Varun Vijay's talk abstract: Blockchain can profoundly change how the world works. It is said that Blockchain will do for transactions what the Internet did for information. It will increase trust and efficiency in the exchange of almost anything, even vehicle registration and tracking medical records - not just Cryptocurrencies. Blockchain, most simply defined as a shared, immutable ledger, has the potential to be the technology that redefines those processes and many others. Blockchain is not about Cryptocurrencies like Bitcion, but about the underlying digital foundation that supports applications such as bitcoin. The reach of Blockchain extends far beyond Crytocurrencies. The Presentation will cover the fundamentals of Blockchain and how this technology will revolutionize transactions and business networks. Audience will also discover the important difference between Blockchain and Blockchain for business and what makes Blockchain an ideal solution for streamlining business networks.

1. BLOCKCHAIN
VARUN VIJAY
Cisco Systems
13-Mar-2018
Technology that is revolutionizing the Transactions

2.  Overview on business networks
 Current transaction system and its shortcomings
 Blockchain fundamentals
 Key characteristics
 Blockchain – how it works
 Key business benefits
 Bitcoin – First live use case of Blockchain
 Innovation Steps in Blockchain
 Hyperledger, Linux foundation project
 Cisco and Blockchain
 Questions
Agenda

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Business Networks never work in isolation, they work together. Its Participants are customers, suppliers, banks, partners Cross geography
& regulatory boundary.
 Wealth: Generated by flow of goods and services across this business network – Transactions and Contract
 Market could be central to these, and are of 2 different types:
o Open Market such as an auction or
o Private market things like supply chain financing such as bond exchange
Business Networks – An Overview

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 The system of record for a business is called "Ledger“. Ledgers are the Key
 Asset- Capable of Being owned or controlled to produce Value
 Tangible like Car,Cash or House
 Intangible like Intelectual Propertly ( Patents ) or Digital assets
 An asset transfer onto or off the ledger is called "Transaction“
Bob purchases car from Platinum Cars Pvt. Ltd:
 The conditions under which the transaction must occur is "Contract“
o If Bob pays Platinum Cars money then car passes from Platinum Cars to Bob
o If car broke down during 1st Year Bob will get free replacement from Platinum Cars
Asset Transfer Creates Value
 Contract, Transactions, Records – Defining structures in our economic, legal, and political systems
 "Blockchain" - A trusted, distributed ledger with shared business processes.
Key Terms

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Current Transactions System and it Shortcomings
Instrument of Trust: Currency, letter of credit, banking have facilitated the exchange of value while protecting buyers and sellers.
Innovation: Telephone lines, credit card systems, the Internet, and mobile technologies have improved the Convenience, speed, and
efficiency of transactions, Shrinking and Virtually Eliminating distance between buyers and sellers.
However Business Transactions remain inefficient, expensive, and vulnerable with following limitations:
 Market Frictions-Impeding the exchange of assets
 Use of Cash - only in local transactions and that too relatively small in amounts
 Longer settlement time as there is need for third-party validation and/or the presence of intermediaries add to the inefficiencies
 Duplication of effort
 The central system such as banks are vulnerable to Fraud, cyber attack even simple mistakes add to the cost and complexity of doing
business
 High Onboarding cost for Credit card system with considerable paperwork and time-consuming vetting process
 Access to bank is still being a challenge to almost half of the world population

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Transaction volumes worldwide are
growing Exponentially and will surely
magnify the
• Complexities
• Vulnerabilities
• Inefficiencies
• Costs of current transaction systems
With IOT these transactions will Explode
as we introduce Autonomous System.
Trends and Challenges
To Address these challenges,
The world needs an underlying
technology that enables fast execution
and that provide a mechanism that
establishes
• Trust
• Requires no Specialized equipment,
• Has No chargebacks or monthly fees,
• Provides a collective book-keeping
solution for ensuring Transparency

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Blockchain Demystified
Blockchain, most simply defined as shared, immutable ledger that
facilitates the process of recording transactions and tracking
assets in a business network:
 Constantly updated list of transaction
 Supported by peer to peer network – Public or Private
 Every participants in business network uses consensus
mechanism
 Creation of unique permanent audit trail
 There is no single point of failure and no way for modification
of records
 Blockchain is the technology behind the Cryptocurrencies like
Bitcoin and Ethereum
Virtually anything of value can be tracked and traded on a
Blockchain network reducing risk and cutting costs for all
involved.
Source: PWC

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TCP/IP
 Distributed computer networking technology
 Email enable bilateral messaging
 Open ,distributed and shared development
 Unlocking new economic value by dramatically lowering the
cost of connections
Blockchain
 Distributed ledger with shared business processes
 Blockchain enable bilateral financial transactions
 Open ,distributed and shared development
 Blockchain could dramatically reduce the cost of transactions-
system record for all transactions
Establishing the Parallel – TCP/IP vs Blockchain (Foundational Technologies)
Economy will once again undergo a radical shift, as new, blockchain-based sources of influence and control emerge
How We Intract and Trade

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Traditional Methods – Recording, Tracking - Participants of Network keep their
own ledger and records
 Expensive as it involves charges and fees of intermediaries
 Inefficient due to delays in executing agreements and the duplication of effort
required to maintain numerous ledgers
 Vulnerable because if a central system (for example, a bank)is compromised,
due to fraud, cyberattack, or a simple mistake, the entire business network is
affected
With Blockchain – Participants share the ledger that is updated through P2P
replication after every transaction
 Important each participant act as publisher and subscriber
 Data is synchronized across the business network as it transferred
 Economical Efficient eliminating effort duplication and reduces the need for
intermediaries
 Less vulnerable because it uses consensus models to validate information
 Transactions are secure, authenticated, and verifiable
Blockchain - Revolutionizing the Traditional Business Networks
Key Differentiator: Transaction record is now shared and available to all parties

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Consensus: For a transaction to be valid, all participants must agree on its validity
 Blockchain enable it through coding rules /agreement or fulfilling conditions.
 Distributed ledger have limited entry in the database no one change without fulfilling the specific conditions.
Provenance: Audit Trail of asset lifecycle came from and how its ownership has changed over time
Immutability: No participant can tamper with a transaction after it’s been recorded to the ledger
 Once confirmed which can't be reversed and immutable i.e. set in stone.
 Every new confirmed transaction is added to immutable records of historical transactions i.e. called Blockchain
Finality: A single, shared ledger provides one place to go to determine the ownership of an asset or the completion of a transaction
 Blockchain ensures one single system of record with single system of truth across the business network Effectively assure that dispute
are very easy to resolve if they come into picture
Effectively building trust in business networks
Key Characteristics of Blockchain Technology

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The Blockchain ledger records every sequence of transaction from beginning to end
 Multiple transactions in supply chain
 Single transaction in online payment
As each transaction occurs , it is put into block with hash ( digital signature) with timestamp. Each block is connected one before and one
after and thus owes its name to the way it stores transaction data —in blocks that are linked together to form a chain.
Group of transactions are blocked Irreversible/immutable chain together. Fingerprint of each block is added to next thus creating the
irreversible chain
Blockchain – How it works - I
Source: PWC

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Blockchain – How it works - II
Bitcoin Blockchain

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Key Requirement/Key Concepts
 Shared Ledger: Append-only distributed system of record across business network
 Privacy Services: Ensure appropriate visibility, transactions are secure, authenticated and verifiable
(Permissioned/ Each Participant have unique ID enabling the policies to
Permissionless) Constrain network participation and Access to transaction details
 Trust : Transactions are endorsed/validated and thus added into Blockchain
Achieved through consensus, provenance, immutability and finality
 Smart Contracts: Storage of set of rules/agreements governing a business transaction
Automatically executed as part of a transaction once rules /conditions matches
No concept of remaking in smart contracts, Once its their it will happen
Superior Security and Lower cost and delays
Blockchain for Business

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Time Savings
 Complex Transactions time which involving multi-parties slashed from Days to
Minute
 Settlement times are faster as no verification by a central authority
Cost Savings
 Audit cost cut both internal and external
 Less oversight is needed because the network is self policed by network
participants
 Elimination of duplication due to access to shared ledger
 Reduction of Intermediaries as direct exchange is possible
Security: Protection against tampering, fraud and cybercrime
Privacy Services
 The shared content is controlled by privacy services
 Ensuring appropriate visibility ,secure ,authenticated and verifiable
Improved Audibility via shared ledger which provide single source of truth
Increased operational efficiency
Enhances Trust across business networks
Speeding up the transactions while reducing cost increases Customer satisfaction
Key Business Benefits
As per Gartner - By 2022,
a Blockchain-based business
will be worth $10 billion

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Digital currency or Cryptocurrency
Launched in Jan-2009 by a mysterious person (or persons) known only by the
pseudonym Satoshi Nakamoto
 They’re “mined” by people unlike printed dollars or euros and increasingly
by business
 Bitcoins are created as a reward for a process known as mining-a record-
keeping service via use of computer processing power
 Works in an anonymous network –Unknown Participants
 Unregulated shadow currency ,interesting property of anonymity
 Running computers all around the world, using software that solves
mathematical puzzles
 It requires compute intensive network to make itself work
 Rather than rely on a central monetary authority to monitor, verify, and
approve transactions and manage the money supply,
 Bitcoin is enabled by a peer-to-peer computer network made up of its
users’ machine-Akin networks that underpin Bit Torrent and Skype
The emergence of Bitcoin – First Live Use Case of Blockchain

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The emergence of Bitcoin – First Live Use Case of Blockchain
Bitcoin has several advantages over other current transaction systems:
 Cost-effective: Bitcoin eliminates the need for intermediaries.
 Efficient: Transaction information is recorded once and is available to all parties
through the distributed network
 Safe and secure: The underlying ledger is tamper-evident - A transaction can’t be
changed; it can only be reversed with another transaction, in which case both
transactions are visible
Bitcoin and Blockchain are not the same. Bitcoin is only the first use case of
Blockchain technology. Bitcoin is just one application over Blockchain which can be
considered as Operating System.
Blockchain provides the means for recording bitcoin transactions —the shared ledger.
Tracks the movement of any asset ( Tangible, intangible, or digital )

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Source: HBR, “The truth about blockchian”, 2017, www.hbr.org
Blockchain Adoption
SINGLE USE
Create Better, Less Costly ,Highly Focused. Eg. Bitcoin Payments –
Alternative Method of Payment
LOCALIZATION
Create Immediate Value, Easy Adoption. Eg. Nasdaq working with
chain.com for processing and validation
SUBSTITUTION
High Coordination, Difficult Adoption. Eg. Cryptocurrency
TRANSFORMATION
 High Coordination and Institutional Agreement
 Adoption requires Social, Legal and Political change
 Deliver Enormous Value
E.g. Smart Contracts-Auto Transfer once negotiated conditions met

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Blockchain is not for everything
Small organization (no business network)
Looking for transaction processing replacement
Need high performance (millisecond) transactions
Looking for a database replacement
Looking for a messaging solution

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 A collaborative effort created to advance cross-industry
Blockchain technologies for business
 Open source developer community building Blockchain and
related technologies –Announced Dec,2015
 Provides tools, training, and events to scale any open source
project.
 Now over 140 members
Open source, open standards, open governance
Cisco is a premier member of Hyperledger Project
For Complete List Visit : https://www.hyperledger.org/members
Hyperledger, a Linux Foundation Project

20. Along with being part Linux HyperLedger Cisco has Co-Founded/Joined the
Trusted IoT Alliance (September 19, 2017)
 A consortium of 17 companies to help establish a protocol for a blockchain-based Internet of Things (IoT). The mission to set the
standard for an open source blockchain protocol in major industries worldwide securing and improving “internet of things” applications
Enterprise Ethereum Alliance for Enterprise ready capabilities
Blockchain IoT Protocol Initiative (January 27, 2018)
 Cisco joined some of the industry’s most innovative Blockchain startups and enterprises
 This consortium is dedicated to ensuring interoperability among multiple Blockchains
 Deploying Blockchain technologies at a global scale in a decentralized and heterogeneous environment
We at Cisco believe Blockchain is likely to play a significant role in network management
 Managing network appliances built by different vendors - Through record-keeping capabilities of Blockchain. E.g. include switches,
routers, firewalls and internet of things gateways, any device having ability to host a blockchain client
Cisco and Blockchain

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How is Blockchain used in retail?
 Transactions recorded in Blockchain help to authenticate high-end luxury
goods(jewels, art, etc.) and identify possible counterfeits (“blood diamonds,”
stolen art, etc.). Where individuals or businesses are buying globally,
authentication can also include sensitive items such as pharmaceuticals,
assuring that any product is produced sustainably and compliantly
 Traceability is a major benefit provided by Blockchain. Across the supply chain,
parts and products are vulnerable throughout the processing of multiple
transactions–from design to development to manufacturing to shipping. By
unifying every transaction down to the store, retailers can provide far better
security for every step of the production process
 Blockchain supports today’s highly flexible mobile payment systems, similar
to Amazon’s “walk out the door and you’ve paid for it” model. This concept
not only makes payment easier for the customer, but assures far better loss
prevention for your store.
Use case in retail: IOT Alliance

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Problem –
• Origination of each component part in complex system is hard to track
• Manufacturer, production date, batch and even the manufacturing machine program
Solution - Image source:MRO-Network.com
• Blockchain with provenance as key characteristics enables compelete audit trails of each component part
• Accessible by each vendor in the production process, the aircraft owners, maintainers and government regulators
Benefits –
• Improve the business processes and system utilization
• Track of the parts of an aircraft thus enable specific recall than cross fleet
• Life cycle of an asset
Use case- Aircraft Maintenance: Solving Supply Chain issues

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Questions

24. Thank you.

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SAWTOOTH
• Modular platform for building,
deploying, and running distributed
ledgers
• Includes a novel consensus algorithm,
Proof of Elapsed Time (PoET), targeting
large distributed validator populations
with minimal resource consumption
Hyperledger Business Blockchain Technologies –Frameworks
IROHA
• Business blockchain framework
designed to be simple and easy to
incorporate into infrastructural
projects requiring distributed ledger
BURROW
• Permissionanble smart contract machine
• Provides a modular blockchain client with a
permissioned smart contract interpreter
built in part to the specification of the
Ethereum Virtual Machine (EVM)
FABRIC
• Developing applications or solutions
with a modular architecture
• Allows components, such as
consensus and membership services,
to be plug-and-play
INDY
• Distributed ledger, purpose-built for
decentralized identity.
• Provides tools, libraries, and reusable
components for creating and using
independent digital identities rooted on
blockchains or other distributed ledgers
for interoperability.

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Hyperledger Cello
On-demand “as-a-service” deployment
model to the blockchain ecosystem to
reduce the effort required for creating,
managing and terminating
blockchainsconsumption
Hyperledger Business Blockchain Technologies – Tools
Hyperledger Composer
Collaboration tool for building blockchain
business networks, accelerating
• Development of smart contracts
• Deployment across a distributed
ledger
Hyperledger Exposure
• View, invoke, deploy or query blocks,
transactions and associated data,
network information, chain codes and
transaction families, as well as any
other relevant information stored in the
ledger
Hyperledger Quilt
Offers interoperability between
ledger systems by implementing ILP,
which is primarily a payments
protocol and is designed to transfer
value across distributed ledgers and
non-distributed ledgers

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Transaction Request message
Supplementary Slides –How Blockchain works –Bitcoin Transactions
• Bob wants to send 3 BTC to Alex - broadcast a message encrypted with the private key of his wallet
• Each node in the network can cross check that the transaction request is coming from Bob-
by decrypting the transaction request message with the public key of his wallet

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 Blockchain Wallet Service- send and receive payment from Blockchain Wallets
 Payment Processing - Easy method for websites to receive bitcoin payments
 Transaction and Blocks Data –
 Blockchain Data API - Query JSON data on blocks and transactions
 Simple Query API - Simple plain text API for querying blockchain data
 Websockets -Low latency streaming socket channel providing data on new blocks and transactions
Bitcoin Developer Application Programming Interface

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Supplementary Slides –How Blockchain works –Bitcoin Transactions
• Digital signature-encrypting a transaction request with your
wallet’s private key
• Each node in the blockchain is keeping a copy of the ledger
• This “balance” verification is performed thanks to links to
previous transactions.
• A transaction request has to be generated that includes
links to previous incoming transactions – Inputs
• If wallet have bitcoin – owning - means that there are
transactions written in the ledger that point to your wallet
address and haven’t been used as inputs yet

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• In Bitcoin network transaction are ordered by putting them together into groups called blocks
• With each block contains a transactions which are limited and a link to the previous block.
• This is what puts one block after the other in time-sequence
• Blocks are therefore organized into a time related chain that gives the name to the whole system blockchain
How Blockchain works –Bitcoin Transactions