Blockchains

For Business
IIT Delhi, June 30 2018
Content
● Drawbacks of Public Blockchains

● What are Private Blockchains?

● Understanding of Privacy and Consensus

● Thinking Business Blockchain

● Industry Use Case: Supply Chains

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1
Drawbacks of Public
Blockchains

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Non Determinism
● There isn’t 100% determinism in terms of transactions getting
accepted.
● Longest chain is the set of accepted transactions

Block 51A Block 52A

Accepted Transactions
Block 1 Block 2 ... Block 50

Block 51B

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 Non Determinism
Block 51A Block 52A Block 53A

Not Accepted Anymore

... Block 50

Block 51B Block 52B Block 53B Block 54B

New Accepted Transactions

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Consensus
Inefficiencies of Consensus Protocols
1. Energy
2. Time

● Proof-of-Work Compute intensive hash puzzle

● How much time would your computer take to mine a block?

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Privacy
● Any computer connected to the
internet can become a bitcoin or
ethereum node

● All nodes on the network can view

all transactions

● The best that public blockchains

can do is anonymity

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2
Private or Permissioned
Blockchains

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What are Private Blockchains
● Blockchains where network participation is restricted

● Only specified nodes are allowed to join the network

● Different functionality can be given to different nodes

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Features
● Privacy of Data
● Faster and more energy efficient consensus protocols
● No requirement of cryptocurrency/economic incentive

Private Blockchain Platforms:

● Hyperledger Fabric
● R3 Corda
● Quorum
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Hyperledger Fabric
● Types of Nodes:
○ Peer - Node maintaining copy of ledger
○ Endorsing Peer - Node taking part in consensus
○ Orderer - Node responsible for ordering

● Channel - A subnetwork of nodes running a private blockchain network

● Chaincode - Hyperledger Terminology for Smart Contract

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Hyperledger - Privacy
Channel 1
Channel 2
Peer 2

Peer 1 Peer 3

Peer 4
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Hyperledger - Consensus
● Endorsement Policy: n out of m nodes should get the same result in
their ledgers
● Example - 3 out of 4 Endorsement Policy
Peer 2
○ Peer 1 initiates transaction
○ Transaction sent to peers 2,3,4 Peer 1 Peer 3

○ All ledger results shared with 1

Peer 4
○ Transaction accepted if 3 of 4 results are same

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3
Industry Use Cases
General Methodology
Supply Chains

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General Methodology
● Understand business workflow
● Identify stakeholders
● Is there a need for blockchain?
○ Trust
○ Efficiency
○ Cost
● Model Business as assets and transactions
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Supply Chains
● Stakeholders: Complex Supply Chain
○ Raw Material Suppliers
○ Manufacturers
○ Intermediaries
○ Sellers
○ Consumers

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Supply Chain Issues
● Lack of trust

● All members want autonomy of operations

● All members maintain their own ledger

● Non uniformity across ledgers

● Hard to synchronise data with multiple organisations

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Supply Chain Issues

DB1 DB2 DB3 DB4

Manufacturer Storage Transportation Distributor

Consumer Complaint
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Applying Blockchain

DB DB DB DB

Manufacturer Storage Transportation Distributor

Consumer Complaint
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Asset and Information
● Asset: Johnnie Walker Bottle
● Attributes:
○ ID (Unique)
○ Description
○ Volume/Weight
○ Location of Creation
○ Date of Creation
○ Path
○ Sold
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Functionalities
● Functions:
○ Create_Bottle (Bottle_ID, attributes)
○ Transfer_Bottle (ID, transfer_to_ID)
○ Report_Damaged (ID)
○ Sell_Bottle (ID)

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Access Control

Manufacturer Intermediary Seller

● Create_Bottle ● Transfer_Bottle ● Report_Damaged

● Transfer_Bottle ● Report_Damaged ● Sell_Bottle

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Added Flexibility
● Regulatory Authorities
○ Sign Paperwork to confirm item meet quality requirements

● Export/Import
○ Authorize that appropriate permissions are present

● Constraint Compliance
○ Constraint requirements can also be met through smart contract
○ Eg: At time of transfer, item should be lower than X temperature

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