS International: Correspondent Banks < what is the next rail? > Real time, frictionless, cross-border, low fees, high volume… ACH / CCP Credit Transfer Direct Debit Transaction Volume / ThroughputTypical Transaction Amount Transaction / Network Fees Authorization / Settlement Time Global / Cross-Border Any High Low Instant Yes Low Low None Instant NoAny Med. Low Long NoMed. Med. High Low Yes High Med. High -- --Any High Low Long No * Very little investment has been directed toward new payment infrastructure in the last 50 years! *

37. © IBM Corporation / Confidential37 IBM Blockchain World Wire™ Cross Border Payments: Pain Points Source: World Economic Forum, 2016

38. © IBM Corporation / Confidential38 IBM Blockchain World Wire™ IBM World Wire § A global payment network for the growing market opportunity enabled by blockchain § Universal payment support– micro payments, low value, high value, commercial, retail, remittance, etc. § Low fee structure and operational costs § Integrated clearing and settlement with real time FX IBM World Wire BankBankOriginator (Sender) Recipient (Consumer or Business) Txn Throughput: HighTxn Amount: Any Txn Cost: Low Settlement Time: Immediate Cross Currency: Yes $ € § Standards-based messaging (ISO 20022) § Options for immediate or deferred / net settlement § Immediate settlement using fungible digital assets § Support for multiple asset alternatives and asset classes: cryptos, stable coins, central bank digital currencies, tokenized commodities

39. © IBM Corporation / Confidential39 IBM Blockchain World Wire™ Operating Modes: It’s all about digital assets! DIGITAL ASSET EXCHANGE IS THE NOVELTY OF WORLD WIRE • Digital Assets represent stored value or dynamic obligations • Real-time Settlement = Exchange of Digital Assets (“DA” Mode) • Deferred Settlement / Prefunding = Exchange of Digital Obligations (“DO” Mode) Digital Obligation (DO) Digital Asset (DA): Cryptocurrency Digital Asset (DA): Stable Coin Digital Asset (DA): CBDC Description A Digital Token representing a promise to pay (IOU) or prefunded balances XLM, ETH Supported Digital Token representing claim on fiat deposits issued by bank or commercial entity Digital Token representing claim on fiat deposits held in reserve by central bank Funds Availability Immediate Immediate Immediate Immediate Settlement Speed Varies Less than 30 seconds Less than 30 seconds Less than 30 seconds Settlement Complexity High: Outside of Network Low: Immediate, on-network Low: Immediate, on-network Low: Immediate, on-network Liquidity Can be high; may be supported by pre-funded nostro accounts or credit / netting agreements Varies, often low High; might be redeemed for cash; can be supported Extremely high; legal tender; likely never requires redemption for cash Risk § Counterparty risk; mitigated with pre-funding § Price volatility § Lack of liquidity on the market § Issuing entity solvency § None

40. © IBM Corporation / Confidential40 IBM Blockchain World Wire™ Current international payment system today D 10 – 20% savings in operational efficiencies & liquidity management 55 – 85% reduction in overall transaction costs How Money Moves COMPLEX Multiple intermediaries, limited transparency, error prone, reconciliation heavy COSTLY Expensive fees, high liquidity requirements SLOW 2-10 days to settle, limited visibility in transit PAINFUL Slow client inquiry times, poor user experience IBM World Wire Payments Simplified with Blockchain STREAMLINED Fewer intermediaries, point-to-point transfer, full visibility in transit D EFFICIENT Fewer fees, reduced transaction costs, improved operating margins, lower liquidity requirements FASTER Immediate final settlement, less than one minute transaction times, real time foreign exchange SIMPLE Exceptional user experience, real time transaction insights

41. © IBM Corporation / Confidential41 World Wire Payments are a critical component to enabling a trusted economy. To service our enterprise clients, IBM has built solutions and capabilities around three common elements pervasive across blockchain use cases: (1) the flow of goods (e.g. Food Trust), (2) the flow of data (e.g. TradeLens) and (3) the flow of value or payments (e.g. World Wire). Value DataGoods Network of Networks World Wire is a Strategic Core to IBM’s Blockchain Portfolio Assets World Wire

42. © IBM Corporation / Confidential42 IBM Blockchain World Wire™ Messaging + Clearing Settlement IBM World Wire Payment API Multi-DLT Protocol (Stellar, Ethereum, etc.) Digital Asset Ecosystem Market Makers KYC Services AML Monitoring (future) Platform Overview Simple API for immediate peer-to-peer payments, regardless of size, origination, destination, currency Messaging and clearing using ISO 20022 payment messages Settlement is token-centric, supporting multiple modes and digital assets issued on Stellar and other DLT networks, e.g. ERC20 (future) Efficient real-time market pricing across digital and fiat currencies driven by open ecosystem of market makers IBM’s enterprise scale secure infrastructure, cloud, and network governance Future proof: Integration with digital identity solutions and new value-added services 1 2 3 4 5 6 32 5 4 1 6 A new global payment rail for real time clearing and settlement using blockchain technology

43. © IBM Corporation / Confidential43 IBM Blockchain World Wire™ A new global payment network enabling real time FX World Wire Global Payment Network & Asset Registry Originating Financial Institution (OFI) Originator Recipient $ € • Stable Coins USD, EUR, IDR, PHP, BRL • Cryptocurrencies (XLM) • Dynamic Digital Obligations D Receiving Financial Institution (RFI) D • CBDCs (Central Banks) • Tokenized Metals (Gold) • Digital SDRs (Fiat basket) Supported Digital Assets: D 1 2 Payment Service Provider (PISP, Corporate, MTO or Bank) – i.e. Users Market Maker (MTO or Bank) – Subscribers Digital Asset Issuers: Cryptos, Stable Coins, or CBDCs – Liquidity Providers (Issuer: Bank, Central Bank, or Fintech) Stellar Protocol Future Digital Assets: World Wire Network Roles and Actors EXCHANGE(S) EXCHANGE(S) Network Roles / Actors:

44. © IBM Corporation / Confidential44 IBM Blockchain World Wire™ 1 2Payment Service Provider * Market Maker Digital Asset Issuer / Liquidity Provider World Wire Global Payment Network & Asset Registry Originating Financial Institution (OFI) Originator Recipient $ € D Receiving Financial Institution (RFI) DD Stellar Protocol Network Participant Roles Banks + money transfer operators + money service businesses + non-banks (corporates) + remittance providers + retailers, etc. … i.e. any authorized entity acting as, or on behalf of money senders, which may be consumers or businesses. These are the beneficiaries and users of the World Wire Network (indirect participants) * i.e. Payment Initiation Service Providers (PISP) according to PSD2 definitions = those acting on behalf of senders (i.e. PSUs = Payment Service Users) Regulated money service businesses, including banks, non-bank financial institutions, or any entity authorized by their regulators to handle money and/or perform exchange functions, converting fiat currency to/from digital assets. This role is crucial to the function of the World Wire network, providing endpoints for deposits and payouts in different currencies. These are the subscribers of the World Wire network (direct participants). Banks, central banks and financial services entities who issue digital tokens representing a legal claim on real world assets. This includes especially Stable Coins and Central Bank Digital Currencies, but also crypto currencies like ETH, and XLM. This is the novelty of World Wire, i.e. the exchange of digital assets is what enables real time settlement.

45. 45 Identity

46. © 2018 IBM Corporation Identity: Unique traits associated with an individual; the owner of personal identification information. The Different Dimensions of our identity Identity Renderings: Digital or physical (paper/plastic) instrument as defined by providers. Identity Interactions: Situational usage such as pay, identify, participate, enter. Name Age Gender Biometrics Race Family Address Birthplace Nationality Education Profession Workplace Health Reputation Beliefs Behavior Habits Sentiments National ID Work ID Driving ID Address History Tax ID Social Security ID Social ID Work History Financial History Medical History Driving History Social History 1. Me as an individual: 2. How I am represented: 3. How I interact:

47. © 2018 IBM Corporation 175M records breached in 2017 that exposed millions of people’s identities1 1339 breaches of data stores of individual names, Social Security, drivers license number, medical record, or financial records in 2017 in the US alone.1 Cyber attacks cost businesses as much as $400 billion a year.2 Banks spend $1 billion a year on identity management solutions2 It could have been your identity.[1] http://www.idtheftcenter.org/images/breach/2017Breaches/DataBreachReport_2017.pdf [2] https://www.wired.com/beyond-the-beyond/2017/07/global-cybercrime-costs-trillion-dollars-maybe-3/ [3] https://www.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_9/Accenture-Future-Identity-Banking.pdf The Facts

48. © 2018 IBM Corporation Online identity systems are broken… Today, individuals and organizations are not in control over their identity. Personal information is often shared without our awareness and is honeypot of personal data for hackers to exploit. Enterprises and traditional data aggregators realize the shift to decentralization • Costly • Liability • Difficult to establish trust The Problem

49. © 2018 IBM Corporation Blockchain enables trust • Users can verify the identity of a person, organization or thing on the public ledger • Users create and manage cryptographic identities; no central certificate authority Blockchain provides privacy • Zero knowledge proofs disclose only the information that needs to be shared Blockchain provides scale • Removal of centralized issuers allows identity to scale at the edges The Solution Decentralized Identity for trust & privacy at scale

50. © 2018 IBM Corporation Sovrin is a self-sovereign identity network • Sovrin pushes identity to the edge of the network • A decentralized approach that establishes trust and puts the end user in control – Every person, organization, and thing has a digital wallet to control the flow of their identity – No PII is stored on the public ledger! • Cryptographic, point to point exchange of identity – Based on Hyperledger Indy technology Decentralized Identifiers Public Blockchain

51. © 2018 IBM Corporation Decentralized Identifier (DIDs) • User owned and governed • New type of identifier for verifiable, self sovereign identity • Fully under the control of person, institution, or thing • URL to relate an identity for a trusted interaction with a subject • Standardization for universal identifiers Sovrin Identity Concepts Verifiable Credentials • Cryptographically backed statements of truth • Standard way of defining, exchanging, and verifying digital information • Ecosystem of issuers, verifiers, and owners Decentralized Key Management • User permissioning • Entities own their own keys and have a “public key” ring for those they interact with • “Public key” rings are used to resolve and verify interactions through DIDs

52. © 2018 IBM Corporation • All interactions between entities are point to point • The public ledger serves as the distributed root of trust instead of CAs • Credentials are accumulated over time through every peer to peer relationship Owner/Holder Acquires, Stores, Presents Verifier Requests, Verifies Issuer Issues Issues Credentials Presents Credentials Decentralized Identifiers (DIDs) Public Permissioned Blockchain Signs Credentials Countersigns Credentials Verifies Signatures Decentralized Identity

53. © 2018 IBM Corporation Issues Credentials Presents Credentials I’m a Doctor Decentralized Identifiers (DIDs) Public Permissioned Blockchain Signs Credentials Countersigns Credentials Verifies Signatures Doctor Acquires, Stores, Presents Hospital Requests, Verifies University Issues Yes, you’re a Doctor You’re now a Doctor Verifiable Credentials

54. © 2018 IBM Corporation Issues Credentials Presents Credentials Signs Credentials Countersigns Credentials Verifies Signatures I have a job Scales to any number of credentials Doctor Acquires, Stores, Presents Bank Requests, Verifies Hospital Issues Yes, you have a job You work for us Decentralized Identifiers (DIDs) Public Permissioned Blockchain

55. © 2018 IBM Corporation Issues Credentials Presents multiple Credentials Signs Credentials Countersigns Credentials Verifies Signatures Signs Credentials Issues Credentials Complex credentials Decentralized Identifiers (DIDs) Public Permissioned Blockchain University Issues Government Issues You’re now a Doctor I’m Jane and I’m a Doctor You’re Jane Doe Doctor Acquires, Stores, Presents Bank Requests, Verifies Yes, you’re Dr Jane

56. © 2018 IBM Corporation • Standards specification of verifying and exchanging credentials • Standardizing schemas and operations for Decentralized Identifiers (DIDs) • IBM is an Observer/Contributor • Foundation of self-sovereign identity providers – building the missing identity layer (protocol) • Focus on identity registration, identity hubs, and resolving of identifiers • Community driven, community supported (Sovrin, Uport, Microsoft, etc) • IBM is a member • Non-profit foundation governing network to achieve self-sovereign identity • Member of DIF • Contributor of Indy codebase • IBM is a member • Open projects building blockchain for business • Indy is code base for Sovrin Trust Framework • Designed for scale and optimized for identity solutions • Ecosystem, Community, Accelerant for our platform • IBM is a member Powered by Open Technology • Standardizing protocols for communication between encrypted systems • Decentralized Key Management System • IBM is an Observer Building blocks: Interoperability and Standards

57. IBM Solutions • Food Trust • TradeLens • World Wire • Digital Identity Your Solution

58. 58 Good blockchain use-case or bad? Food Provenance Know Your Customer Track Your Child Electronic Medical Records Holiday Tracking Tool Secure Document Store

59. 59 – Identifying a good blockchain use-case is not always easy! – However there should always be: 1. A business problem to be solved • That cannot be more efficiently solved with other technologies 2. An identifiable business network • With Participants, Assets and Transactions 3. A need for trust • Consensus, Immutability, Finality or Provenance What makes a good blockchain use case?

60. 60 – First use-cases are even more difficult to identify! 1. A limited scope, but still solves a real business problem • Minimum Viable Product in a few weeks of effort 2. A smaller business network • Usually without requiring regulators and consortia 3. Allows for scaling with more participants and scenarios • Consider shadow chains to mitigate risks Start small, succeed and grow fast! What makes a good first blockchain use case?

61. 61 1. What is the specific business problem / challenge that the first project will address? 2. What is the current way of solving this business problem? 3. Assuming the business problem is large, what specific aspects of this business problem will be addressed? 4. Who are the business network participants (organizations) involved and what are their roles? 5. Who are the specific people within the organization and what are their job roles? 6. What assets are involved and what is the key information associated with the assets? 7. What are the transactions involved, between whom, and what assets are associated with transactions? 8. What are the main steps in the current workflow and how are these executed by the business network participants? 9. What is the expected benefit of applying blockchain technology to the business problem for each of the network participants? 10. What legacy systems are involved? What degree of integration with the legacy systems is needed? Sample questions to ask for the selected use case:

62. 62 It is important to ideate potential use-cases

63. 63 – It can be difficult to accurately quantify investment case for blockchain – Things to consider: – Existing Pain Points – Scope – participants, assets, transactions – Benefits: baseline, minimum viable ecosystem (MVE) & mature network – Blockchain Design Points – References Blockchain Value Design (BVD) activity will help elaborate these items! Assessing Business Value

64. Benefits benchmarks - Value Tree M F M M M F M M F KPI’s (e.g.) References Problem Participants Asset & Trust Transactions Pain Points Blockchain : Design Points New revenue Improve client experience Reduce transport costs # new value propositions Increase in customer satisfaction Increase in trade volumes Cycle times (transit & shipping) Waste as % of total shipped Fraud and errors as % of total costs Documentation admin. as % of total costs • Transport remains highly dependant on a flood of paper that is never digitised • Shipping information must pass through many hands, increasing potential for delays in transport. • One shipment can require sign-off from 30 unique organizations and up to 200 communications. • One lost form or late approval could leave the container stuck in port • The entire process can take more than one month.. • Fraudulent changes may be made to the Bill of Lading 90% of goods in global trade are carried by the ocean shipping industry each year. Costs associated with trade documentation processing and administration are estimated to be up to 20% the actual physical transportation costs. Need for trust around paperwork associated with a container • Securely and transparently trace the container’s path through the supply chain on the blockchain • Add trust (Immutability and Provenance) around the Bill of Lading and other container paperwork • Automate the transit and shipping process with Smart Contracts reducing cycle times and delays • No reconciliation or matching of documentation with near instant updates - eliminates the need for audit and verification • Removes paper and intermediaries Baseline 30 days Phase 1 Phase 2-3 +15%- +5% 5% 20% 6% 4% 15% 5% 0.5% 5% 1% 10 days25 days - - 1 to 3 Manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process Solution Supplier, couriers (*2), customs (*2) , ports (*2), shipper and retailer …. Supplier prepares to ship, release container to courier, load to ship, clear customs, retailer receipt - 5% 10% ANO -1 ANO -2 • Find new value propositions to exploit the network effect between members Template – example only (Cross Border Supply Chain)

65. Questions? Tweet us or go to ibm.com/blockchain @IBMBlockchain IBM Blockchain IBM Blockchain Thank you

66. © Copyright IBM Corporation 2018. All rights reserved. The information contained in these materials is provided for informational purposes only, and is provided AS IS without warranty of any kind, express or implied. Any statement of direction represents IBM's current intent, is subject to change or withdrawal, and represents only goals and objectives. IBM, the IBM logo, and other IBM products and services are trademarks of the International Business Machines Corporation, in the United States, other countries or both. Other company, product, or service names may be trademarks or service marks of others.

IBM Blockchain Solutions Explained v0.6

You are reading a preview.

Check these out next

IBM Blockchain Solutions Explained v0.6

More Related Content

Slideshows for you (20)

Similar to IBM Blockchain Solutions Explained v0.6 (20)

More from Matt Lucas (9)

Recently uploaded (20)