BLOCKCHAIN ENABLING IT TRANSFORMATION...2018 Dell EMC Proven Professional Knowledge Sharing 5...

BLOCKCHAIN ENABLING ITTRANSFORMATION

Dahab ShafikAssociate Sales Engineer AnalystDell [email protected]

Ahmed AbdelaalAssociate Sales Engineer AnalystDell [email protected]

Mohamed SohailAdvisor, Delivery SpecialistDell [email protected]

Abdelrahman ElnakeebAssociate Sales Engineer AnalystDell [email protected]

Knowledge Sharing Article © 2018 Dell Inc. or its subsidiaries.

2018 Dell EMC Proven Professional Knowledge Sharing 2

Table of Contents

Why is Blockchain a Big Deal? .............................................................................................. 3

Blockchain Enabling IT Transformation in Banking ............................................................... 5

How can Blockchain Be of Use? ........................................................................................ 6

Blockchain is Much Cheaper .......................................................................................... 7

Blockchain Transactions are Much Faster ...................................................................... 7

Blockchain Enabling IT Transformation in FinTechs .............................................................. 8

Blockchain Enabling IT Transformation in Supply Chain Management ................................ 11

Traditional Supply Chain Management ............................................................................ 12

How can Blockchain Be of Use? ...................................................................................... 13

How Blockchain Can Revolutionize Supply Chain Management .................................. 14

Blockchain, Supply Chain and IoT……The Perfect Trio ................................................... 17

Blockchain Enabling IT Transformation in Cloud Computing ............................................... 19

How can Blockchain be of use?……Cloud Storage ......................................................... 19

How can Blockchain be of use?……Cloud Consumption ................................................. 23

References ......................................................................................................................... 26

Table of Figures

Figure 1 How a transaction is created in Blockchain (Bagley, n.d.) ....................................... 4

Figure 2 MAIN SERVICES OFFERED BY BANKS (SILVA, 2017) ........................................ 5

Figure 3 Blockchain is way cheaper and way faster .............................................................. 6

Figure 4 Current State Vs Blockchain enabled in Securities (CCN, 2016) ............................. 9

Figure 5 DIGITIZED SECURITIES SOLUTION USING BLOCKCHAIN (CAPGEMINI, 2016) 9

Figure 6 TRADITIONAL CONTRACTS VS SMART CONTRACTS (CCN, 2016) ................. 10

Figure 7 How can Blockchain Revolutionize Supply Chain management (Fintech Futures,

2017) .................................................................................................................................. 14

Figure 8 Traditional Supply Chain Vs Supply Chain using blockchian (Christidis &

Devetsikiotis, 2016) ............................................................................................................. 15

Figure 9 Overview of Blockchain's Application in supply chain industry (Abeyratn &

Monfared, 2016) .................................................................................................................. 16

Figure 10 Overview of Blockchain Implementation used by Maersk (IBM, 2016) ................. 18

Figure 11 YOU CAN'T CHEAT ON THE BLOCKCHAIN (ETHEREUNM OFFICIAL

WEBSITE, N.D.) ................................................................................................................. 20

Figure 12 Storj vs Amazon vs Azure ................................................................................... 22

Figure 13 Finding the right KPI ............................................................................................ 23

Figure 14 Reputation Calculation Flow ................................................................................ 25

Disclaimer: The views, processes or methodologies published in this article are those of the

authors. They do not necessarily reflect Dell EMC’s views, processes or methodologies.


Blockchain – a shared bookkeeping system or ledger that allows all the participants

connected to a network to have access to all its records and history – is making a gradually

transformative impact across many industries. Around 25% of Earth’s population are talking

about blockchain and already billions of dollars have been invested in blockchain-based

technologies. Like any disruptive innovation, blockchain is met by many naysayers. Do you

recall what the former CEO of Blockbuster said about Netflix back in 2008? “Neither RedBox

nor Netflix are even on the radar screen in terms of competition. It’s more Wal-Mart and

Apple.” We all know the rest of that story. Of course we’re not talking about on-demand

movies, we’re talking about a major technology. However, if we can learn anything from

history, blockchain is worth taking the time to listen to the argument of how it can completely

revolutionize and transform some industries. After all, no one wants to end up like

Blockbuster.

IT transformation is imperative for all businesses, from the small to the enterprise. That

message comes through loud and clear from seemingly every keynote, panel discussion,

article, or study related to how businesses can remain competitive and relevant as the world

becomes increasingly digital. Since we are among the firm believers that blockchain is the

biggest technology since the internet, and to convert you to our side, this article examines

how blockchain can enable and fast forward IT transformation in three major industries;

Finance, Supply Chain Management and Cloud Storage & Consumption.

By the end of this article, readers will have an overview of how blockchain can enable IT

transformation within:

Finance, with a focus on banking, private securities and smart contracts

Supply Chain Management, with a focus on products’ life cycle and how IoT

fits in the picture

Cloud Storage & Consumption, with a focus on choosing a cloud service

provider and security on the cloud

For each of the above points, we will discuss the status quo of the industry and how

integrating blockchain can lead each industry to a more efficient and faster process. As

proof, we highlight success stories in these industries along with some obvious future

directions and plans.

Why is Blockchain a Big Deal?

Essentially, the blockchain can be applied to any digital asset transaction exchanged online;

a digital fingerprint can be created for any physical or nonphysical asset and be placed in a

transaction. Figure 1 represents how a transaction in the blockchain is requested and

confirmed. The transaction is sent over the p2p network and is sent for validation by a miner

on the network using a known algorithm. Once the transaction is verified it is placed in a pool

of ungrouped transactions. These transactions are combined to form a block that is added to

the blockchain and a confirmation status is set; with every new block, an extra confirmation

is added to the transaction and to completely verify a transaction a minimum of six

confirmations is required. The blockchain is then updated on all peers on the network to

have an identical view of the history provided by the network.


How is this a good thing?

The blockchain offers a set of advantages, some of which include a decentralized network;

no central system to control the flow of transactions or set restrictions. A distributed ledger;

a copy of the ledger is available on every peer on the network and everyone can see the

history of transactions created. Distributed consensus; an agreement is set across the

whole network agreed upon by all the peers in the network in order to prevent events such

as double spending. Blockchain also offers a tamper-proof feature; transactions are digitally

signed by owners to prevent identity theft of the transaction and creation of fake

transactions. Transparency; all transactions are created and transmitted in a way that

cannot be traced back to the source as well as to maintain anonymity of the transactions.

FIGURE 1 HOW A TRANSACTION IS CREATED IN BLOCKCHAIN (BAGLEY, N.D.)


Blockchain Enabling IT Transformation in Banking

“Blockchain will do to banks what the internet did to media” (Harvard Business Review). As

of 2016, almost 60% of financial institutions and banks were using blockchain for various

aspects of their process and specifically for international money transfer. Blockchain-based

solutions are used for security clearing and settlements, anti-money laundering services and

Know Your Customer (KYC) regulations (Ito, Narula, & Ali, 2017).

Banks offer four main services as shown in Figure 2:

1. Value Transfer – Payments

2. Value Storage – Deposits

3. Value Provision – Lending/Investing

4. Value Protection – Derivatives/ Insurance

Providing advisory services for the above mentioned services is sometimes a fifth function

that are offered by banks. To be able to constantly provide the above mentioned services

and with the quality expected by the banks, there are 3 main frictions that are obviously

pushing on banks that are concurrently raising their costs and lowering their efficiency

(Mason, 2017).

5. Expensive Transactions

6. Uncertain Regulatory Environments (can change every 12 minutes (Skinner, 2017)

7. Digital Disruption

Mason has also highlighted that these three forces will cost banks around $300 billion

by 2021. Adding to the financial burden are their ancient processes for international

payments and keeping up with KYC regulations (Mason, 2017). Financial Institutes

sent around $150 to $300 trillion in payments across borders annually (Silva, 2017).

Around 10% of these transactions are paid in fees with transactions taking from two

to five business days to get through. On the same discouraging note, financial

institutions are currently spending $60 to $500 million keeping up with KYC

regulations.

FIGURE 2 MAIN SERVICES OFFERED BY BANKS (SILVA, 2017)


How can Blockchain Be of Use?

The above mentioned issues are just a few of many that face the banking industry today. So,

can Blockchain technology be of any help here?

“Blockchain is undoubtedly one of the most talked about technologies in banking services

today” according to John Mclean, CTO, VP Global Blockchain Team, IBM Systems. At

SWIFT’s Sibos conference in Singapore in October 2015, “it was almost impossible to have

a conversation without the ‘b-word’ being mentioned, and it was very clear that blockchain

had made the transition from being a technology discussed by the few people ‘in the know’

to being a mainstream preoccupation.” (Finextra, 2016)

Blockchain has the chance to revolutionize the banking industry for two main reasons

(Mason, 2017):

1) It’s much cheaper

2) Transactions are much faster

FIGURE 3 BLOCKCHAIN IS MUCH CHEAPER AND MUCH FASTER


Blockchain is Much Cheaper

According to a report published by PwC, “Blockchain systems could be far cheaper than

existing platforms because they remove an entire layer of overhead dedicated to confirming

authenticity. In a distributed ledger system, confirmation is effectively performed by everyone

on the network, simultaneously.” (PwC, 2017). For the four main services mentioned above

offered by the banks, Blockchain can reduce friction and make transfers and settlements in

seconds and at a fraction of the current fees by digitizing any asset or currency.

If we focus on KYC regulations within a Blockchain, an Accenture representitive stated “We

think identity could be big. Financial experts can easily see how you could move [Blockchain]

to the massive area of ‘know your client’ and anti-money laundering, where the costs are

high for banks and the costs of messing it up are also huge” (FInancial Times, 2017)

If we then move our focus to identity fraud, in 2017 alone, victims were affected to the tune

of $16 billion. However, Blockchain case save banks $20 billion annually in infrastructure

costs alone (Silva, 2017). Such extraordinary results, make banks easily attracted to

Blockchain-based solutions; it is estimated that investing in blockchain technologies will soar

to $400 million by 2019 (PwC, 2017)

Blockchain Transactions are Much Faster

According to Charley Cooper, Managing Director of R3 “Trade finance is an obvious area for

Blockchain technology. It is so old it's done with fax machines and you need a physical

stamp on a piece of paper” (CCN, 2016)

In 2016, a test was run by the New York-based blockchain company Axoni to test the

effciency of a transaction running on blockchain in terms of time. Axoni CEO Ger Schvey

stated, “The testing included over a million active trade contracts inserted, with hundreds of

thousands of new trades and updates and it ran in one minute” (CCN, 2016) The test

included banks such as JP Morgan, Citi, Credit Suisse and Barclays.

In a further proof of conccept of how fast a Blockchain transaction can be, SAP, ATB

Financial and Ripple united to send the first ever international across the border blockchain

payment from Alberta, Canada to ReiseBank in Germany. The results as published by

DigitalList Magazine:

“The CAD 1000 (€667 EUR) blockchain payment, which would typically have taken from two

to six business days to process was completed in about 20 seconds. The proof of concept

has since been enhanced, and we are able to complete the transactions in just 10 seconds.”

Other success stories that stood out about the technology in different parts of the world:

1. The Middle East: NBAD (National Bank of Abu-Dhuabi) is currently the first and only

bank in the Middle East to introduce to its costumers real time cross the borders

payments on a blockchain network. They have teamed up with the USA-based startup

Ripple to create this new channel of transactions that is to cut speed and cost of

payments (DubaiEye, 2017). Emirates NBD is another bank that have introduced its

use case at “Keynote 2017”, an annual blockchain technology event held at Burj Al


Arab. The bank is currently working on a pilot blockchain-based software that is aimed

at eliminating check fraud (Rizzo, 2017). Naimish Shah, Emirates NBD VP of

Enterprise Architecture explained that the software would mark checks with QR code

embedded with data linked to a blockchain. When given to a beneficiary, the code can

be scanned with the aid of a self-service channel to check the integrity of this check.

This software is estimated to save roughly 25m AED (6.8m USD) (Rizzo, 2017)

2. India: on October 2017, ICICI Bank was the Indian pioneer that carried the first

international transaction using Blockchain. Shortly after, YES Bank, Kotak Mahindra

Bank and Axis Bank also started to invest in creating their own Blockchain-based

solutions (D'Cunha, 2017).

Embracing blockchain technology can save the banking industry a significant amount of

money, effort and time on a daily basis. In a banking report published by IBM, they surveyed

200 banks in 16 countries on their experience and expectations regarding the advancements

and implementations of blockchain. The results showed that 91% of the surveyed 200 – the

Trailblazers – are expected to have blockchain in commercial production (IBM, 2016) by

2018.

Blockchain Enabling IT Transformation in FinTechs

IT transformation has been quite obvious in the last few years within the financial sector

causing the emergence of the FinTech field where numerous technological advancements

have been made to enhance financial processes. In order for the financial sector to move to

a technology-based process, current documents have to be digitized such as shares,

contracts, agreements, and asset ownership. All these documents can be converted into

smart contracts. This was when the FinTech sector started to realize that adopting

blockchain can further enhance some of the most basic yet extremely time and staff-

consuming processes.

Using the above mentioned technology, the applications mentioned in the next section were

made possible.

8. IT Transformation in Private Securities

It is very difficult for companies to go public. The process is prolonged due to the banks

creating a syndicate and work to underwrite a deal and attract investors to gain shares in

the company. Also, stock exchange agencies need to list the company to start trading

shares of the company as well as handle clearing and settlement of the shares in a secure

and timely manner. A number of parties are involved to license a private company to go

public. With more parties involved, the fees increase and a lot money is spent.


Blockchain can help avoid all of this. By simply trading the shares of the company on a

secondary market utilizing the blockchain network, the company will be publicly registered

using a form of consensus and smart contracts (Crespigny, et al., 2016).

An excellent successful use case is Linq, Nasdaq’s Private Markets Blockchain Project.

Nasdaq is a leading provider of liquidity solutions for private securities trading, clearing,

exchange technology, listing, information and public company services across six continents.

It introduced by Nasdaq in 2015, Linq provides issuers and investors the ability to complete

and execute subscription documents online. It’s a first of its kind to successfully complete and

record a private securities transaction. In May 2017 and due to Linq’s success, Nasdaq and

Citi Bank announced a pioneering blockchain and global banking payment solution that

enables straight-through payment processing and automates reconciliation by using a

distributed ledger to record and transmit payment instructions. The partnership between Citi

and Nasdaq leverages Chain’s blockchain infrastructure platform and draws on core

FIGURE 4 CURRENT STATE VS BLOCKCHAIN ENABLED IN SECURITIES (CCN, 2016)

FIGURE 5 DIGITIZED SECURITIES SOLUTION USING BLOCKCHAIN (CAPGEMINI, 2016)


competencies from industry leaders who are at the forefront of innovation in the global financial

sector. (Nasdaq, 2017)

9. IT Transformation in Smart Contracts

For an entity to ensure an asset, physical or non-physical, it will have to go through the process

of background checking and a thorough investigation on the asset. The standard contract

usually outlines the terms binding two or more parties in an agreement, while the concept of

smart contract enforces said agreement with a cryptographic code.

Smart contracts are only made possible by the emergence of the blockchain. A decentralized

network can handle such a process by registering assets with unique and difficult to forge

properties in order for it to be identified in the ledger. Transaction and ownership history of the

asset can easily be tracked and verified due to the high cryptographic security provided by the

blockchain. Smart contracts powered by the blockchain could provide insurers with the means

to manage claims in a transparent, responsive, and irrefutable manner. Contracts and claims

could be recorded onto a blockchain and validated by the network, ensuring only valid claims

are paid (Shelkovnikov, 2016). For example, the blockchain would reject multiple claims for

one accident because the network would know that a claim had already been made. Smart

contracts would also enforce the claims.

Smart contracts can be integrated as part of any agreement between parties such as digital

identity, loans, securities and many more. A great example implemented in the Middle East

and as part of His Highness Sheikh Mohammed bin Rashid Al Maktoum’s vision to achieve a

fully smart government running on a blockchain network by 2020, Dubai Customs, the

Emirate’s Customs office and Dubai Trade are partnering with IBM. This partnership aims to

test trade finance using blockchain (Higgins, 2017). The public-private initiative is utilizing the

Hyperledger Fabric blockchain protocol as part of a solution aimed at harmonizing the trade

finance lifecycle within a single platform. The solution being tested incorporates device-driven

data collection which is aligned with Dubai’s current intention of testing blockchain as a part

of a broader digitization drive focused on smart governance (Higgins, 2017)

FIGURE 6 TRADITIONAL CONTRACTS VS SMART CONTRACTS (CCN, 2016)


It is worthy to note that smart contracts as a concept goes beyond FinTechs; it can be involved

in Life Sciences and Healthcare when it comes to tracking medical records or granting medical

researches access to certain medical information. Smart contracts can also be used in cross-

industry transactions, public sector record keeping or even voting.

Blockchain Enabling IT Transformation in Supply Chain Management

In 2017 an article was published in Bitcoin Magazine titled “Innovation Percolates When

Coffee Meets the Blockchain” (Scott, 2017). While you may wonder how it is possible for coffee

and blockchain to meet and why innovation would percolate in this case, this title actually

addresses a very important development. Which is that blockchain has recently been

transforming and enabling IT transformation within the area of supply chain management.

Questions arise in a multitude of aspects around supply chain management. A frequent query

pertains to whether it is possible to ensure coffee producers actually abided by fair-trade

regulations. Other often cited concerns are how to ascertain a diamond’s authenticity or how

to ensure that clothing manufacturers refrain from subjecting their employees to sweatshop-

like harsh labor conditions. Until the introduction of the blockchain, such questions regarding

products’ life-cycle in the supply chain were not easily answerable.


Traditional Supply Chain Management

To understand the value added by blockchain to supply chain management, it is important to

understand how traditional supply chain worked and some of the issues prevalent in traditional

supply chains.

A supply chain is the management of the flow of products from raw materials to consumption.

However, it “is much more than trucks and logistics. It’s the way a product or service moves

from inception to consumption and describes all the steps a product takes in its sourcing,

manufacturing, and production before it ends up in the consumer’s hand (The supply chain,

2015). These systems contain many different key actors, processes, phases and most

importantly recorded information. It is often impossible to get an overview of all transactions

throughout the chain.

In the coffee example, the coffee is perhaps farmed and harvested by a farmer before

undergoing quality control by an auditor (point A), then it might get transported via road to a

port (point B), where it then gets shipped by boat to a distributor’s warehouse (point C), before

appearing on the shelves of a grocery store (point D) (Christidis & Devetsikiotis, 2016). In each

phase, there is information recorded by the key actors, for example, the farmer may keep

information about the product’s location, temperature, and humidity. This information is

sometimes based on inputs from other actors in the chain, for example, retailers will include

quality control information based on information passed on down the chain by the quality

control auditors, which could have been altered.

With increasing complexity of supply chain systems nowadays not all information is cascaded

down the supply chain, which is why this whole process is often nontransparent to the end-

user. Despite the fact that many of supply chain processes have been streamlined and IT has

played a major role in transforming supply chain management, it still has many shortcomings

that lead to inefficiencies and incurred losses (McDermott, 2017). Moreover, with the data

being separately stored by each party in multiple locations there is no way to ensure the

authenticity of data. And even if it was established that data has been tampered with at a

certain phase, it would be impossible to pinpoint, who is responsible for this alteration and

when it occurred. Due to the lack of transparency in traditional supply chain systems,

transactions down the supply chain are based on trust between entities in the system.

Based on the current state of traditional supply chain there has been a need for transparency

and traceability. There are billions of manufactured products in global complex supply chains,

but there is a clear lack of data visibility. The issue is not just “complexity of supply chains but

the lack of management, transparency, and monitoring which is fundamental” (Managing


Supply Chain Risk, 2017) . This lack of data visibility hinders an efficient supply chain and

results in supply chain fraud, which has been reported to be on the rise in 2017 reaching over

600 billion dollars (McDermott, 2017). Moreover, given the size of supply chains and the key

entities being unknown suppliers, customers and service providers there is also a lack of trust

and a need for a single version of the truth.

Trusted information is important for the manufacturers firstly to ensure no counterfeit items

have been entered into their supply chain in addition to ensuring regulatory compliance and

being able to act in a timely fashion in case any issues arise, leading to a reduction of their

liability as well as the number of losses incurred. Moreover trusted information about a

product’s provenance is important so the end-customer can regain trust in the company

knowing a product’s origin and the process that this product underwent from raw material to

end product.

How can Blockchain Be of Use?

To tackle these issues companies would have traditionally had to invest large amounts of

money and time. However, using blockchain it is possible to fulfill these needs and increase

the efficiency of supply chain management while saving time and money in the process.

Blockchain’s attributes allow it to enable supply chain transformation, which may be

something that is not recognized by those people not closely related to the supply chain

management field. Since blockchain is a decentralized ledger, it is not dependent on a single

actor as is the case in the traditional supply chain. All parties have access to the exact same

information, which ensures end-to-end reliable transparency. All actors in the supply chain

are able to check records of events in the life of a product from its origin.


How Blockchain Can Revolutionize Supply Chain Management

1) It’s Transparent

2) Provides an untampered trail

Blockchain is Transparent

This kind of visibility helps prevent counterfeit and fraud as it is now possible to know exactly

where something came from and if it is coming from the correct supplier. This type of

application would help save hundreds of billions of dollars, which is the estimate of counterfeit

losses in the multi-billion supply chain industries (Associated Press, 2017).

FIGURE 7 HOW CAN BLOCKCHAIN REVOLUTIONIZE SUPPLY CHAIN MANAGEMENT

(FINTECH FUTURES, 2017)


Several startups and companies have been deploying applications to track the provenance or

origin of a product across the supply chain by allowing different actors to transparently

communicate information to each other. This provides an audit trail that can track the

transformations throughout the supply chain and can be used for different purposes. For

example, an application that has been implemented in Walmart retail stores across the United

States is tracking the origin of fresh foods (Aitken, 2017). Knowing the origin of each item and

the phases it passed until it arrived on the store shelf helps maintain the quality of the produce

and increase food safety, an important issue that has resulted in annual losses estimated at

tens of billions of dollars in the United States alone (Kowitt, 2016). This also helps increase

customer satisfaction, since the end customer can now verify whether received products are

as advertised, thus leading to better buying choices. Furthermore, companies using these

applications can use the feedback and information from the supply chain for better strategic

decision making.

FIGURE 8 TRADITIONAL SUPPLY CHAIN VS SUPPLY CHAIN USING BLOCKCHIAN (CHRISTIDIS &

DEVETSIKIOTIS, 2016)


Blockchain Provides an Untampered and Secure Trail

Moreover, blockchain technology creates secure and immutable records, which are

irreversible, thus guaranteeing authenticity and security and establishing confidence in the

information which is the single version of the truth. This leads to reducing opportunities for

fraud and data tampering. Now that trust can be established it will be easier to eliminate

fraudulent actors since it is now possible to pinpoint what changes have been made and by

whom, thus increasing the accountability in case of any arising issues. It is important to

highlight, however, that given the nature of an open share ledger, this does not mean that

there is no privacy or security. In order to connect to the blockchain, each user needs to be

identified and authenticated first and can access certain sets of data based on their access

privileges that cannot be altered unless broadcast and verified by the other entities in the

system. Based on access privileges the user only gets access to a predefined set of data, so

for example in order not to compromise competitive advantage of a manufacturer, information

about the specific location of a produce farm may not be visible to the end customer, but may

still be available on the blockchain network and available to other parties. The distribution of

nodes across the network eliminates any single point of failure and deters malicious access

since there is no longer a central IT infrastructure as in traditional supply chain technologies.

The fact that blockchain can be easily deployable on a supply chain network and the different

users only require authenticated access helps make the transactions more efficient by

FIGURE 9 OVERVIEW OF BLOCKCHAIN'S APPLICATION IN SUPPLY CHAIN INDUSTRY (ABEYRATN

& MONFARED, 2016)


eliminating paperwork that used to be maintained separately in traditional supply chains. By

eliminating paperwork, costs and time are reduced.

Blockchain, Supply Chain and IoT……The Perfect Trio

As mentioned above, while blockchain has already made improvements to supply chain, it can

achieve more improvements and open the door for far more opportunities through “the

interplay between blockchain, smart contracts and the Internet of Things (IoT)” where that has

been “a significant development towards revolutionizing trade transactions that could deliver

considerable benefits throughout the global supply chain” (Eidel, 2016). IoT is a fast-growing

complex network of connected physical devices that are able to process and communicate

information. Smart contracts are contracts that embed logic to the process and are able to

execute automatically and correctly without the need for human intervention by enabling

automated transactions between devices across the blockchain thus ensuring process

integrity.

By using IoT with RFID devices one can track information regarding goods and services as

they are being moved through the different phases in the blockchain. Produce’s statistics can

be obtained using the IoT devices from the products throughout its cycle in the supply chain

and this information is updated in the shared ledger, where all other parties have access.

Using this information along with smart contracts, it is possible to add logic to the supply chain.

An implementation for such an example by shipping giant Maersk would be tracking

information such as position, arrival time and temperature of products as they are being

transported through the blockchain for quality assurance purposes (Gronholt-Pedersen,

2018). This is in addition to the benefit of all actors having the ability to track product

information as it is being moved in the supply chain. Whenever the environmental data of the

products deviate from the agreed-upon values, the IoT devices tracking these products would

propagate this information to all concerned parties including information of the party currently

responsible for the shipment and thus held accountable for the violation. In this case, the

benefits compared to the traditional supply chain are clear and most importantly the

transparency of the flowing information guarantees non-repudiation.


To add to that, IoT devices can trigger actions such as sending an immediate alert prompting

the relevant party to take the necessary measures that could help mitigate or resolve the

situation if done in a timely fashion. Also, it will be easier to reject spoiled products improving

product safety as well as automatically penalizing parties responsible for not delivering the

products in the agreed upon quality, thus moving a step a further towards an autonomous

service system and supply chain.

An example of an IoT and blockchain application in supply chain is the use of blockchain in

tuna supply chain in Australia to combat illegal fishing. Whenever a fish is legally landed and

starts its journey from the sea to the plate it is assigned a QR code by the World Wildlife Fund

(WWF) (Visser & Hanich, 2018). This QR code is then used throughout the journey until it

reaches the consumer. The consumer can then scan the QR code to ensure this fish was not

illegally fished and the government can check that suppliers are not supplying illegally fished

fishes. While tracking fishing supply chains using QR codes is not a new concept, the fact that

it is now using blockchain ensuring the authenticity and transparency of information is the

major difference.

FIGURE 10 OVERVIEW OF BLOCKCHAIN IMPLEMENTATION USED BY MAERSK (IBM, 2016)


Looking at the current state of supply chain we can say that it is already automated with things

such as sensor-based devices, location awareness, self-reporting and auto-correcting

features. With the prominence of IoT devices, it is starting to become a globally connected

network with interconnectivity through and increased interoperability between IoT devices.

Now using blockchain and IoT we can move to the next step and start making supply chains

more dynamic, robust, auto-executing and responsive and finally allow the next step of artificial

intelligence and machine learning to take place on top of blockchain in the supply chain

(Radocchia, 2017). Considering the amount of trusted data gathered, the idea is to build on

the ability to spot and learn trends yielding insights into how to boost efficiencies and reduce

costs and make better strategic decisions in the supply chain network. Rather than aiming for

transaction costs and time this would open the door for reshaping how to approach businesses

in an innovative way using supply chain. After all, innovation percolates when coffee meets

blockchain.

Blockchain Enabling IT Transformation in Cloud Computing

As most organizations are being transformed towards a way to consume cloud computing

products, the need to leverage blockchain to take a part of this journey emerged. One of the

main streams in this direction is the use of blockchain to choose the cloud service provider for

a specific cloud service. Here we are speaking about a novel way to consume the cloud service

based on concrete and neutral suggestion and service evaluation through blockchain.

Traditional cloud storage

When uploading data to the cloud the service provider saves the data in one of their

datacenters to an off-site storage system maintained by a third party instead of storing

information to a computer’s hard drive or other local storage devices. However, to access

the data, one must send a request to that data center to get their data which isn’t always

close to the physical location of the customer’s location.

To implement this, giant servers should be used which come with its own challenges. Running

them is expensive; they need to be temperature controlled, updated and strictly maintained.

Banks and corporations spend billions of dollars to protect and maintain their server

infrastructure while still experiencing leaks and virus attacks.

How can Blockchain be of use?……Cloud Storage

Blockchain eliminates the need for trusted third parties. Every transaction that happens is

logged and timestamped. It can’t be changed because every node across the network has a

full copy of the data. Constant verification keeps the records accurate. This leads to a peer-

to-peer system that’s almost impossible to hack.


Blockchain cloud storage solutions allow storage to be decentralized – and therefore less

prone to attacks that can cause systemic damage and widespread data loss. On a

decentralized network, files are broken apart and spread across multiple nodes. Also, these

files are encrypted with a private key which makes it impossible for the node (participant in the

network) to look at any other node.

Blockchain technology has created the first opportunity to rethink cloud storage on a technical

as well as an economic level (Blockchain-Based Decentralized File Storage). Blockchain cloud

storage solutions allow storage to be decentralized, more secure, private, cheaper, faster,

censorship-resistant, and more distributed than existing cloud storage solutions. File loss

prevention is very high due to data redundancy caused by extra copies of data (this data can

be gathered from error in storing or transmission of data). Thus, also ensuring a significant

reduction in costs.

This is a great chance for companies to monetize their spare storage space by renting out

their unused hard drive space; a massive amount of storage space sits unused on people’s

hard drives around the world. Sia, Storj, SAFE network, Swarm and Filecoin grabbed the

opportunity to use Blockchain technology to decentralize data storage breaking up files into

many pieces, encrypting and sending them to people’s drives around the world.

FIGURE 11 YOU CAN'T CHEAT ON THE BLOCKCHAIN (ETHEREUNM OFFICIAL

WEBSITE, N.D.)


Storj developed a decentralized, secure way to store data in the cloud without using sever

farms. It utilizes Ethereum blockchain which is a decentralized platform that runs contracts

applications that run exactly as programmed without any possibility of downtime, censorship,

fraud, or third-party interference (Storj Website, n.d.).

Sia is another blockchain project offering decentralized storage. The Sia team has been

explicit about its preference for proof-of-work (PoW) blockchains. Proof of Work provides a

cryptographic assurance that a certain amount of money needs to be spent to create an

alternate history. A block requires doing a ton of computation, and this type of computation is

inherently very expensive energy.

We know when we see a Bitcoin block, it took tens of thousands of dollars in electricity to

produce, even using the most sophisticated hardware in the world. A Bitcoin block costs tens

of thousands of dollars to produce, and a one block double-spend necessarily costs tens of

thousands of dollars. If people are pending 6 blocks to receive transaction confirmation, then

an attacker trying to execute a 6 block double-spend is going to need to spend over one

hundred thousand dollars executing their attack. This brings the price down considerably.

Storing 5 TB of data on the cloud with Sia will set you back about $10 a month. Amazon S3

charges $115 for the same amount of storage. The savings get even more considerable once

you start getting into the big numbers (and factor in things like requests and outbound traffic)

(Sia - Blog, n.d.).

Microsoft Azure is also one of the technology leaders and controls a large amount of the

world’s data. Microsoft brings the Blockchain to the company and implemented in Cloud with

the customers to improve shared business processes.

A lot of huge IT leaders, including Dell EMC and Oracle, worked with Microsoft on Azure cloud

platform to help their customers embrace cloud computing.

http://sia.tech/


FIGURE 12 STORJ VS AMAZON VS AZURE


How can Blockchain be of use……Cloud Consumption

Tech giants are tending to accomplish such an approach based on a permissioned blockchain

{It is a blockchain that requires permission to read the information on the blockchain, that limit

the parties who can transact on the blockchain and that set who can serve the network by

writing new blocks into the chain}. This allows access to only invited and verified clouds –

cloud services – to evaluate the cloud provider’s service quality, and to automate the whole

cloud service process. It is based on P2P multi-cloud service automation platform for cloud

resources publishing/validation, cloud provider reputation proofing, and cloud service contract

execution.

Here we need to operate in the multi cloud environment with the agility of a start-up while

meeting the security and compliance needs of a major enterprise in order to accomplish the

above mentioned concept.

Such new service automation systems are established on blockchain networks across multiple

cloud “service providers”. The secure communications among the cloud providers are

achieved over on-chain ledger and smart contracts. Each cloud provider can be an endorsing

peer which validates and executes smart contracts.

We can speak a lot about all the aspects of automating the cloud provider selection but let me

focus on the reputation calculation metric.

FIGURE 13 FINDING THE RIGHT KPI


The main purpose of the reputation system is to

choose cloud providers for quality of service based on

multiple factors “such as network latency, resource

and capacity verification”. In addition, the system

aims to guarantee the best quality of service (QoS) for

the cloud consumers. One important aspect of the

reputation system is maintaining an absolute fairness for cloud providers such that they are

not rewarded for the amount of the resources that they own or register but rather for the

fulfillment of their contracts’ terms, service level agreements and key performance indicators.

After the service execution is completed, the

monitoring metrics are collected and aggregated

into an execution report that has a summary for

the service resources allocation and performance

for the contract period. This execution report is

then sent to all the peers along with the contract

identification. When each peer receives the

execution report and the contract identification, it

would then do the following:

Compares each metric with its respective contract term and calculates the

percentage fulfilled.

Calculates a fulfillment score for the contract by giving each metric a weight and

calculating the weighted average for the contract.

Calculates an average of all previous contracts between the provider cloud and each

other cloud registered (contract fulfillment history).

Calculates an average of the averages between the provider cloud and every other

cloud

Stores the new contract fulfillment report along with its score in the ledger as part of

the history.

This enhanced version of an average algorithm tries to eliminate an exploitation of having two

clouds doing repeated contracts with one another with simple metrics; thus a provider would

keep getting high fulfillment scores which would then highly factor in to their final reputation

score.

FIGURE 13 MONITORING METRICS


The diagram below illustrates the workflow if doing the calculation of the reputation and the

service scoring.

As demonstrated throughout this document, Blockchain has already integrated and

established its existence in some of the biggest industries: i.e. Cloud Computing, Supply Chain

Management and Banking. We are now living in what experts refer to as “The New Era” of

blockchain. Currently Blockchain is building momentum and industries are exploring with use

cases. We believe the next few years will focus on expansion of proofs of concepts followed

by commercial deployment on a much larger scale as the world starts embracing the new

technology.

FIGURE 14 REPUTATION CALCULATION FLOW


References

1. Abeyratn, S., & Monfared, R. (2016). Blockchain Ready Manufacturing Supply Chain

Using Distributed Ledger. International Journal of Research in Engineering and

Technology, 5. Retrieved from BLOCKCHAIN READY MANUFACTURING SUPPLY

CHAIN: http://esatjournals.net/ijret/2016v05/i09/IJRET20160509001.pdf

2. Aitken, R. (2017, December 14). IBM & Walmart Launching Blockchain Food Safety

Alliance In China With Fortune 500's JD.com. Retrieved from Forbes:

https://www.forbes.com/sites/rogeraitken/2017/12/14/ibm-walmart-launching-

blockchain-food-safety-alliance-in-china-with-fortune-500s-jd-com/

3. Bagley, J. (n.d.). What is Blockchain Technology? A Step-by-Step Guide For

Beginners. Retrieved from Block Geeks: http://blockgeeks.com/guides/what-is-

blockchain-technology/

4. Blockchain-Based Decentralized File Storage. (n.d.). Retrieved from

https://storj.io/metadisk.pdf

5. Capgemini. (2016). Blockchain Disruption in Security Issuance. Capgemini:

Consulting Technology Outsourcing.

6. CCN. (2016, Dec 10). Smart Contracts: 12 Use Cases For Business And Beyond.

Retrieved from CCN: https://www.ccn.com/smart-contracts-12-use-cases-for-

business-and-beyond/

7. CCN. (2016, Oct 18). The Banking Industry Completes a Smart Contracts Blockchain

Test. Retrieved from CCN: https://www.ccn.com/jp-morgan-citi-among-banks-

complete-smart-contracts-blockchain-test/

8. Christidis, K., & Devetsikiotis, M. (2016). Blockchains and Smart Contracts for the

Internet of Things. IEEE Access, 2298.

9. Crespigny, A. C., Gulamhuseinwala, I., Hatch, M., Lele, N., Eenennaam, M. v., &

Dam, F. v. (2016). Implementing blockchains and distributed infrastructure. Ernst &

Young LLP.

10. D'Cunha, S. D. (2017, Sep 1). These Startups Are Using Blockchain To Change

Digital Banking In India. Retrieved from Forbes:

https://www.forbes.com/sites/suparnadutt/2017/09/01/blockchain-is-slowly-changing-

digital-banking-in-india-thanks-to-these-startups/#735e014a4a17

11. DubaiEye. (2017, February 1). NBAD Becomes First Bnak in Middle East to Offer

Blockchain Technology. Retrieved from dubaieye1038.com:

http://dubaieye1038.com/nbad-become-first-bank-in-middle-east-to-offer-blockchain-

technology/

12. Eidel, M. (2016, October 24). Commonwealth Bank, Wells Fargo and Brighann

Cotton pioneer landmark blockchain trade transaction. Retrieved from


Commonwealth Bank: https://www.commbank.com.au/guidance/newsroom/CBA-

Wells-Fargo-blockchain-experiment-201610.html

13. Ethereunm Official Website. (n.d.). Retrieved from https://www.ethereum.org/

14. Filecoin official website. (n.d.). Retrieved from

https://medium.com/tokenreport/filecoin-v-sia-storj-maidsafe-the-crowded-push-for-

decentralized-storage-7157eb5060c9

15. FInancial Times. (2017, Oct 16). Five ways Banks are Using Blockchain. Retrieved

from Financial Times: https://www.ft.com/content/615b3bd8-97a9-11e7-a652-

cde3f882dd7b

16. Finextra. (2016). Bnaking on Blockchain: Charting the Progress of Distributed Ledger

Technology in Financial Services. Finextra.

17. Fintech Futures. (2017, August 14). Retrieved from BankingTech:

http://www.bankingtech.com/2017/08/infographic-how-serialised-blockchain-will-

revolutionise-supply-chain/

18. Gronholt-Pedersen, J. (2018, January 16). Maersk, IBM to launch blockchain-based

platform for global trade. Retrieved from Reuters: https://www.reuters.com/article/us-

maersk-blockchain-ibm/maersk-ibm-to-launch-blockchain-based-platform-for-global-

trade-idUSKBN1F51DE

19. Higgins, S. (2017, February 7). Dubai's Government Launches Blockchain Trade

Finance Trial with IBM. Retrieved from Coin Desk: 2017

20. IBM. (2016). Leading the Pack in Blockchain Banking. New York: IBM.

21. IBM. (2017, March 5). Retrieved from Maersk and IBM Unveil First Industry-Wide

Cross-Border Supply Chain Solution on Blockchain: https://www-

03.ibm.com/press/us/en/pressrelease/51712.wss

22. Ito, J., Narula, N., & Ali, R. (2017, March 09). The Blockchain Will Do to the Financial

System What the Internet Did to Media. Retrieved from Harvard Business Review:

https://hbr.org/2017/03/the-blockchain-will-do-to-banks-and-law-firms-what-the-

internet-did-to-media

23. Kowitt, B. (2016, May 6). America’s food industry has a $55.5 billion safety problem.

Retrieved from Fortune: http://fortune.com/food-contamination/

24. Managing Supply Chain Risk. (2017). Retrieved from Thomson Reuters:

http://info.accelus.thomsonreuters.com/SupplyChainRisk

25. Mason, J. (2017, Dec 27). Why Blockchain will revolutionize the banking industry.

Retrieved from Brave New Coin: https://bravenewcoin.com/news/why-blockchain-will-

revolutionize-the-banking-industry/


26. McDermott, B. (2017, December 14). Using Blockchain for Supply Chains.

Cambridge, MA, USA.

27. Nasdaq. (2017). Nasdaq and Citi Announce Pioneering Blockchain and Global

Banking Integration. Nasdaq.

28. Radocchia, S. (2017, October 24). Here’s How IoT, Blockchain, And Machine

Learning Are Working Together To Seriously Innovate Supply Chain Management.

Retrieved from Hackernoon: https://hackernoon.com/heres-how-iot-blockchain-and-

machine-learning-are-working-together-to-seriously-innovate-supply-e11ae76f9e8f

29. Rizzo, P. (2017, March 6). Dubai Claims Tirle of Blockchain's 'Global Capital' at

Keynote Event. Retrieved from Coin Desk: http://www.coindesk.com/dubai-

government-claims-title-blockchains-global-capital/

30. Scott, M. (2017, April 17). Innovation Percolates When Coffee Meets the Blockchain.

Retrieved from Bitcoin Magazine: https://bitcoinmagazine.com/articles/innovation-

percolates-when-coffee-meets-blockchain/

31. Shelkovnikov, A. (2016). Blockchain applications in insurance. Deloitte.

32. Sia - Blog. (n.d.). Retrieved from https://blog.sia.tech/choosing-asics-for-sia-

b318505b5b51

33. Silva, B. (2017, July 24). Blockchain, Banks, and the Innovator’s Dilemma. Retrieved

from Trade Craft: https://medium.com/tradecraft-traction/blockchain-banks-and-the-

innovators-dilemma-7c66d26d52f2

34. Skinner, C. (2017, Jan 31). Bank regulations change every 12 minutes. Retrieved

from Brave New Coin: https://bravenewcoin.com/news/bank-regulations-change-

every-12-minutes/

35. Storj Website. (n.d.). Retrieved from https://storj.io/

36. The supply chain. (2015). Retrieved from Barclays Africa:

https://www.barclaysafrica.com/supply-chain-challenge/the-supply-chain/

37. Visser, C., & Hanich, Q. (2018, January 21). How blockchain is strengthening tuna

traceability to combat illegal fishing. Retrieved from The Conversation:

https://theconversation.com/how-blockchain-is-strengthening-tuna-traceability-to-

combat-illegal-fishing-89965


Dell EMC believes the information in this publication is accurate as of its publication date.

The information is subject to change without notice.

THE INFORMATION IN THIS PUBLICATION IS PROVIDED “AS IS.” DELL EMC MAKES

NO RESPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE

INFORMATION IN THIS PUBLICATION, AND SPECIFICALLY DISCLAIMS IMPLIED

WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Use, copying and distribution of any Dell EMC software described in this publication requires

an applicable software license.

Dell, EMC and other trademarks are trademarks of Dell Inc. or its subsidiaries.

BLOCKCHAIN ENABLING IT TRANSFORMATION...2018 Dell EMC Proven Professional Knowledge Sharing 5...

Documents

Transcript of BLOCKCHAIN ENABLING IT TRANSFORMATION...2018 Dell EMC Proven Professional Knowledge Sharing 5...