Blockchain as a new cyber strategy for your business

1. BlockChain as a New
Cyber Strategy for
your Business
DAVID CARVALHO – GROUP CISO – OCS GROUP
SEPT. 2017

2. AGENDA – FOCUS
- INTRODUCTION TO THE TECHNOLOGY
- THE PROMISE OF BLOCKCHAIN
- WHAT IT IS AND WHAT IT ISN’T
- BLOCKCHAIN IN CYBER
- BLOCKCHAIN WITHIN YOUR BUSINESS STRATEGY
– REAL WORLD EXAMPLES

3. The context within the Blockchain environment
9 Years involved in the ecosystem
Investment advisory for HNW Individuals around Crypto
Audited core code of various Cryptocurrencies and Smart contracts
Created various Cryptocurrencies
Advise several distruptive startups and ICOs

4. Blockchain technology is a digital innovation
that is poised to significantly alter financial
markets within the next few years, within a
cryptographic ecosystem that has the
potential to also significantly impact trusted
computing activities and therefore
cybersecurity concerns as a whole.

5. BitCoin, the first real implementation of BlockChain
technology
• What bitcoin does is nothing special.
• How bitcoin works is revolutionary.

6. How does blockchain work?
 eWallet app: holds keys, not money
 Using PKI (public key infrastructure): electronic wallet software
issues a public-private key pair (public address is a 32-character
alphanumeric code)
 Scan public address (QR Code) & submit transaction
 Private key confirms access and funds availability,
transaction validated and posted to blockchain

7. Why is it called blockchain?
Ledger (chain) of sequential transaction blocks
• Each new block starts by calling the last block, so a
cryptographic chain of transactions is created
• Every 10 minutes, the latest block of submitted transactions
is validated (by cryptographic mining) and posted to a single
distributed ledger
Block 10 Block 11 Block 12

8. More about BitCoin
The Blockchain is the generic name for the database and
transaction processing capabilities that power BitCoin

9. Though the results look similar to other systems, the way
that BitCoin works is profoundly different

10. Though the results look similar to other systems, the way
that BitCoin works is profoundly different

11. What is Bitcoin mining?
11
 Mining is the software-based accounting function
to record transactions, fee-based
 Mining hardware/software “finds new blocks”
 Network regularly issues random 32-bit nonces
(numbers) per specified cryptographic parameters
 Mining software constantly makes nonce guesses
 At the rate of 2^32 (4 billion) hashes (guesses)/second
 One machine at random guesses the 32-bit nonce
 Winning machine confirms and records the
transactions, and collects the rewards
 All nodes confirm and append the new block of
transactions to their copy of the distributed ledger
 “Wasteful” effort deters malicious players
Sample
code:
Run the software yourself:

12. BitCoin may the single most secure piece of commercial
information technology ever created

13. Thesis
Blockchain - no other technology can:
• Uplift 2 billion people out of poverty overnight
• Intermediary-free remittances
• Produce an orderly transition to the automation
economy
• Humans and machines in collaboration
• Transform the only sectors not yet re-engineered
for the Internet era
• Economics and governance

14. To the topic: Compliance & Governance
services
 Blockchain weddings (Bitcoin, Ethereum)
 Public document registries
 Titling Registries
 Local government RFPs for home, auto, land
 Legal services: register and attest
 Contracts, IP, agreements, wills registries
 Proof of Existence: hash + timestamp + blockchain record
 Voting
 Quadratic voting (interest), PageRank (relevance)
 Delegative democracy, random sample elections
 NetworkVoting

15. Impact of Blockchain on Cyber, IT Audit &
Compliance
• Why not Cyber?Why not a compliance trust ledger?
• In the UK: Open Source projects ongoing to streamline compliance
with IT/Cyber standards I.E. GDPR, NIST, PCI-DSS, etc. I.E. Using
Blockchain:
• Allows for verifiable inter-business compliance using an immutable
distributed ledger akin to Bitcoin.
• In order for a hacker to change the verifiable source of truth, the hack would have
to be focused on the whole network including all of its devices and IOT, including
offline devices and hardened systems, cloud systems, mobility, etc… and make
its changes cryptographically signed, this is very hard to impossible.
LinkedIn: NAORIS – UK based Blockchain Cyber & Compliance project
Available also on Slack and Facebook

16. Two fundamental eras of network computing
I.Transfer Information II.TransferValue
6 7
2020s
Smart Contracts
2030s
Smart Law &
Governance
Simple networks Smart networks

17. Technology interest levels & investment
2009 to 2017

18.  Secure information exchange
 Asset confirmation and transfer
 Automated coordination
 Example: fleet management of drones,
autonomous driving, robotics, clinical trial
patients, cellular therapeutics
 Blockchain: automated, secure coordination
system with remuneration and tracking
Key blockchain functionality
Source: Swan, M. Philosophy of Social Robotics: Abundance Economics. Sociorobotics, 2016.
http://www.melanieswan.com/documents/SocialRobotics.pdf.

19. Scalability/Auditability and financial/business
inclusion – Some examples
• Current hierarchy does not scale
• Next leap-frog tech: fintech /
insurance / others
• Like cell phones vs. POTS, it does not
make sense to build out brick-and-
mortar banks in a world of digital
finance
• Decentralized networks + digital
finance = the power of the printing
press in banking, credit, and money
• Access to credit and financial services
as a basic human right (4 billion under-
banked)
19
Source: POTS: Plain Old Telephone Service, http://www.amazon.com/Bitcoin-Blueprint-New-World-Currency/dp/1491920491

20. Financial services
• Shared ledger
• Instantaneous transaction
validation (t=0, not t+3(DAYS??))
• Settlement, clearing,
• Custody, insurance
• Secure, lower risk, cheaper
• Financial assurance
• Securities asset registries
• Automated clearing
• Quoting, deal placement
• Billing, settlement
20
Source: https://www.cbinsights.com/blog/financial-services-corporate-blockchain-investments
Shared Ledger

21. Supply chain and logistics
• Asset transfer and customs clearing
• Provenance, assurance, release
• Inventory management
• Custody, insurance, damage
• Automated tracking and notification
• Pallets, trailers, containers
• Trade finance and documentation
• Track purchase orders, change orders,
receipts, shipment notifications
• Custody and product certification
• Link physical goods to serial numbers, bar
codes, RFID tags
21

22. Energy
• Blockchain energy projects
• Enerchain: trading (NE Europe)
• BTL Interbit blockchain energy platform:
trading (Vancouver CA)
• PONTON: DSO,TSO, aggregator,
generation power-balancing (Austria)
• Automatic markets
• “Energy Internet” - smart buildings on
regional energy smartgrids
• Smart resource self-pricing
• Load-balancing
• Source fungibility: wind, solar power
• Energy price and trade validation

23. Personalized
governance &
audit services
We are arriving at Crypto-enlightenment
“One ought to think autonomously, free
of the dictates of external authority” -
Immanuel Kant
Kant, I. "Answering the Question: What Is Enlightenment?" (German: Beantwortung der Frage: Was ist Aufklärung?). 1784.
Hayek, F. The De Nationalization ofMoney. 1976. (paraphrased)
“Multiple private currencies should
compete for customer business”
- Friedreich Hayek
Personalized
economic &
digital
transaction
services

24. ThankYou.
• DAVID.JV.CARVALHO@GMAIL.COM
• DAVID.CARVALHO@OCS-GROUP.COM
• https://www.linkedin.com/in/david-joao-vieira-
carvalho-4479b8103/