Blockchain for mere mortals - understand the fundamentals and start building distributed systems using Azure BaaS - Silviu Niculita

@ITCAMPRO #ITCAMP17Community Conference for IT Professionals
Blockchain for mere mortals
Understand the fundamentals and start building
distributed systems using Azure BaaS
Silviu Niculiță
Head of Technology – Yonder
silviu@niculita.ro

• Mobile Computing;
• Social Web;
• Big Data;
• Internet of Things;
• The Cloud;
• Machine Learning;
• Big Data;
Technology Revolution of the Next 20 Years

• Get you excited about the technology!
• Explain the concepts of Blockchain;
• Introduce Microsoft’s offering in this space;
• Leverage Blockchain for distributed system
development;
• NOT a technical deep dive into the cryptography
behind the Blockchain;
Objectives

1. What is the Blockchain;
2. Demo of Blockchain Basics;
3. Current State and Future;
4. Microsoft BaaS Overview & Demo;
5. Implementing Blockchain in your Apps;
6. Conclusions & Current Challenges;
Agenda

1. WHAT IS THE BLOCKCHAIN?

Origins Story

Cryptographically Authentic
Uses tried and true public/ private signature
technology. Blockchain applies this technology to
create transactions that are impervious to fraud
and establishes a shared truth.
Shared
Blockchain’s value is directly linked to the number of
organizations or companies that participate in them.
There is huge value for even the fiercest of competitors
to participate with each other in these shared database
implementations.
Distributed
There are many replicas of the Blockchain
database. In fact, the more replicas there are, the
more authentic it becomes.
Ledger
The database is a read/write-once database so it is
an immutable record of every transaction that
occurs.
Key Features

• Digital distributed ledger creates the same copy of the data across all nodes;
• Transactions are broadcast across the blockchain network to be added to the
system;
• Participants in the blockchain verify each transaction is valid and then writes
it to the ledger;
Blockchain uses a distributed ledger to track transactions
Entire network has
same ledger
FROM TO PROPERTY VALUE
Alex Katie Payment $500
Jim Sally Payment $300
Alex Garth Asset Car
Katie Tony Payment $100
Molly Paula Message I love you
Example ledger

Each block is created and distributed
Block
0x5f23827e3cd1…
0xa01abcd897…
0x3e23827e3cd1…
0x6f23827e3cd1…
0x5f23827e3cd1…
0x6f23827e3cd1…

Scope
• Public (trustless) – Bitcoin, “Alt Coins”, Ethereum;
• Private (trusted) – Ethereum, Ripple, MultiChain;
• Consortium (semi-trusted);
Consensus
• Proof of work (mining) only for trustless environments;
• Proof of stake (escrow);
• Proof of identity, vote, burn, and more;
Generation
• 1.0 / 2.0 / 3.0;
3 dimensions of Blockchain technologies

2. DEMO OF BLOCKCHAIN BASICS
https://anders.com/blockchain/

3. CURRENT STATE AND FUTURE

BLOCKCHAIN 1.0

Blockchain 1.0 - 3 tier architecture

Digital Assets
• Digital Currency (Bitcoin, DASH);
• In-app digital items (WoW Armour, Pokemon, Counter-
Strike skin)
• Domain names
• Media
Physical Assets
• Cars
• Land
• Apartments
Use Cases: Ownership
👾
🤖
🎮
🏰

• Bitcoin https://bitcoin.org
• DASH https://dash.org
• Zcash https://z.cash
• Litecoin https://litecoin.org
• Namecoin https://namecoin.org
• Doge http://dogecoin.com
• And many others
Use Cases: Digital Currencies

Use Cases: Attestation

Use Cases: Provenance
All parts get a hash (digest) based on
product serial number + manufacturer
All digests of parts are combined
into one unique digest for the phone
Digest of each part Smartphone Digest

Use Case: Supply Chain Management

BLOCKCHAIN 2.0

Blockchain 2.0 - 3 tier architecture

• Smart Contracts allow to execute business and legal
logic shared between counterparties:
– Supply chain across industries;
– Open exchanges for: bonds, equities, loans, insurance,
derivatives;
– Contracts for: labor, partnerships, sale, trade;
– Peer-to-peer where a peer can be an individual or a
corporation;
• Regulatory output is a by-product;
Smart Contracts

• Ethereum https://ethereum.org
• Hyperledger (IBM) https://www.hyperledger.org
• Corda (R3) http://www.r3cev.com
Blockchain 2.0 Implementations

Significant Investments

WeiFund is an open platform for
crowdfunding campaigns.
You can launch a campaign using
one of WeiFund’s contract
templates or integrate your own
smart contracts.
Use Cases: WeiFund

“We’re building a home for
artists that allows them to own
and control their creative
content and be paid directly for
sharing their musical talents
with the world”
Use Cases: Ujo

Use Case: Abra

BLOCKCHAIN 3.0 (FUTURE)

• Proof of Stake replaces Proof of Work;
• Blockchain scaling;
–Fast enough to power the Internet of Things;
–Fast enough to compete with VISA and SWIFT;
3.0 Improvements

4. MICROSOFT BAAS
Blockchain as a Service

Enterprise Ethereum
R3 - Corda
Hyper ledger Umbrella
Chain
Digital Asset Holding
…
Azure & Azure Stack
Blockchain Core Platform – Many Contenders

Grow the ecosystem
Develop key Azure
middleware services
Build and learn
Azure & Azure Stack
LedgerCore
Distributed Ledger Stacks
Partner
Distributed
Ledger A
1st Party Distributed
Ledger
Fully Managed Distributed Ledger Hosted Compute (VMs)
Partner
Distributed
Ledger B
Partner
Distributed
Ledger C
Blockchain Resource Provider
Developer Services (Tools, Teams, CI/CD)
Middleware
Data
Platform
(ML/BI)
Cryplets:
Off-Chain
Secure
Compute
Monitoring
& Security
Identity and
Key
Management
3rd party
services
IndustrySolutions
HealthcareRetail &
CPG
Public
Sector
ManufacturingFinancial
Services
Media
Horizontal SaaS & Adapters
3rd
Party
3rd
Party
1st Party 3rd
Party …..
Professional Services & Support
Microsoft Blockchain as a Service (BaaS)

• Ledgers
– Ethereum Consortium;
– Corda;
– Chain;
– Strato;
– Parity;
– Emercoin Blockchain Engine;
• Developer Tools
– Blockstack Core;
– Ethereum Studio;
– Truffle;
Azure Marketplace
Microsoft Ignite

Ethereum Blockchain Deployment Architecture

4. AZURE BAAS DEMO

5. IMPLEMENTING BLOCKCHAIN IN YOUR
APPS

6. CONCLUSIONS & CURRENT CHALLENGES

Eliminates Intermediaries
Reduces Fraud
Increases Efficiency and Speed
Increases Revenue and Savings
Reduce counterparty risk
Conclusions (1)
Decentralization has great benefits & changes
fundamental processes & models:

• Go straight to Blockchain 2.0;
–Ethereum is the most popular option currently;
–Works as public & consortium;
• Blockchain 3.0 is coming;
–Focuses on scalability & interaction with external systems;
• Can get started in just 20 minutes with Azure!
Conclusions (2)

• Current versions of the technology have limitations;
• The energy consumption is significant;
• Government could stifle it/Incumbents could usurp
it;
• Criminals will turn the general public against it;
• Governing the protocols becomes impossible;
• Insufficient incentives for mass collaboration;
Current Challenges

Bitcoin Latency (avg. transaction confirmation time)

Criminal Activity

Volatility

Gartner says…

Blockchain for mere mortals - understand the fundamentals and start building distributed systems using Azure BaaS - Silviu Niculita

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