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Using Blockchain for Digital Identifiers. The case of LEI.

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Mirek Sopek
"Using Blockchain for Digital Identifiers: Improving Data Security and Persistence for Digital Object Identifier (DOI) and Legal Entity Identifier (LEI)”.

The E-Finance Lab and DZ BANK 2016 Fall Conference. Goethe University Frankfurt. September 1st, 2016.

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Using Blockchain for Digital Identifiers. The case of LEI.

  1. 1. Using Blockchain for Digital Identifiers Improving Data Security and Persistence for DOI (Digital Object Identifier) and LEI (Legal Entity Identifier) Dr Mirek Sopek, Dr Grzegorz Życiński MakoLab SA, Poland  Chemical Semantics Inc. , USA
  2. 2. Presentation plan  Digital Identifiers and their challenges  Why Blockchain?  Examples of Blockchain use for Identification  Our Case Studies: DOI (Digital Object Identifier) and LEI (Legal Entity Identifier)  LEI Proof-of-Concept – fully functional software  Lessons learned from the POC  Conclusions 2
  3. 3. Digital Identifiers and their challenges  Uniqueness – “Who is Who* ” without doubts  Accessible free of charge as a “broad public good* ”  Decentralization of their generation/assignment  Bi-directional non-repudiation  Authenticity  Resilience to system failures 3 * Slogans borrowed from E-Finance Lab and IBM Joint Spring Conference 2016
  4. 4. Digital Identifiers Examples  LEI – Legal Entity Identifiers  Financial Instrument Global Identifier (Bloomberg FIGI)  Companies Registration Numbers (CRN)  VAT Numbers  Electronic Product Codes (EPC), GS1, EAN codes (*)  DOI – Digital Object Identifiers  VIN – Vehicle Identification Number  GPII – Global Patient Identifier 4
  5. 5. Why Blockchain? - I  Non-repudiation of identities and transactions  Immutability of data  Decentralization of processing  Lowering the transactions costs in distributed organizations  Transparency to internal stakeholders and regulators  Resilience to system failures 5
  6. 6. Why Blockchain? - II  Efficient replication mechanisms  Far-reaching democratization of Digital Identifiers generation (for specific types of identifiers)  Ability to restrict generation of identifiers to authorized agents or institutions.  Diversification of targets: institutions, legal and real persons, datasets and devices. 6
  7. 7. Why Blockchain? - III  Recommended by Ledra Capital in “The Mega-Master Blockchain List” among: 7 http://ledracapital.com/blog/2014/3/11/bitcoin-series-24-the-mega-master-blockchain-list
  8. 8. Existing uses of Blockchain for Identifiers  Blockstack (“ …the first implementation of a decentralized DNS system on top of the Bitcoin blockchain”)  Namecoin (The cryptocurrency with applications for naming ( .bit domain) )  … and more: ShoCard, Hypr, BlockAuth, CryptID … 8
  9. 9. Blockchain evolution  Blockchain 1.0 – Bitcoin and other Crypto Currencies “The deployment of cryptocurrencies in applications related to cash, such as currency transfer, remittance, and digital payment systems”  Blockchain 2.0 – Contracts and Identities “The entire slate of economic, market, and financial applications using the blockchain that are more extensive than simple cash transactions: stocks, bonds, futures, loans, mortgages, titles, smart property, and smart contracts”  Blockchain 3.0 – Applications “Beyond currency, finance, and markets—particularly in the areas of government, health, science, literacy, culture, and art.” Quotations from: “Blockchain” by Melanie Swan, O'Reilly Media, Inc. 9
  10. 10. The idea of using Blockchain 2.0 Smart Contracts for Identification Services
  11. 11. Using Blockchain 2.0 Smart Contracts for Identification Services. I The central tenet of our approach is to treat a single record for any entity to be identified by some KEY as "atomic", in the sense of being curated as a single unit of data, by the authority that assigns the KEYs. Then, the representation of a single “atomic” record can be considered as a state for a single smart contract. 11
  12. 12. Using Blockchain 2.0 Smart Contracts for Identification Services. II Each such contract would offer a method for accessing the representation, and a dynamic data structure that holds "revisions" of the representation. That is, when the record changes globally, its new representation would be added to the state of the contract. Such contract can hold many revisions of the representation, bound only by the capabilities of the network’s global storage. We call such contract "entity contract". 12
  13. 13. Using Blockchain 2.0 Smart Contracts for Identification Services. III Together with entity contracts, someone can devise one or more "master contracts", that keep track of individual entity contracts and make accessing an easier process. One must remember, however, about the trade-off between complexity of such contracts and their cost of creation and execution. 13
  14. 14. Using Blockchain 2.0 Smart Contracts for Identification Services. IV The suggested architecture for the Digital Identifiers on the blockchain is: Consortium blockchains Vitalik Buterin - https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/ : A consortium blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. The right to read the blockchain may be public, or restricted to the participants, and there are also hybrid routes such as the root hashes of the blocks being public together with an API that allows members of the public to make a limited number of queries and get back cryptographic proofs of some parts of the blockchain state. These blockchains may be considered “partially decentralized”. 14
  15. 15. Case studies: DOI – Digital Object Identifiers LEI – Legal Entity Identifiers
  16. 16. Case Study I – DOI – Digital Object Identifiers The Digital Object Identifier (DOI) system is a generic framework allowing for the identification of any digital object across global computer networks. The key features of the DOI system include persistence, fault-tolerant operation, security and ability to resolve its identifiers to different forms, including metadata about objects and pointers to their object location. The DOI system is part of an ISO standard (ISO 26324). Example: https://doi.org/10.1109/5.771073 16
  17. 17. DOI infrastructure today – HANDLE system 17 The Handle System, is a set of protocols concerned with assignment, resolution and management of persistent identifiers for digital objects and other resources on a network. The system was originally developed by Bob Kahn, (contributor to the invention of the TCP/IP protocol), with active participation of DARPA in the framework of CNRI. CNRI develops and manages the system through today.
  18. 18. Our current activity 18 The main idea behind the case study is the way we envision the use of Blockchain technology as the back-end infrastructure for the DOI (Digital Object Identifier) system, effectively improving or replacing the aging Handle system. The project has been proposed to US National Science Foundation by our American Joint-Venture: Chemical Semantics, Inc.
  19. 19. Two case studies: DOI – Digital Object Identifiers LEI – Legal Entity Identifiers
  20. 20. Case Study I – LEI – Legal Entity Identifier „The Legal Entity Identifier (LEI) is a 20-digit, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions. Simply put, the publicly available LEI data pool can be regarded as a global directory, which greatly enhances transparency in the global marketplace.” https://www.gleif.org/en/lei-focus/introducing-the-legal-entity-identifier-lei 20
  21. 21. LEI – Legal Entity Identifier resolution mechanisms The management of the LEI system is coordinated and supported by GLEIF Foundation (www.gleif.org). Registrations are performed by LOUs – Local Operating Units.  GLEIF offers RESOLUTION mechanism for LEI: e.g.: https://www.gleif.org/lei/2594007XIACKNMUAW223  There are also private LEI resolvers. The one using Linked Data/Semantic Web principles (with an award wining GLEIO Ontology) is run by MakoLab: e.g.: http://lei.info/2594007XIACKNMUAW223 21
  22. 22. MakoLab LEI Blockchain Proof of Concept The fundamental principles for the POC:  Modelling a small consortium blockchain (only 3 nodes for the POC)  Using Ethereum as smart contract platform  Ethereum clients form a private network of participants  Each client synchronizes its blockchain with others  Three LOUs (Local Operating Units) modelled  Clients are connected in a distributed cluster 22
  23. 23. MakoLab’s LEI Proof-of-Concept  Ethereum nodes (run as GETH processes) are interfaced using WEB3.js library  node.js is used as a primary layer on top of GETH and as a web server to access the blockchain  Additional logic is delivered by a layer of Python scripts  LEI data is represented as JSON-LD objects  Web application Front-End JS code allows for retrieval, entry and update of data  Single node is: 8GB/4 cores/ 3,2 GHz/Intel i7 23
  24. 24. More details about the POC  Fast index service used for searches (SOLR)  Individual web interfaces are enabled for each LOU  POC functionality: Search, Creation of contracts for LEIs records, registration in the master, creation of the new revisions …  Estimated mining time for a single LEI: mining of 1 block itself, with low difficulty PoW (0x4000), typically less than 10 secs 1 LEI = 3 blocks = ~30 sec. 24
  25. 25. POC Web interface: http://leiblc.mm.com.pl/POC.html 25
  26. 26. POC Web interface and JSON-LD LEI representation 26
  27. 27. Lessons Learned from the LEI POC  Ethereum is a very good platform for building a Digital Identifiers Blockchain based system  However, Blockchain software is not enough to build a fully functional identification system  The need for indexing and caching is important (access time to LEI data varied between few hundreds ms to ~2 seconds depending on the number of LEI record revisions)  Index and cache security are needed and can be done by periodic hashing of index/cache server database and frequent verification  POW difficulty can be easily adjusted (low for initial blockchain creation, higher for new entries and updates)  Semantic Layer is needed for adding meaning to smart contracts (e.g. GLEIO Ontology for LEI) – next on our POC 27
  28. 28. Conclusions  Blockchain technology is the ideal choice for Digital Identifiers working in the public space  Blockchain offers non-repudiation, persistence, fault-tolerant operation, security (authenticity) and low-cost decentralized management  For Identifiers assigned by distributed system of affiliated organizations (like RAs for DOI or LOUs for LEI) – the consortium Blockchains form the ideal organizational framework  The ability to resolve the identifiers to different forms requires additional software solutions  Next steps in our Blockchain research will include:  Adding a semantic layer to blockchain data  Improving the security of indexing and adding caching  Adding linked data resolution mechanisms 28
  29. 29. 29 Contact Dominik Kuziński MakoLab SA Rzgowska 30 93-172 Łódź Poland dominik.kuzinski@makolab.com Brandon Pate MakoLab USA Inc. 20 West University Ave., Gainesville, FL 32601 USA brandon.pate@makolab.com Mirek Sopek MakoLab SA Demokratyczna 46 93-430 Lodz Poland +48 600 814 537 sopek@makolab.com

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