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Private Shared Ledgers: The New Age of the Consortium

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This was presented in Hong Kong yesterday at a chain of things event. This is based on a whitepaper I co-authored: https://www.gtlaw.com.au/blockchain-and-shared-ledgers-new-age-consortium. It talks about the consortium model and how private shared ledgers are being used to build these in financial services. I also give some example use cases for supply chains using both public and private blockchains.

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Private Shared Ledgers: The New Age of the Consortium

  1. 1. Private Shared Ledgers: The new age of the consortium
  2. 2. What This Will Cover? • Different Trust Models • Privacy & Confidentiality Key Design Feature • What is a Private Shared Ledger? • Why Use A Consortium? • Different Types of Consortiums • How To Form a Consortium/Structure • Example • How IOT fits in 2
  3. 3. Traditional Clearing House Fully DecentralisedHybrid Private Model Reliance on central intermediary or custodian Public blockchain model Trusted shared ledger for private consortiums Lead / Master Node Private Hybrid Model 3
  4. 4. DCS Triangle – the trade-offs for achieving confidentiality 4 Consistent High Throughput High Capacity Low Latency Anyone can join the network as a validator All nodes see the same data at the same time
  5. 5. A B Initiate transaction Posts record to the transmission network Broadcast this transaction to the network Validate transaction Record to blockchain Come to consensus on transaction Transaction completed 1 2 3 4 5 6 7 DISTRIBUTED TRUST CENTRALISED TRUST No broadcasting to nodes (other than the counterparties) Rules based engine (validation is “node to node” or via one node, based on the operating rules agreed between ledger participants) Recorded onto the individual nodes of the counterparties – with no sync required across the remainder of the distributed ledger vs Private Shared Ledgers – New approaches to validation and consensus 5
  6. 6. Private Shared Ledgers: common features
  7. 7. Cryptographic Tools Being Deployed to Solve The Privacy Problem • Zero Knowledge Proofs • Zk-SNARKS • zCash • Hawk • Confidential Transactions • State Channels 8
  8. 8. Why Use a consortium • The success of blockchain and shared ledger technologies requires significant levels of market participation collaboration and investment. • The consortium is less about a technology solution or a particular business model, and more about a way for companies to come together and collaborate. • Participants don’t need to trust each other. The participants on a shared ledger just need to have similar requirements in terms of: • ++ the mix of confidentiality and transparency (as captured in the design choices and operating rules for the shared ledger platform); • ++ functionality and processes; • ++ the approach to governance; and • ++ a shared view of regulation and compliance and they need to commit to complying with the operating rules of the consortium. • Where the participants are known to each other, they can leverage the efficiencies of working on a private shared ledger: • ++ to deal with other participants directly, without the need for a third party intermediary; and • ++ to innovate in a cost effective manner – and collaborate with other consortium members where it makes sense. 9
  9. 9. Shared Ledger Platforms Public Private Eg: R3, AMIS, Utility Settlement Coin Platform Consortia Inter-Company Shared Ledgers Distributed Autonomous Communities Intra-Company Shared Ledgers Business Divisions Business Suppliers Business Consortia Hyperledger • Trend towards open source • Race to be the ubiquitous shared ledger platform On public blockchain On private shared ledgers Private Shared Ledgers: new consortia emerging 10
  10. 10. Consortium Agreement Participant Agreement Consortium Promoter Founding Members Participating Members Non- Participating Members Governance Board Decisions re Consortium Shared Ledger Platform Operating Rules Smart Contracts System Rules Engine Technology Supplier Decisions to be implemented on Ledger Consortium Manager Management of consortium operations 12
  11. 11. Mapping File 011001010 010100101 011001010 010100101 011001010 010100101 01100101010011 changes state Ensuring consistency between smart contracts and “real world contracts” 13
  12. 12. 14 Distributed Ledger Vault Smart Contract System CO (Centrally Organised) Governance Board CODE – example of new governance framework for shared ledgers
  13. 13. 15 2nd Global Blockchain Summit Shanghai September 2016 BHP proposal to share public regulatory information
  14. 14. 16 2nd Global Blockchain Summit September 2016 BHP proposal to share public regulatory information
  15. 15. 2nd Global Blockchain Summit Shanghai September 2016 - BHP presentation 17
  16. 16. 18 2016 – BHP: Tracking wellbore samples
  17. 17. Project Rai Stones delivers a blockchain based sample tracking system ready for production What this means for BHP Billiton • Improves wellbore sample data access to almost real-time status • Provides greater transparency to BHP Billiton business units, vendors and government agencies • Reduces human error and cost of compliance • Confirms readiness of the blockchain to begin exploring more user-cases Non monetary use cases • First business use of embedding process on the blockchain beyond simple value transfer use cases within financial services • Extends the blockchain beyond data to logic and leverages the power of smart contracts available through Ethereum 19 2nd Global Blockchain Summit Shanghai September 2016 – BHP: Tracking wellbore samples
  18. 18. Shared ledgers for supply chains 20
  19. 19. Blockchain and supply chains 21
  20. 20. Blockchain and IoT 22
  21. 21. Blockchain and IOT: Filament 23
  22. 22. Blockchain and IOT: Filament 24
  23. 23. Conclusion • Institutional trust wasn't designed for the digital age. • The emergence of shared ledger technologies – empowered by consortia – is a game changer for a major trust shift, which will empower new business models and relationships between corporations and consumers. • If shared ledger technologies realise their full potential, then the consortium model should thrive and be sustainable in the way that hasn’t been possible in the past. 25
  24. 24. Contact Info • Email: george.samman@gmail.com • Twitter: @sammantic • Blog: sammantics.com 26

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