“Mutual Distributed Ledgers (aka blockchains) For … - Mutual... · “Mutual Distributed...

38
© Z/Yen Group 2017 Z/Yen Group Limited 41 Lothbury London EC2R 7HG United Kingdom tel: +44 (20) 7562-9562 www.zyen.com “Mutual Distributed Ledgers (aka blockchains) For Identity Authentication InfrastructureProfessor Michael Mainelli @mrmainelli [email protected] BrightTALK Webinar 14 March 2017, London

Transcript of “Mutual Distributed Ledgers (aka blockchains) For … - Mutual... · “Mutual Distributed...

© Z/Yen Group

2017

Z/Yen Group Limited

41 Lothbury

London EC2R 7HG

United Kingdom

tel: +44 (20) 7562-9562 www.zyen.com

“Mutual Distributed Ledgers (aka blockchains)

For Identity Authentication Infrastructure”

Professor Michael Mainelli

@mrmainelli

[email protected]

BrightTALK Webinar

14 March 2017, London

© Z/Yen Group

2017

♦ Special – City of London’s leading commercial think-tank

♦ Services – projects, strategy, expertise on demand,

coaching, research, analytics, modern systems

♦ Sectors – technology, finance, voluntary, professional

services, outsourcing

Independent Publisher Book Awards Finance, Investment &

Economics Gold Prize 2012 for The Price of Fish

British Computer Society IT Director of the Year 2004 for

PropheZy and VizZy

DTI Smart Award 2003 for PropheZy

Sunday Times Book of the Week, Clean Business Cuisine

£1.9M Foresight Challenge Award for Financial £aboratory

visualising financial risk 1997

Z/Yen

© Z/Yen Group

2017

♦ Distributed ledgers (1995-present)

♦ LIBOR and FX surveillance (2007-present)

♦ PropheZy and VizZy – automation &

visualisation of compliance monitoring

(2002-present)

♦ Prediction markets and bubbles (1998-

present) – www.extzy.com

♦ Market intelligence – Ministry of Defence,

e.g. Vision 2020 (1994-present)

♦ Avatars for Big Data (2010-2012)

♦ Financial £aboratory Club visualising risk

(1997-1998)

Z/Yen Fintech Research

© Z/Yen Group

2017

What Is A Ledger?

“A ledger is a book, file, or other record of

financial transactions.”

[SOURCE: https://en.wikipedia.org/wiki/Tally_stick]

[SOURCE: http://www.rootsweb.ancestry.com/~nygreen2/wpeF7.jpg]

[SOURCE: https://en.wikipedia.org/wiki/Ledger]

© Z/Yen Group

2017

Ledger Thrills!

© Z/Yen Group

2017

♦ 1976 – Diffie-Hellman, Merkle, RSA

♦ 1990 – Mondex, Digicash, Flooz

♦ 1995 – Z/Yen Stacks & Sleeves

♦ 1996 – Ricardo payment system

♦ 1998 – Wei-Dai b-money, Bitgold

♦ 1999 – LOCKSS & CLOCKSS

♦ 2000 – Gnutella

♦ 2004 – Ripple

♦ 2007 – Estonia

♦ 2009 – Bitcoin

♦ 2012 – Term ‘blockchain’ used

♦ 2013 – Silk Road, FBI, Alderney

coin, Fintech ‘born’

♦ 2014 – Regulators – Jersey &

Alderney, Isle of Man, FATF, ECB,

State of New York

Mutual Distributed Ledger Timeline

♦ 2015 – IBM-Samsung, Bank of

England research agenda, UK budget

for cryptocurrency standards,

Barclays, UBS, BNY Mellon, Goldman

Sachs, USAA, NASDAQ, Honduras

land registry, Channel Islands

Standards for MDLs, Fine (sic) Sign of

having arrived – Ripple $700,000, Sign

of the Tines – Bitcoin forking hell,

Economist Special, FT Special

♦ 2016 – UK government, Blythe

Masters DAH, R3, SafeShare

Insurance, XLRAS, …

© Z/Yen Group

2017

Ledgerage Area Possible Applications Financial instruments, records, models

Currency, private and public equities, certificates of deposit, bonds, derivatives, insurance policies, voting rights associated with financial instruments, commodities, derivatives, trading records, credit data, collateral management, client monies segregation, mortgage or loan records, crowd-funding, P2P lending, microfinance, (micro)charity donations, account portability, airmiles & corporate tokens, etc.

Public records Land and property titles, vehicle registries, shipping registries, satellite registries, business license, business ownership/incorporation/dissolution records, regulatory records, criminal records, passport, birth/death certificates, voting ID, health and safety inspections, tax returns, building and other types of permits, court records, government/listed companies/civil society, accounts and annual reports, etc.

Private records Contracts, ID, signature, will, trust, escrow, any other type of classifiable personal data (e.g. physical details, date of birth, taste) etc.

Semi-private/semi-public records

High school/university degrees and professional qualifications, grades, certifications, human resources records, medical records, accounting records, business transaction records, locational data, delivery records, genome and DNA, arbitration, genealogy trees, clinical trials, etc.

Keys accounts, home, hotel, office, car, locker, deposit box, mail box, Internet of Things, etc. Intellectual property

Copyrights, licenses, patents, digital rights management of music, rights management of intellectual property such as patents or trademarks, proof of authenticity or authorship, etc.

Other records Cultural, historical events, documentary (e.g. video, photos, audio), (big) data (weather, temperatures, traffic), SIM cards, archives, geostamping, etc.

© Z/Yen Group

2017

Smart contract:

“legal contract terms implemented as

executable computer code”

Smart Contracts & Straight-Through

Processing

© Z/Yen Group

2017

Follower Syndicate In Code

© Z/Yen Group

2017

♦ ledger – a record of transactions

♦ distributed – divided among several or many, in multiple

locations

♦ mutual – shared in common, or owned by a community

♦ mutual distributed ledger (MDL) - a record of

transactions shared in common and stored in multiple

locations

♦ mutual distributed ledger technology – a technology that

provides an immutable record of transactions shared in

common and stored in multiple locations

♦ blockchain - “a transaction database shared by all nodes

participating in a system based on the Bitcoin protocol”

Terminology Evolving

© Z/Yen Group

2017

Application:

MetroGnomo – Timestamping & Datalogging

© Z/Yen Group

2017

Application:

Clinical Trials

© Z/Yen Group

2017

INSERT OTHER

Host details Property details Peroid of cover Policy

cancelled

Reason for cancellation

Premiu

m IPT

From To

First Name

Surname

Unique Refere

nce Address Poscode Address Postcod

e Date Time Date Time 9.50%

John Smith VR000

1 123 Bank

Street EC2V 5AY 54 Woodhill

Lane W17 RQ No £2.00 £0.19

Select £-

Application:

Sharing Economy Broker and Underwriter

© Z/Yen Group

2017

Application:

Reinsurance Claim Payment Data Sharing

© Z/Yen Group

2017

Application:

GeoGnomo – Geostamping

© Z/Yen Group

2017

♦ Usable

visualisation, apps, XML partial matching engines

key structures, sprites (smart contracts)

♦ Mutual - validate

validation methods – NPL timing project

‘genetic splicing’ and integrity

♦ Distributed - safeguard

surveillance – support vector machines

transmitting & receiving, high volumes, multiple transmitters

♦ Ledger - preserve

immutability and standards

partial data holding, long-term data storage

Ongoing Research

© Z/Yen Group

2017

MDLs Are Database Technologies

Centralised Databases

Distributed Databases

Mutual distributed ledgers

(unpermissioned)

Mutual distributed ledgers

(permissioned)

Storage Single master Multiple copies

Definition of data

Multidimensional, typically using some approximation to

the relational database design of Codd

Specialised single dimensional for e.g. ownership, amount

Participation Closed Open. New nodes can be freely added.

New nodes added subject to

agreement by core participants.

Rights e.g. for updating of entries

Governed by separate data base management system

Built into the ledger protocol.

Configuration file determines all node

rights to decrypt/ update

Validation of data

Uses ‘proof of work’ or some weighted voting schema such as ‘proof

of stake’

Typically based on confirmation by core participants

Reconciliation of data

Only necessary when data is

moved.

Iterative, trading off consistency against availability

Robustness Historically vulnerable to server failure

Resilient, continues to update even with partial node availability

© Z/Yen Group

2017

? Validate – “a trust model for timestamping”

Safeguard – “a set of rules for updating

state via blocks”

Preserve – “a shared state”

Reducing Natural Monopolies

© Z/Yen Group

2017

No

Trusted

Third

Parties

Single

Trusted

Third

Party

Efficient

Inefficient

Master Node

Supervisor Nodes

Majority Nodes

Collective Nodes

Free for All Nodes

Bitcoin Ethereum

Ripple

Central Database

‘Woven’ Broadcasting

Mistrust Costs Coins

Paper

© Z/Yen Group

2017

Report Conclusions

♦ Ambitious claims for mutual distributed

ledgers and lots of initiatives working on

‘proof of concepts’

♦ Few easy wins:

MDLs and associated standardisation of

data lowers switching costs and potential for

exploiting market power

So there will be resistance from incumbents

♦ Honouring the full promise of mutual

distributed ledgers (and other FinTech)

for existing infrastructure will not come

automatically, easily, or cheaply

© Z/Yen Group

2017

Process Change Difficulty

Technology

Change

Difficulty Asset Transfer

Archiving

Contract Execution

Shared Data Timestamping

Market

Wholesale Payments

Asset Maintenance

Regulatory Reporting

Identity

Deal Rooms

Too Smart By Half?

© Z/Yen Group

2017

Real World Uses Multiple Ledgers

© Z/Yen Group

2017

Real World Standards & XML Matter

© Z/Yen Group

2017

Real World Economics Matter

Factor Bitcoin Ethereum Custom

Speed – transactions per second

7 tps 20 to 30 tps >10,000 tps per single transmitter; unlimited transmitters

Storage Fixed Fixed Fixed or Variable

$/transaction $0.10 to $2.50 $0.20 to $5.00 <$0.000001

Validation time circa 10 minutes circa 15 seconds <0.0001 second

© Z/Yen Group

2017

Real Work Needs Identity

© Z/Yen Group

2017

♦ Transaction chain: A distributed ledger that records the creation

keys, the upload of files, sprites, and the use of sprites.

♦ Content chain: A distributed ledger that holds all the uploaded

files

♦ Content key: A key that allows access to a single document

♦ Document ring: A depository for content keys that allow access

to different documents

♦ Document ring key: A key that allows access to a document ring

HEALTHchainZ document ring keys are sprite contracts which allow the

subject to set time and use limitations and to revoke access

♦ Master ring: A document ring that has no parent ring, that is no

other ring holds its KRID or KRIDH

♦ Sub-ring: A document ring that is attached to another ring that

holds its KRID and KRIDH

♦ Sprite: A program written on the transaction chain which when

run will allow access to a file under certain conditions

Definitions

© Z/Yen Group

2017

Subjects

IDchainZ

IDchainZ

Professionals

Certifiers

Health

Documents

Certified

Health

Documents

Document

Ring Key

Payment

Request

Certified Documents

Document Ring Key

© Z/Yen Group

2017

IDchainZ Functionality Summary

1) Interface – User interface / access / administration / billing

2) Keys – Private and public key management

3) C#ASM – On ledger and off ledger content storage and

management

4) Data protection – “Right to be forgotten”

5) Disputes – Arbitration, mediation and expert determination

6) Integrity – Content entry, hashing, cryptography and public keys

7) Validity – Consensus model

8) Scalability – Technical architecture and system management

9) Transparency – Publication and safety (ledger status and trust)

© Z/Yen Group

2017

Load IDchainZ

A – Subject visits Certifier

B – Certifier provides Subject with the key

to their master ring

Certifier uploads:

• certified health documents

• identity documents

Certifier destroys:

• their copies of the original

• their record of the Subject’s keys

© Z/Yen Group

2017

A – Subject visits certifier

Create Master

Ring for

Elizabeth

Windsor

Create Identity or

Health Sub-ring

Upload Certified

Documents

© Z/Yen Group

2017

B – Certifier provides Subject with the key

Certifier Subject

1) Certifier gives Subject the key to their master ring

2) Certifier destroys their copies of the key and the

underlying files?

Master Ring Key:

280d98e3-361f-491b-8631-5c19e942d6d1

Access:

1) by App

2) or https://185.77.66.18:3000/api

Subject

View Files View Ring History

Subject uses master ring key to view the certified files and monitor

activity on the ring

© Z/Yen Group

2017

C – Subject shares Health sub-ring with Inquisitor

Subject

Inquisitor

1) Subject saves selected Identity ring files onto a new sub-ring for the Inquisitor

2) Subject sets time and use limits on the Inquisitor’s ring

3) The Subject sends the Inquisitor the key for this limited access ring

Inquisitor's Ring Key:

2fb41e7e-99cf-4110-aab4-ec401f4fd6c6

Access:

1) by App

2) or https://185.77.66.18:3000/api

© Z/Yen Group

2017

♦ Inquisitor can only see the contents of the Inquisitor’s ring and its

time and use limits

C – Subject shares

Time & Use Limits Identity Documents

© Z/Yen Group

2017

♦ The Subject can monitor access to the ring by the Inquisitor

♦ The Subject can revoke the Inquisitor’s ring

C – Subject controls

© Z/Yen Group

2017

♦ Mutual distributed ledgers help communities

share information across time and space, less

vulnerable to natural monopolies

♦ Mutual distributed ledgers provide persistent

and permanent ‘contract’ utilities:

safeguarding transactions

preserving transactions & data

♦ Immutable identity document exchange may be

the ‘killer app’

… try one out … www.MetroGnomo.com

Closing Thoughts

© Z/Yen Group

2017

Thank you!

When Would We Know Our Commerce Is Working?

“Get a big picture grip on the details.”

Chao Kli Ning