© 2018 IBM Corporation

Blockchain 101

An Introduction to Blockchain for Healthcare, State & Local Government and Education

Alan Dickman, IBMMark Lucente, Zilker Technology

Explained Solutions Architected ExploredComposed

Blockchain education series

Next Steps

V5.3 Public Sector, January 17, 2018

© 2018 IBM Corporation

Agenda

Approximate Time Description

9:30 – 9:45 Welcome and introduction

9:45 – 10:15 What is Blockchain• Underlying Capabilities• Benefits

10:15 – 10:45 Why is it relevant?• Healthcare Use Cases• State & Local Government Use Cases• Demo - Immunichain

10:45 – 11:15 Getting started with Blockchain• What makes for a good project• Design Thinking and the Garage Method• IBM’s Blockchain Offerings

11:15 – 11:30 Q & A

© 2018 IBM Corporation

Contents

3

What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation

Business networks, wealth/value and integration

4

– Business Networks benefit from connectivity

• Participants are customers, suppliers,

banks, partners

• Cross geography & regulatory boundary

– Wealth or Value is generated by the flow of

goods, services or information across

business network in transactions and

contracts

– Integration or Markets are central to this process:

• Public (fruit market, car auction), or

• Private (supply chain financing, bonds)

© 2018 IBM Corporation

Ledgers are key

Ledger is THE system of record for a business.

Business will have multiple ledgers for multiple business networks in which they participate.

– Transaction – an asset transfer onto or off the ledger

• John gives a car to Anthony (simple)

– Contract – conditions for transaction to occur

• If Anthony pays John money, then car passes from John to Anthony (simple)

• If car won't start, funds do not pass to John (as decided by third party arbitrator) (more complex)

5

© 2018 IBM Corporation6

Insurer records

Auditor records

Regulator records

Participant Bank records

Participant

© 2018 IBM Corporation

Auditor records

Regulator records

Bank records

Participant

Blockchain

Insurer records

Participant

7

© 2018 IBM Corporation

Blockchain for business

8

Append-only

distributed system of

record shared across

business network

Business terms

embedded in

transaction

database

& executed with

transactions

Transactions are

endorsed by

relevant

participants

Ensuring appropriate

visibility; transactions

are secure,

authenticated

& verifiable Privacy

Shared

ledgerSmart

contract

Trust

© 2018 IBM Corporation

Hyperledger Fabric: Distributed Ledger Platform

9

– An implementation of blockchain technology that is a foundation for developing blockchain applications

– Emphasis on ledger, smart contracts, consensus, confidentiality, resiliency and scalability.

– V1.0 released July 2017

– 159 developers from 27 organizations

– IBM is one contributor of code, IP and development effort to Hyperledger Fabric

http://hyperledger-fabric.readthedocs.io/

© 2018 IBM Corporation

Permissioned vs Non-Permissioned Blockchains

10

• For its use in government and large scale industry applications – a

Permissioned Blockchain will need to be leveraged– Non-Permissioned Blockchains – such as bitcoin – use “Proof of Work” and other

mechanisms to establish trust (because there is no central authority)

– Permissioned Blockchains have specific characteristics that will be required for

Government’s use of Blockchain

• Permissioned Blockchains will also be the right point to include adding

of the Consumer/Citizen – Can leverage either an existing identity management solution or building this capability into

Blockchain itself

– Adding Consumer/Citizen interaction in the Blockchain unlocks a whole new set of use

cases and value

• The Hyperledger Project defines an open standard and open source

solution for a Permissioned Blockchain - https://www.hyperledger.org/

© 2018 IBM Corporation

Blockchain underpins Bitcoin

• An unregulated shadow-currency

• The first blockchain application

• Resource intensive

Blockchain for business differs in key areas:

• Identity over anonymity

• Selective endorsement over proof of work

• Assets over cryptocurrency

is:

11

© 2018 IBM Corporation

Contents

12

What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation

Blockchain eliminates these challenges

13

• Eliminates data silos

• Allows organizations to

share networks without

compromising data privacy,

security or integrity.

• Supports data encryption

and permission settings for

participants and third parties

• Provides provenance of

what happened when

• Allows a auditors or regulators

to view transactions at any

time and be certain they are

looking at the single version

of the truth

• Ensures immutability of the

chain which eradicates fraud

and abuse

• Enables immediate

deployment of policy to all

members of a network at the

same time

© 2018 IBM Corporation

What

• Provenance of each component part in complex system hard to track

• Manufacturer, production date, batch and even the manufacturing machine program

How

• Blockchain holds complete provenance details of each component part

• Accessible by each manufacturer in the production process, the aircraft owners, maintainers and government regulators

Benefits • Trust increased, no authority "owns” provenance

• Improvement in system utilization

• Recalls "specific" rather than cross fleet14

Common Use Case:

Supply chain

IBM Blockchain

“This is what the blockchain does at its core. It is a shared ledger technology that allows participants in a business network to transact assets where everyone has control but no one person is in control,” - Leanne Kemp, Founder & CEO @ Everledger

Blockchain startup Everledger is tapping Watson and other IBM technologies to underpin its tracking of the provenance of more than 1.2 million diamonds globally.

© 2018 IBM Corporation15

Common Use Case:

Audit and compliance

IBM Blockchain

What

• Data in large organizations is dispersed throughout

many divisions and geographies

• Audit and Compliance needs indelible record of all

key transactions over reporting period

How

• Blockchain collects transaction records from

diverse set of systems

• Append-only and tamperproof qualities create a

high confidence audit trail

• Privacy features to ensure authorized user access

Benefits • Lowers cost of audit and regulatory compliance

• Provides “seek and find” access to auditors and

regulators

• Changes nature of compliance from passive to

activehttps://www.forbes.com/sites/northwesternmutual/2018/10/12/why-more-companies-are-offering-financial-wellness-benefits/#40a737f54709

Delaware has announced that it expects to introduce “smart UCC” filings that “will (1) automate the release or renewal of UCC filings and related collateral, (2) increase the speed of searching UCC records, (3) reduce mistakes and fraud and (4) cut cost.”

UCC Uniform Commercial Code

© 2018 IBM Corporation16

Common Use Case :

Shared reference data

IBM Blockchain

What

• Competitors/collaborators in a business network need

to share reference data

• Each member maintains their own codes, and

forwards changes to a central authority for collection

and distribution

• An information subset can be owned by organizations

How

• Each participant maintains their own codes within a

Blockchain network

• Blockchain creates single view of entire dataset

Benefits • Consolidated, consistent dataset reduces errors

• Near real-time access to reference data

• Naturally supports code editing and routing code

transfers between participants

Patient Cost Liability Estimation

• Use blockchain to bring together provider pricing, insurance eligibility, and claims data in real-time to provide transparency into cost estimates

• Aggregate data for common procedures or services along with claims data to create standard models for pricing

© 2018 IBM Corporation17

What Allow consumers, patients and citizens to easily assert identity

Make it faster, easier and more secure to verify identity, for example, opening a bank account or apply to rent an apartment

How Use Blockchain technology to create its identity management solution

Benefits Frictionless you-are-you experience

Reduction in identity theft & fraud

Common Use Case:

Identity

IBM Blockchain

SecureKey innovates consumer identity protection with IBM Blockchain technology

“When I show up at a bank and I want to create a bank account, I have to prove that I am who I say I am,” explains Greg Wolfond, Chief Executive Officer (CEO) of SecureKey. “Sometimes I bring a driver’s license or other documents. But it takes 30 minutes. And there are lots of opportunities for fraud. For example, someone can have a fake driver’s license issued in my name, be able to pretend to be me, and open a fraudulent bank account using my credentials... Identity is much more valuable than money... We turned to blockchain and started working on Hyperledger because we didn’t see another technology that could solve this problem the way we wanted.”

© 2018 IBM Corporation© 2018 IBM Corporation

Catalog of Use Cases

Healthcare• Consumer-mediated health data

exchange & digital health wallet• Medical/Clinical Treatment

Adherence• Claims Settlement, Adjudication

and Billing Management• Clinical trials innovation• Drug Supply Chain Integrity with

Remote Auditing• Other Healthcare use cases

State & Local Government• Delaware Blockchain Initiative for

Uniform Commercial Code• Illinois Blockchain Initiative

(multiple use cases)• Regulation of the Marijuana

Industry• Verifying eligibility for welfare

payments• Other State & Local Government

use cases

Banking, Finance & Treasury• Clearance, Settlement & Account

Reconciliation• Comprehensive Annual Financial

Report (CAFR)• Customer Identity / Know Your

Customer (KYC)• Other Banking & Treasury use cases

Education• Academic and Medical Credentials• Educational Services

Transportation• Shipping• Vehicle Maintenance

© 2018 IBM Corporation

Healthcare/Life Sciences Use Cases

• Consumer-mediated health data exchange & digital health wallet• Medical/Clinical Treatment Adherence• Claims Settlement, Adjudication and Billing Management• Clinical trials innovation• Drug Supply Chain Integrity with Remote Auditing• Other Healthcare use cases

© 2018 IBM Corporation

IBM has identified 4 aims for our Healthcare efforts

20

Better Outcomes

Improved Patient

Experience

LowerCosts

Improved Provider

Experience

How can Blockchain help?• Reduce information silos

and increase data visibility

• Enforce consistency through smart contracts

• Decrease paperwork• Decrease audit,

verification and reconciliation

© 2018 IBM Corporation

Consumer-mediated health data exchange & digital health wallet

21

Challenges• Patients do not have access to their longitudinal health data

• Patients do not have the ability to share their data with whom they want in real-time

Solution• Personal health data from patients would be held by patients

themselves with access and consent managed by a trusted third party.

• Patients would have the ability to access their own data and give access to others (such as a new provider) when they choose. Also a possibility of monetizing this data as an incentive for patients to share.

Benefits

• Improved access and sharing of patient health data with security and privacy

Patientory Leads Tokenization of Healthcare To Deliver Blockchain-Based Patient Care Model

© 2018 IBM Corporation

Medical/Clinical Treatment Adherence

22

Challenges• Non-adherence accounts for 125,000 deaths in the U.S. alone and costs the

country $300B each year• Reasons for non-adherence include:

• Patients stop treatment when they feel better• The treatment regimen is too complex• A pharmacy doesn’t have the product in stock

Solution• Use Blockchain to capture medications, monitor adherence and provide

patient reminders• If a pharmacy runs out of a product, the medication will be automatically

delivered to the patient’s home• Incentivizes patients to interact with the medication reminder platform

through a reward based systems

Benefits• Healthcare providers spend more time educating• Low adherence patients increase their chances to correctly take the

treatmentBlockchains and Pharmacies: a New Way of Leveraging Medication Adherence

© 2018 IBM Corporation

Claims Settlement, Adjudication and Billing Management

23

Challenges• Fraud: Healthcare fraud costs the nation between $68 billion and $230

billion annually (between 3-10 % by varying estimates)• Errors: health insurance companies are averaging a 19.3 percent error rate

Solution• Automate claim adjudication and payment processing with Blockchain• Consensus enables disintermediation and trustless exchange with

predefined smart contracts• Pay for outcomes and incentive-based behavioral health programs,

leveraging smart contracting features

Benefits• Significantly improve inefficiencies in billing and insurance-related (BIR)

activities• Direct payment of incentive and health tokens toward positive and healthy

behavior by members/patients• Reduced number of disputes/ frauds regarding claims settlement by eliminating the human

judgment factor to speed up claim processing• Improve healthcare revenue cycle management and reduce payment inefficiencies for providers

© 2018 IBM Corporation

Clinical trials innovation

24

Challenges• Clinical trial data often sits in silos and cannot always easily

understand how therapies work in real patient populations• Clinical trials are very controlled and may not provide data on

valuable areas like growth rate kinetics• Trials also often exclude critical populations like pregnant

women.

Solution• Use blockchain to aggregate real-time real-world patient data and report out to researchers• Data could be patient-reported or collected from patient follow ups• Data collected in clinical trials shared across NIH, FDA, academia, industry is stored in Blockchain.

Benefits• Improved sharing of data could lead to increased opportunities to publish new studies or create new

indications• Better understand of the heterogeneity of effects of drugs or medical devices

Blockchain technology for improving clinical research quality

© 2018 IBM Corporation

Drug Supply Chain Integrity with Remote Auditing

25

Challenges

• Counterfeiting: Pharma companies lose $200 billion annual due to counterfeit drugs globally; an estimated 30% of the drugs sold in developing countries are counterfeit

• Theft: Drugs account for about 15% of the estimated $8 billion to $12 billion in annual cargo theft, according to FreightWatch International

Solution

• Blockchain-based chain-of-custody log to track each step of the supply chain by individual product/drug (Provenance)

• Remote process auditing with Blockchain verified source of truth (Smart contracts)

Benefits

• Improved drug traceability across the supply chain; check drug counterfeiting, thus reducing industry losses.

• Health authorities and regulatory institutions can safeguard citizens by requiring proof of identity(or license) to detect/minimize counterfeit drugs

• Patients can directly participate in medication adherence and loyalty programs to avail incentives

© 2018 IBM Corporation 26

– Healthcare Cost Estimation for Patients and Providers/Insurers

– Drug & Medical Device Supply Chain

– Clinical Trial Identity Matching

– Genetic Treatment Provenance

– Medical Research Provenance

– E2E Serialization

– Provider Credentialling

– See Illinois Blockchain Initiative

– Cyber Security and Healthcare IoMT

See also: Hyperledger Wiki of Use Cases

Other Healthcare Use Cases for Blockchain

© 2018 IBM Corporation

State & Local Government Use Cases

• Delaware Blockchain Initiative for Uniform Commercial Code• Illinois Blockchain Initiative (multiple use cases)• Regulation of the Marijuana Industry• Verifying eligibility for welfare payments• Other State & Local Government use cases

© 2018 IBM Corporation 28

Open Government

As Government agencies increasingly collaborate with private

sector and NGOs to drive economic growth and vitality, the need for

transparency and trust in data becomes all the more important.

Cyber Security and Privacy

As cyber attacks on Government agencies increase, security of

Government systems and data becomes fundamental to the

Governments ability to provide safe communities and protected

critical infrastructure.

Regulations and Compliance

Governments need to minimize regulations to enhance economic

vitality while at the same time ensure regulatory compliance.

Governments will not only create but also need to manage the

implementation of policy changes at speed.

Three Government imperatives are underpinning the vision of Blockchain

© 2018 IBM Corporation 29

Delaware Blockchain Initiative

WHAT:

BENEFITS:

•

Delaware Blockchain Initiative (DBI)

• DBI allows for the application of distributed ledger technology to

documents

• The new legislation will allow companies to create and maintain corporate records, including stock ledgers, on a blockchain to better track and verify stock ownership, and improve transaction time and proxy voting using a distributed ledger

• Delaware law ensures that businesses that utilize blockchain will not face new regulations

https://www.forbes.com/sites/northwesternmutual/2018/10/12/why-more-companies-are-offering-financial-wellness-benefits/#40a737f54709

UCC filings and related collateral, (2) increase the speed of searching UCC records, (3) reduce mistakes and fraud and (4)

UCC Uniform Commercial Code.

© 2018 IBM Corporation 30

Illinois Blockchain Initiative

WHAT:

BENEFITS:

• The goal of the initiative is to determine if this groundbreaking technology can be leveraged to create more efficient, integrated and trusted state services

• Blockchain and distributed ledger technology has the potential to transform the delivery of public and private services, redefine the relationship between government and the citizen in terms of data sharing, transparency and trust, and make a leading contribution to the

© 2018 IBM Corporation 31

Illinois Blockchain Initiative Proofs of Concept

© 2018 IBM Corporation 33

Using Blockchain to verify eligibility for welfare payments

Citizens give permission to agencies to access data

Ledgers

Citizens can set up rules with agencies

Individual blockchain ledgers are secured by key cryptography

Smart contracts

Key Benefits

One truthSingle view of citizen across agencies

SecureEmpower citizens to say who has access to dataEfficient

Faster processes and updatesProvenance

Near real-time ledger Immutable

More accurate records builds trust across stakeholders

Agencies gain permission to access citizen data when predefined conditions are met.

Government AgenciesCitizen

Regulation

Rules define situations where information is shared

Agencies can access ledgers if they have the required permissions

Current situation

Social workers spend 60-80% of their time on

administrative tasks

Estimated 30% reduction in administrative costs

In addition, 77% of improper payments are addressable by blockchain30% of improper payments due to insufficient documentation to determine

eligibility

26% of improper payments due to inability to authenticate eligibility or failure

to verify data

21% of improper payments due to administrative or process errors

made by federal, state, or local agency

Estimate 20% reduction in improper payments

© 2018 IBM Corporation 34

Potential use cases

Energy Trading

blockchain-based trades in wholesale power and natural gas markets.Europe's Biggest Utilities Join Blockchain Energy Trading

Demand-based Service Marketplace (Auctions)Marketplace for waste management, snow removal, etc. Combine IOT sensors for increase automation and monitoring. Use smart contracts for agreed pricing/sourcing.

Grant Eligibility/TrackingSmart contracts simplify eligibility/approval process, trigger payments, monitor results and, optional, repayment.

Tax Credits

market visibility and to ensure asset provenance.

Citizen IdentityPublic addresses used to form unified citizen ID across departments and systems to maintain a source of truth.City of Zug

Public Sector Supply Chain LogisticsAdd greater visibility and efficiency across the entire supply chain to deliver higher value to trading relationships.Why Blockchain May Be Your Next Supply Chain

VotingBring the voting process online to make it easier, moresecure, and cost effective. See: State of Utah, Poland Revolutionizes Voting and Follow My Vote

Other State & Local Government Use Cases for Blockchain

Property Title ManagementUse blockchain for transferring and tracking property titles and other public recordsChicago Cook County

© 2018 IBM Corporation 35

Vehicle Logistics & TrackingState/Local vehicle tracking, logistics and transport.AOS and IBM developing logistics and transportation solution

Economic DevelopmentFacilitate the setting up of businesses, issuance of commercial licenses, protecting the rights of businesses and consumers, and promoting enterprise and trade.Dubai Aims to Be a City Built on Blockchain

Blockchain: Top 10 Areas Ripe for Government Innovation

TourismBoost tourism through a blockchain-based program that would allow visitors to better earn and spend loyalty points. Norway and Dubai

Agricultural Protections and Quality Control

skyrocketing, but producers and manufacturers are often struggling to verify the accuracy of data from farm to table. Use Blockchain to ensure the provenance of food.Walmart in ChinaTrace food contamination with blockchain

(Non-Education) Credentialing of ProfessionalsManaging credentials/certifications for healthcare workers, craftsmen, etc.

Carbon Credits.

Carbon Credits in China

Fraud & ComplianceIncrease the efficiency of government agency processes that requires data to be shared across a number of different agencies. Smart Dubai

Other State & Local Government Use Cases for Blockchain

See also: Hyperledger Wiki of Use Cases

Community TransportationState/Local on-demand (self-driving) transportation servicesSee Arcade City: https://arcade.city/

© 2018 IBM Corporation

EducationUse Cases

• Academic and Medical Credentials• Educational Services

© 2018 IBM Corporation

Academic & Medical Credentialing plus more

37

Academic CredentialingChallenges

• Improve access to verifying academic credentials

Solution

• Illinois Universities to issue academic credentials and transcripts on Blockchain

Benefits

• Students, educational institutions and employers are able to track continuing education credentials with the Illinois Department of Financial and Professional Regulations (DFPR) and the University of Illinois

Medical CredentialingChallenges

• Improve the efficiency and accuracy of the medical credentialing process while reducing operational costs

Solution

• Illinois provider medical licensing data will be entered into Blockchain

Benefits

• Allows providers to be identified in a secure, verifiable and scalable way

• Credentialing bodies can reliably view and eventually attest to certifications

• Providers can verify and maintain a single record

• All interacting bodies can trust that the central record is valid, authenticated, and uniqueIn June 2018, MIT used

certificates to issue diplomas for two cohorts of students at the MIT Media Lab (Media Arts and Sciences) and the Sloan School of Business.

• Accepts Bitcoin for tuition for any degree program at the university

• Offers an accredited academic degree program, a Master of Science in Digital Currency, taught online in English

• Issues academic certificates onto Blockchain

© 2018 IBM Corporation

Educational Services

38

Challenges

• Need to reduce/eliminate frictions associated with verifying academic credentials

Solution

• Sony has developed a new educational platform in partnership with IBM that uses blockchain to secure and share both primary and higher education student records

Benefits

• Allow educators to exchange information on student progress and achievements

• The initial focus has been on school records but Sony plans to extend the application to support testing and other information

© 2018 IBM Corporation

TransportationUse Cases

• Shipping• Vehicle Maintenance

© 2018 IBM Corporation 40

What • Ninety percent (90%) of goods in global trade are

carried by the ocean shipping industry each year

• Tracking and management of tens of millions of

shipping containers across the world is handled

using paper – methods that are costly and wasteful

How • Maersk will use Blockchain to manage and track tens

of millions of shipping containers across the world by

digitizing the end-to-end shipping process to

enhance transparency and provide highly secure

sharing of information among trading partners

Benefits • Reduce fraud and errors, reduce the time

products spend in the transit and shipping

process, improve inventory management and

ultimately reduce waste and cost

Shipping

“As a global integrator of container logistics with the ambition to digitize global trade, we are excited about this cooperation and its potential to bring substantial efficiency and productivity gains to global supply chains, while decreasing fraud and increasing security,” said Ibrahim Gokcen, chief digital officer, Maersk. “The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.”

http://www-03.ibm.com/press/us/en/pressrelease/51712.wss

© 2018 IBM Corporation 41

What • Drivers populate a DVCR (Driver Vehicle Condition Report) before and

after the completion of a trip

• Currently it is a very paper intensive process to convey the condition

of transportation equipment to operations, safety and maintenance

How • Automated all reporting with inspection and maintenance

information of equipment throughout its lifecycle

• Verification of the inspections, maintenance performance records and

recall information could all be part of this blockchain

Benefits • Simplifies the asset management and utilization task

• Better connectivity between suppliers, customers, carriers and

others

• All relevant information to a particular supply chain is captured and the

data is accessible to all parties involved

• Allows for better tracking of pallets and trailers as they move between

supply chains or to the sales floor

Vehicle Maintenance

https://en.paperblog.com/blockchain-the-future-of-supply-chain-operations-1638444/

"The immediate benefits of blockchain include an expanded level of security, visibility, and traceability. With many moving parts in a supply chain from the products to people, blockchain has the ability to allow multiple parties to transfer and store data in a space that is permanent and easily accessible. This simplifies paper-heavy, disparate, expensive, and logistically complex data systems."

© 2018 IBM Corporation

Banking, Finance & Treasury Use Cases

• Clearance, Settlement & Account Reconciliation• Comprehensive Annual Financial Report (CAFR)• Customer Identity / Know Your Customer (KYC)• Other Banking & Treasury use cases

© 2018 IBM Corporation 43

What • State Treasuries maintain funds at multiple in-state banks

• Treasuries and in-state banks must reconcile accounts

monthly

• Account reconciliation is manual

How • Credit/debit/transfer transactions are audited in real-time

through Blockchain

• Smart contracts assure that transactions succeed when

all parties recognize the credit/debit/transfer

• Discrepancies caught immediately and resolved quickly

Benefits • Real-time reconciliation

• Reduction in costs associated with manual

reconciliation costs for the State and private banks

• Single source of truth for the State and participating

banks

Clearing, Settlement & :

Account Reconciliation

Finance and Economics Discussion Series: Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C. -Distributed ledger technology in payments, clearing, and settlement“The driving force behind efforts to develop and deploy DLT in payments, clearing, and settlement is an expectation that the technology could reduce or even eliminate operational and financial inefficiencies, or other frictions, that exist for current methods of storing, recording, and transferring digital assets throughout financial markets.”Applying Blockchain to Clearing and Settlement“Clearing and Settlement is where all of the early action has been.”

© 2018 IBM Corporation

44

IBM Blockchain

Comprehensive Annual

Financial Report

(CAFR)

Challenges• CAFRs are costly and time-consuming to prepare• CAFR audits are difficult for the auditor and expensive

to support by the audited organization• How to build credibility with investors in CAFR integrity?Solution• Use Blockchain as a common, shared ledger across

departments and place all debits/credits on the ledgerBenefits• Simplifies and reduces the cost and time to prepare a CAFR• Improved financial credibility & reduced investor risk factors allow governments to pay lower

interest rates on bonds

Mean number of days to issue a CAFR

Larger Smaller

States 199 N/A

Counties 172 244

Localities 182 187

Independent School Districts 188 142

Special Districts 129 181

FORBES: The Technology That Will Change Accounting

© 2018 IBM Corporation

Customer Identity/

Know Your Customer

(KYC)

Challenges• Banks often have a variety of systems that separately manage customer identity for

different services provided• How can banks federate silos of customer data to create a single, cross-businesses KYC

platform to inform all of the banks processes?Solution• Blockchain identifies and uses valid information and evidence stored in a bank’s multiple

systems of record - mortgage applications, life insurance enrollment, bank accountsBenefits• Data silos broken down• Reinforced consistency, traceability and privacy of the information, which is critical in a

highly regulated environment• Reduction in unnecessary duplication of information and requests• Banks are able to deliver proof of their identity to third-parties such as local utilities,

retailers or regulated service providers

45IBM and Crédit Mutuel Arkéa Pioneer the Use of Blockchain to Manage Customer Identity and Improve Customer Satisfaction

“Crédit Mutuel Arkéaapplied IBM DesignThinking and agile

development methods to turn a simple idea into a strategic, decentralized platform for collaboration. The availability of IBM Blockchain services and DevOps tools on IBM innovation platform IBM Cloud was key to accelerate the time-to-value during the development phase,” said Juliette Macret, IBM Financial Services Sector Business Development Director, IBM France. “As the foundation of a robust system of trust, blockchain technology can help businesses create frictionless business transactions that improve customer satisfaction and employee efficiency.”

© 2018 IBM Corporation 46

Other Banking & Treasury Use Cases

Securities

- Post-trade settlement

- Derivative contracts

- Securities issuance

- Collateral management

Trade Finance

- Bill of Lading

- Cross-currency payment

Syndicated Loans

Retail Banking

- Cross border remittances

- Mortgage verification

- Mortgage contracts (smart contract)

Public Records

- Real estate records

- Vehicle registrations

- Business license and ownership records

© 2018 IBM Corporation

Contents

47

What is Blockchain?

Why is it relevant?

Getting Started With Blockchain

© 2018 IBM Corporation48

Making blockchain real for business with over 400 engagements and multiple active networks

Trade Finance Pre and Post Trade Complex Risk Coverage

Identity/ Know your customer (KYC) Unlisted Securities/ Private Equity Funds Loyalty Program

Medicated Health Data Exchange Fraud/ Compliance Registry Distributed Energy/ Carbon Credit

Supply Chain Food Safety Provenance/ Traceability

© 2018 IBM Corporation

Deployment Options

49

Blockchain as a Managed Service on IBM Cloud

Hyperledger Support

Support options for IBM-Certified Hyperledger Images• Available for IBM Certified Docker Images from IBM Docker Hub• Entry: Mon-Fri 8am-5pm; 8 business hrs; 1 technical contact;

no developer assistance• Elite: 24x7X365: 2 business hrs; unlimited technical contacts;

5 assists

Run Hyperledger on premise:• Business or regulatory policies restrict

use of Cloud Services • Easier

Flexible membership plans enable each ecosystem’s unique needs for compute, performance and isolation. Participants in the network, join the network via one of several Membership Plans.

• Business ready platform that addresses the full life cycle (develop, govern, and operate) of a multi-organization blockchain network

• Runs on our High Security Business Network (HSBN)

• Built on Hyperledger Fabric V1.0 leveraging a modular architecture to achieve enterprise levels of security, data integrity, scalability, and performance

More Information

More Information

Run Hyperledger in a 3rd Party Cloud• Easier integration with cloud-native applications

© 2018 IBM Corporation

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© 2018 IBM Corporation 51

– Identifying a good blockchain use-case is not always easy!

– However there should always be:

What makes a good blockchain use case?

1. A business problem to be solved

• That cannot be solved with more mature technologies

2. An identifiable business network

• With Participants, Assets and Transactions

3. A need for trust

• Consensus, Immutability, Finality or Provenance

© 2018 IBM Corporation 52

– First use-cases are even more difficult to identify!

What makes a good first blockchain use case?

1. A limited scope, but still solves a real business problem

• Minimum Viable Product in a few weeks of effort

2. A smaller business network

• Usually without requiring regulators and consortia

3. Allows for scaling with more participants and scenarios

• Consider shadow chains to mitigate risks

Start small, succeed and grow fast!

© 2018 IBM Corporation 53

Rapid Immersion – Step 1

Use the IBM Garage to your advantage

• Multiple Locations

• Thought Leadership

• Consistent Approach

• Rapid Results

• The “New IBM” approach

© 2018 IBM Corporation 54

What happens at The Garage?

1. Guest Visit

2. Design Thinking Workshops

3. MVP Buildout (features pair programming)

4. Solution Architecture

5. Future Build Iterations (features pair programming)

© 2018 IBM Corporation 55

Rapid Immersion - Step 2

Use the HyperLedgerComposer Playground on the cloud.

PARTICIPANTS

ASSETS

TRANSACTIONS

© 2018 IBM Corporation 56

3 Quick Examples

2. Fundamentals

(Car Auction)

1. The Goal State

(Immunization)3. HealthIT Build In-Process

(Blood Management)

Artifacts from an in-

process project will

be shown live.

© 2018 IBM Corporation57

Engagement Model overview

1. Discuss Blockchain technology

2. Explore customer business model

3. Show Blockchain Application demo

1. Understand Blockchain concepts & elements

2. Hands on Proof-of-Technology with Blockchain

1. Design Thinking workshop to define business challenge

2. Agile iterations incrementally build project functionality

3. Enterprise integration

1. Scale up pilot or Scale out to new projects

2. Business Process Re-engineering

3. Systems Integration

Remote Digital Face to face Face to face

Let’s

Talk

Blockchain

Hands-on

First

ProjectScale

© 2018 IBM Corporation

IBM Blockchain Resources

58

Hyperledger & Composer Resources:

• Redbook “Zero to Blockchain”: http://www.redbooks.ibm.com/abstracts/crse0401.html?Open

• Github “Zero to Blockchain”: https://github.com/rddill-IBM/ZeroToBlockchain

• Youtube “Zero to Blockchain”: https://www.youtube.com/playlist?list=PLnJzIOiv6cVTjaJRtJ2srarhs-m4V3zs3

• Hyperledger Composer Playground: https://composer-playground.mybluemix.net/login

• Github Repo: https://github.com/hyperledger/composer

• HyperLedger Project Page: https://www.hyperledger.org/

Blockchain Videos:

• Ted Talk: https://www.ted.com/talks/bettina_warburg_how_the_blockchain_will_radically_transform_the_economy

• Island of Yap: https://www.youtube.com/watch?v=Fy8BfVrj4dk

Design Thinking/Garage Resources:

• IBM Garage Pair Programming:https://www.ibm.com/cloud/garage/content/code/practice_pair_programming/

• IBM Garage Method: https://www.ibm.com/cloud/garage/category/practices

• IBM Garage (General): https://www.ibm.com/cloud/garage/

© 2018 IBM Corporation59

Introducing Think 2018 March 19 22, 2018

Las Vegas, NV

Tomorrow is happening here.

No matter how you come to IBM from AI to Cloud, IoT to Big Data, SaaS to Storage we are inviting all of our partners and customers to think together.

Communities of people with a shared vision.

Technology that is changing the planet.

Place to learn, to play, to build, to grow.

Access to great minds and practical ideas.

Training and certification.

Register today atibm.com/think2018

Think is a first-of-its-kind global IBM event that gathers the

leaders, and thinkers in one place, to ask:

What makes you think?

Join us for insightful answers to the most important questions: yours.

Learn more at ibm.com/think2018 >

EntertainmentTrainBarenaked Ladies

© 2018 IBM Corporation

Thank you

ztech.io

www.ibm.com/blockchain

developer.ibm.com/blockchain

www.hyperledger.org

© Copyright IBM Corporation 2018. All rights reserved. The information contained in these materials is provided for informational purposes only, and is provided AS IS without warranty of any kind, express or implied. Any statement of direction represents IBM's current intent, is subject to change or withdrawal, and represents only goals and objectives. IBM, the IBM logo, and other IBM products and services are trademarks of the International Business Machines Corporation, in the United States, other countries or both. Other company, product, or service names may be trademarks or service marks of others.

Alan DickmanWatson & Cloud Platform, Blockchain Technical SalesPhone: 1-303-324-9353E-mail: adickman@us.ibm.com

Mark LucenteManaging Partner, Strategy, Zilker TechnologyPhone: 1-215-913-9870E-mail: mlucente@ztech.io

© 2018 IBM Corporation

© 2018 IBM Corporation© 2018 IBM Corporation62

videos

https://youtu.be/42Pbx9JYcFABlockchain in health care data management (3:34)

Healthcare: https://youtu.be/_ibaTpBj7D4Healthcare (4:30)

https://youtu.be/ZouqkQko7hEGovernment: How blockchain can revolutionize government (2:39)

https://youtu.be/_o3OMDuWleoIBM's Arvind Krishna: Can Blockchain End Corruption? (1:06)

https://youtu.be/GawgL7YIW08Education: Sony and IBM team to secure education data with blockchain (2:02)

https://youtu.be/1uH0khBVs_4Forecasting Part 3: Blockchain in education (3:16)

© 2018 IBM Corporation

IBM Blockchain References

63

London Stock Exchange Group | blockchain experimentation (link 1) leading to develop securities data blockchain solution for European SMEs (link 2) |http://www-03.ibm.com/press/us/en/pressrelease/49029.wss | http://www-03.ibm.com/press/us/en/pressrelease/52836.wss

Kouvola Innovation | logistics / supply chain | http://www.ibm.com/press/us/en/pressrelease/49029.wssJapan Stock Exchange (JPX) | Central Securities Depository ledger with automating clearing & settlement | http://www.ibm.com/press/us/en/pressrelease/49088.wssABN AMRO | property portfolio revaluation | https://www.abnamro.com/en/newsroom/blogs/arjan-van-os/2016/walking-the-walk-exploring-the-power-of-blockchain.html |

https://www.computable.nl/artikel/nieuws/ecm/5902248/250449/abn-amro-en-ibm-testen-blockchain-in-vastgoedsector.htmlCredit Mutual Arkea | shared ledger of customer registration |

https://www.finextra.com/newsarticle/29117/credit-mutuel-arkea-applies-blockchain-tech-to-verify-customer-ids?utm_medium=newsflash&utm_source=2016-6-30 | https://t.co/5uOn7Nf619MIZUHO Bank, Japan | settlement with virtual currencies. https://www.cryptocoinsnews.com/mizuho-ibm-digital-currency-test/IBM Global Finance | resolving supply chain transaction disputes. http://www.coindesk.com/ibm-building-blockchain-dispute-resolution-system/HSBC, Bank of America | trade finance - letter of credit replication | http://www.coindesk.com/hsbc-bank-america-blockchain-supply-chain/Everledger | global certification system for diamonds, art and luxury goods | https://ibm.box.com/v/EverledgerUseCase | https://youtu.be/Sn7bILEJ-nY |

https://www-03.ibm.com/press/us/en/pressrelease/50169.wss | https://www.comparethecloud.net/articles/diamonds-are-forever-especially-on-the-blockchain/Bank of Tokyo-Mitsubishi UFJ | repository of the legal documents and approval histories |

https://cointelegraph.com/news/ibm-and-bank-of-tokyo-start-blockchain-revolution-in-banking-aim-for-complete-automationChina UnionPay | sharing loyalty bonus points among banks | http://on.ft.com/2cVASsi | http://fortune.com/2016/09/23/ibm-china-unionpay-block-chain/CLS Group | payment netting service for foreign exchange | http://www-03.ibm.com/press/us/en/pressrelease/50615.wssRDW (NL Vehicle Licensing Agency) | electric bike registration | http://telegra.ph/Bikeblockchain-RDW-at-top-10-government-projects---RDW--IBM--Keylane-pitching-together-for-Computable-jury-05-11UBS (Zurich) | novel, digital trade finance instrument | http://bit.ly/2cPU7TW | http://bit.ly/2dOcgjvWalmart (China) | food tracking experimentation | http://fortune.com/2016/10/19/walmart-ibm-blockchain-china-pork/ |

http://www-03.ibm.com/press/us/en/pressrelease/50816.wss | One Page Flyer | PresentationSumitomo Trust Bank (Japan) | finance, real estate and asset custody | http://www.coindesk.com/sumitomo-mitsui-trust-bank-testing-blockchain-ibm/SBI Securities (Japan) | bond trading | http://www-03.ibm.com/press/us/en/pressrelease/50861.wssKYCK! (Singapore) | Know Your Customer | https://www-03.ibm.com/press/us/en/pressrelease/51054.wss | http://www.coindesk.com/ibm-bluemix-garage-kyck-singapore-blockchain/Mahindra Group (India) | supply chain finance | http://www-03.ibm.com/press/us/en/pressrelease/51147.wssThe Seam (US) | cotton trading consortium | http://www.forbes.com/sites/rogeraitken/2018/01/07/ibms-blockchain-consortium-with-the-seam-deploys-hyperledger-for-cotton-trading/#47ecf7593de2DTCC (US, UK) | next generation trade information warehouse | http://www.forbes.com/sites/laurashin/2018/01/09/dtcc-selects-partners-for-blockchain-solution-for-credit-default-swaps/#3fc8df0fad88DIACC (Canada) | corporation identity management | https://diacc.ca/wp-content/uploads/2014/08/DIACC-End-of-Year-Newsletter-December-2016.pdfGovernment of Dubai (UAE) | trade finance and logistics for import and re-export of goods | http://www-03.ibm.com/press/us/en/pressrelease/51541.wssFood and Drug Administration (USA) | secure, efficient and scalable exchange of health data | http://insidehpc.com/2018/02/ibm-collaborates-fda-blockchain-health-data/Postal Savings Bank of China | asset custody system | http://www-03.ibm.com/press/us/en/pressrelease/51358.wssNorthern Trust | private equity | http://www-03.ibm.com/press/us/en/pressrelease/51655.wss | VideoDubai Government | Blockchain Strategy | http://www.coindesk.com/dubai-government-ibm-city-blockchain-pilot/Bank of Montreal (et al) | Managing customer's digital identities | https://www.americanbanker.com/news/canadian-banks-pick-ibm-blockchain-to-expand-digital-identity-projectMaersk | Cross border supply chain | http://www-03.ibm.com/press/us/en/pressrelease/51712.wssNatixis and Trafigura | Commodity trade finance for US crude oil transactions | http://www-03.ibm.com/press/us/en/pressrelease/51951.wssHejia (China) | supply chain financial services for pharmaceutical procurement |

http://www.prnewswire.com/news-releases/ibm-and-hejia-launch-blockchain-based-supply-chain-financial-services-platform-for-pharmaceutical-procurement-300437935.htmlAOS | Truck-Tracking Solution | http://www-03.ibm.com/press/us/en/pressrelease/52665.wss | http://www.coindesk.com/ibm-announces-blockchain-truck-tracking-solution-with-colombian-partner/AIG | Smart Insurance Contract | Video | http://www-03.ibm.com/press/us/en/pressrelease/52607.wss | http://www.coindesk.com/ibm-announces-blockchain-truck-tracking-solution-with-colombian-partner/Santiago Exchange | Securities Lending | http://www-03.ibm.com/press/us/en/pressrelease/52407.wssSignzy Technologies | Customer Identification with Watson | http://www-03.ibm.com/press/us/en/pressrelease/52320.wssTenneT | Flexible Power Grid management in Netherlands & Germany | http://www-03.ibm.com/press/us/en/pressrelease/52243.wss | Video|Energy-Blockchain Labs (China) | Carbon Credit Management Platform | http://www-03.ibm.com/press/us/en/pressrelease/51839.wssINVICTUS (Singapore Start-up) | Order, Logistic & Payment (OLP) platform | http://www-03.ibm.com/press/us/en/pressrelease/51830.wssDigital Trade Chain Consortium (Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale, Unicredit) | Trade Finance Platform |

http://www-03.ibm.com/press/us/en/pressrelease/52706.wss | http://www.coindesk.com/digital-trade-chain-banks-blockchain-2018/AEON Financial Services | Financial Platform for Asian Market | http://www-03.ibm.com/press/us/en/pressrelease/52700.wssANZ, Westpac & Scentre | Bank guarantees | http://www-03.ibm.com/press/us/en/pressrelease/52777.wssHSBC | Trade finance with Watson AI | https://ibm.biz/BdjF5YKBank (Kasikornbank) | Letter of guarantee service |

https://cointelegraph.com/news/major-thai-bank-and-ibm-co-launch-blockchain-platform-to-settle-letters-of-guaranteeSony | Store Academic Records |

https://www.coindesk.com/sony-and-ibm-team-to-secure-education-data-with-blockchain/ | http://www-03.ibm.com/press/us/en/pressrelease/52970.wssZF, UBS | Car Secure Payments “On The Go” | http://www-03.ibm.com/press/us/en/pressrelease/53122.wssChina Construction Bank (Asia) | Bancassurance | http://www-03.ibm.com/press/us/en/pressrelease/53168.wss

© 2018 IBM Corporation

Hyperledger vs. Etherium, Corda

64

https://medium.com/@philippsandner/comparison-of-ethereum-hyperledger-fabric-and-corda-21c1bb9442f6

On the one side, there is Fabric and Ethereum. They both are highly flexible, but in different aspects. powerful smart contracts engine makes it a generic platform for literally any kind of application. However,

permissionless mode of operation and its total transparency comes at the cost of performance scalability and privacy.

Fabric solves performance scalability and privacy issues by permissioned mode of operation and specifically by using a BFT algorithm and fine-grained access control. Further, the modular architecture allows Fabric to be customized to a multitude of applications. An analogy to a versatile toolboxcan be drawn.

Corda is located at the other end. It has been consciously designed as DLT for the financial services industry. Most notably, it takes the highly regulated environment into account by augmenting smart contracts with legal prose.

Apparently, focus solely on financial services transactions simplified its architectural design compared to Fabric. Therefore, it might offer a more out-of-the-box experience. However, it might be possible that Fabric, due to its modularity, can be tailored to resemble feature set. Efforts exist that seek to integrate Corda into the Hyperledger project. Corda therefore cannot be seen as a competitor to Fabric but more as a complement.

© 2018 IBM Corporation

What Motley Fool Recommends

65https://www.fool.com/investing/2018/01/02/the-safest-way-to-bet-on-blockchain.aspx

“If you invest in a company going all-in on blockchain, you're exposing yourself to the risk of near-total loss.

That's why International Business Machines (NYSE:IBM), the century-old technology company, is the safest way to bet on blockchain.”

© 2018 IBM Corporation

A Blockchain example: Citizen Identity, Data Management and Smart Contracts

Providing an accessibleand self-verifiable sourceof truth for citizen-stateinteractions

• Procurement Process Vendor Contracts

• EMR/EHR (Patient controlled)

• Employment Data• Deeds (Digital property

titles)• DHS - Immigration

Records• Secure E-Voting

© 2018 IBM Corporation

IBM Cloud Approach to Blockchain Integration

67

© 2018 IBM Corporation

Blockchain Integration Reference Architecture

68

© 2018 IBM Corporation

Blockchain Interoperability

69

Blockchain to Blockchain Use Cases• Asset interoperability – via IBM Master Data Management• Smart contract interoperability - the same unmodified smart

contract can run on multiple fabrics, e.g. Hyperledger Sawtoothwith Hyperledger Burrow, a modular blockchain client with a permissioned smart contract interpreter built in part to the specification of the Ethereum Virtual Machine (EVM)

• Inter-chain payment provider e.g. Hyperledger Project Quilt – a trustless decentralized exchange and payment service.

• Network of networks – only ad-hoc approaches at the moment.• Know Your Customer / Anti-Money Laundering (KYC/AML) –

Private key chain (distributed identifiers) shared amongst members e.g. Hyperledger Indy as a base for self-sovereign ID

Blockchain to Other Use Cases• Process interoperability – trigger a transaction in a shared process

(e.g., IBM Process Manager) on a blockchain or trigger a private member process using Hyperledger events

• Business rules interoperability – a blockchain calls an externalized business rule to run in place of a native smart contract with IBM Operational Decision Manager

• ERP integration - unlocks the potential of the supplier’s data at source to drive a digital supply chain experience.

• Messaging protocol interoperability - e.g. EDIFACT or e-mail• IOT integration – integrate sensors such as temperature, location

or weighbridges into supply chains on the blockchain via IBM Watson IOT or SmartAxiom

• AI – and blockchain are converging and IBM Watson Analytics is already providing cognitive analytics for blockchain transactions

• Portals – integrate the user interface and user experienceBlockchain Industry and legal standards

• BiTA (Blockchain in Trucking Alliance) – supply chain and logistics • Accord Project – promoting the market wide adoption of smart

legal contracts

© 2018 IBM Corporation

Hyperledger.Org Projects

70

Frameworks• Hyperledger Fabric is a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components,

such as consensus and membership services, to be plug-and-play.• Hyperledger Burrow is a permissionable smart contract machine. Burrow provides a modular blockchain client with a permissioned smart contract

interpreter built in part to the specification of the Ethereum Virtual Machine (EVM).• Hyperledger Iroha is a business blockchain framework designed to be simple and easy to incorporate into infrastructural projects requiring

distributed ledger technology.• Hyperledger Indy is a distributed ledger, purpose-built for decentralized identity. It provides tools, libraries, and reusable components for creating

and using independent digital identities rooted on blockchains or other distributed ledgers for interoperability.• Hyperledger Sawtooth is a modular platform for building, deploying, and running distributed ledgers. Hyperledger Sawtooth includes a novel

consensus algorithm, Proof of Elapsed Time (PoET), which targets large distributed validator populations with minimal resource consumption.

Tools• Hyperledger Composer is a collaboration tool for building blockchain business networks, accelerating the development of smart contracts and their

deployment across a distributed ledger. Work with Hyperledger Composer here.• Hyperledger Cello aims to bring the on-demand “as-a-service” deployment model to the blockchain ecosystem to reduce the effort required for

creating, managing and terminating blockchains.• Hyperledger Explorer can 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 Interledger Protocol (ILP), which is

primarily a payments protocol and is designed to transfer value across distributed ledgers and non-distributed ledgers.