Industry Views on Blockchain

Claire Vishik(Mic Bowman)

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General perceptions

“Blockchain is the most disruptive invention since

the Internet itself”

(Digital Doughnut)

• Internet was a major disruption, but finance was behind

– In the US, by 1999, only 20% of the banks were offering online banking

• Even now, post-trade reconciliation and settlement takes 3-30 days

– And still involves exchanging spreadsheets sometimes

• Finance didn’t anticipate blockchain

– In 2014, issues such as mobile check capture and branch optimization were recognized as key priorities in finance surveys

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Modern finance, archaic technology

• Both threat and opportunity for finance

• Applications available in– E-Government

– Real Estate

– Enterprise

– IoT

– Storage

– Identity

– Many more

• Startup space is very active– E.g., Nexus labs have a database of 300 early stage startups in Europe

• The number of events is growing– Several in The Hague area only in the course of the next two weeks

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Blockchain expansion

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DLT Today Is Still Being Worked Out:

• There are too many unanswered questions about validation mechanisms, scalability of transactions, complexity of transactions, number of participants, viability of privacy, and more.

DLT Today Is Immature for Enterprise:

• No service level agreements, transaction rates are too slow, anonymity is uncontrolled, endpoints are insecure, validation is (computationally or network-load) inefficient. And useful applications are still emerging.

The Upside Potential Is Substantial, But Untested

• In financial services alone, cost reduction for pre- and post-trade settlement; syndicate lending could be very substantial. Instant auditability could improve many processes. In e-government, the same practices could be broadly applied.

Industry is looking at a wide range of applications

Considering security, privacy, scalability, and standards, but the work is in its early stages..

Distributed Ledger Technology In One Slide

Summary

Distributed Ledger Technology, or DLT, is a set of communication protocols that enable administratively decentralized,

replicated databases. It is currently being used as the basis for crypto-currencies. Initial alternative usages are being

explored in financial services, around clearing and settlement. DLT is useful today, but potentially, DLT as a common

protocol COULD have widely transformational impact. It would enable any trusted, decentralized transactions and

transform all online transactions, although significant barriers to these usages remain.

• A disruptive technology & model

• Potentially broadly applicable (e.g., database replication)

• Potentially enabling new services and use cases

• Potentially a foundational technology

• Many similar reasons

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So, why is industry ICT industry interested in blockchain?

• Cryptocurrency exchanges

– E.g., Polonex, Coinbase, Coinsetter

• Brokerage services

– E.g, Volobit, Unocoin, Coinjar

• Software wallets

– E.g, Xapo, Coinkite, Coinprism

• Hardware wallets

– E.g., CASE, Keep Key

• Microtransactions solutions

– E.g., ProTip, ChangeTip

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So, what is out there?

• Investments, loans

– E.g., BitBond, Loanbase, Magnr

• Money (remittances) ervices

– E.g, CoinX, ABRA, CryptoPay

• Capital markets

– E.g, Chain, Clearmatics

• Trading platforms

– E.g., orderBook, Mirror

• Merchant Services

– E.g., CoinSimple, Pagos

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So, what is out there II?

• Compliance tools

• ATM

• Financial Data

• Payroll & insurance

• And a lot of work outside of the financial sector…

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So, what is out there III?

MODULAR DEVELOPMENT & TESTING: SAWTOOTH LAKE

• Sawtooth Lake is a research project…

– Rapid prototyping of new concepts (consensus, transactions, etc)

– Measure “big O” performance of large deployments

– Experiment with architectures and layering

– Extensible, plug-and-play, …

• It is not…

– Production quality… though we are in the process of hardening it

– Optimized for validator performance

• And… we have found it useful for building interesting applications

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Disclaimer

• The code is open sourced in NTG … code available here:

• https://github.com/intelledger

• Docs here:

• http://intelledger.github.io/

•

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Code

Sawtooth Lake Architecture

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Communication

Journal

Ledger

Facilitate communication between nodes

Drive global consensus on an ordering of transaction ids

Define and enforce semantics for transaction families

Sawtooth Lake Validator

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Communication

HTTP Endpoint

GossipEndpoint

JournalConsensus

Protocol

Ledger

Endpoint

Registry

Distributed

Marketplace

Observer

Transactor

HTTP interface

for light clients

Gossip protocols

for inter-validator

communication

More On The Journal

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Construct Block

Validation Up-Call

Incentive Up-Call

Commit Block

Handle Disputes

ClaimBlock

Journal

Consensus

Protocol

The consensus abstraction allows plug and play of both

lottery and voting consensus protocols

More On The Ledger

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Distributed Marketplace

Cached State

TxnValidation

Incentives

Ledger

Endpoint

Registry

Distributed

Marketplace

Transaction families capture the semantics of a

transaction and enforce compliance with the semantics

Distributed Marketplace Transaction Family

• Basic objects

– Participant (the “who”)

– Assets (the “what”)

– Holdings (“who” owns “what”)

• And one more…

– Offers to exchange

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• Transactions

– Register each kind of object

– Exchange ownership of objects

A Concrete Application for Testing Hypotheses About Application Viability and Value

Example: Football ExchangeA Marketplace Game Based on Trading Shares of Football Teams

• The league creates within the Marketplace:

– assets for shares of each team and the game currency “mikels”

– buyback offers for team shares equivalent to the points the team scores in games it wins

• The league gives new contestants an initial set of team shares and some currency

• Contestants may sell or trade shares with the league or with other players

• Contestant with the most currency at the end wins

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The Marketplace Is General Enough To Exchange Arbitrary Value

Status

• Implemented in Python – Crypto acceleration in C/C++

– JSON/CBOR message encoding

– Emulated SGX support– NOTE: “Real” SGX enclaves

distributed separately

• Scale Tests– Mean commit time/rate

– Transaction rates

– Number of validators

– Network drop rates/latency

• Network Topologies– Random Walk

– Barablisi-Albert (scale-free)

• Consensus Protocols– Proof of Processor (SGX)

– Federated, Quorum-Voting

• Transaction Families– Endpoint Registry (configuration)

– IntegerKey (scale tests)

– Digital Marketplace

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