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Session objectives and takeaways

Microsoft Scenarios Blockchain+

Scenarios where it can advance transformational

change

IoT

AI

Robotics

Strategy

Azure BaaS

Blockchain 3.0

EEA

Open Infrastructure, Enterprise Capabilities

Blockchain has some missing parts…

Existing SystemsIdentity

Privacy

Operations

&

Management

Better Tools

Security

In Depth

Key

Management

Data Services Solutions

5

Execution on strategy in 3 steps to develop most compelling

Blockchain offering

POCs

HealthcareRetail & CPG GovernmentDiscrete

ManufacturingBanking,

Capital

Markets

Azure – Blockchain resource provider

Horizontal SaaS & Adapters

3rd

Part

y

3rd

Party

3rd party

DL stack A1st party DL Stack

1st Party3rd

Party

Blockchain Virtual Machine Adapters

Smart Contract-Based Distributed Ledger Stacks UTXO + others

Mid

dle

ware

Base

Pla

tfo

rm

3rd party DL

stack C…

…..

Ind

ust

ry S

olu

tio

ns

Crypto services & architecture (secure containers, attestation, etc.)

Professional Services & Support

Identity & Key

Services

Encryption

Services

ML & BI

Services

Distributed

Ledger Gateway

Services

3rd party

DL stack B

Optimize Operations & Transform Products

Microsoft Services

Snapshot Microsoft partner ecosystem

Many Flavors

7

R3 - Corda

Enterprise Ethereum

Hyperledger

Chain Core

Ripple

Waves

Azure & Azure Stack

Process Reengineering for Blockchain

Model the Current State

Identify Participants and Role(s)

Document the Workflow

Understand Data and Systems

Review User Experience(s)

Capture Compliance Requirements

Model the Future State

Re-evaluate Participants and Role(s)

Re-define the Workflow

Integrate with Data and Systems

Revisit User Experience(s) Approach

Build a Minimal Viable Product

Capture the Benefits

Time Saved

Costs and ROI

Compliance Overhead

Measure Satisfaction

Anchor the change

Cultural Impact

Change Management

Build on the Change

97% of Blockchain Startups are ‘Chainwashing’ – R3’s

“By asking these types of questions our team has helped

filter the 400 or so companies/projects into a much more

manageable dozen,”

99% of Blockchain Startups

Are Bullshit

http://bitcoinist.com/chainwashing-r3-swanson-blockchain-hype/

https://convergence.vc/99-of-blockchain-startups-are-bullshit-4cf11a549895

When I say 99% it is meant figuratively, but actually if 90%

of everyday startups fail in their first 3 years, 99% in

blockchain may very well be close

Standby Letter of Credit

11

Trade Finance – Standby Letter of Credit (SBLC)

Current State

MicrosoftTreasury

Agrees to Buy

Requests SBLC

Provides SBLC Terms

Accept Terms and Provide Issuing Bank Details

Validates and Approves Issuing Bank

Submits ApplicationSends SBLC

Sends SBLC

Reviews SBLC for Treasury

Processing

Tracks security to expiration date so long as customer maintains payment schedule. If customer defaults, pursues claim with Advising Bank.

Initial Contract Negotiation

Initial Contract Negotiation

Inform Advising Bank in case of Customer default

Amendment Negotiation

Amendment Negotiation Forwards

Amendments

Resends SBLC

Reviews SBLC Again for Treasury

Processing

Applicant Beneficiary

Issuer Advisor

Operational Inefficiencies

Working capital/

balance sheet

implications

Lack of visibility, not

knowing holistic

exposures

12

Digital Transformation

People – All four parties involved would need similar IT skill competencies to build and operate a digital system

Process – Transformation would relocate the pain from manual entry to reconciliation whenever one counterparty updates

Technology – All counterparties would require compatible technology stacks and then allow access into their networks

Corporate

Web

server

Web

ServerDatabase serverDatabase

ServerEnterpriseDatacenter

DeviceCorporate

Network Application serverApplication

Server

Issuing Bank

Web

server

Web

ServerDatabase serverDatabase

ServerEnterpriseDatacenter

DeviceCorporate

Network Application serverApplication

Server

Advising Bank

Web

server

Web

ServerDatabase serverDatabase

ServerEnterpriseDatacenter

DeviceCorporate

Network Application serverApplication

Server

• Counterparty IT staffs have to maintain

network connections and provide operational

cybersecurity

• SBLC latency is reduced moving from paper

to digital but still exists due to counterparty

synchronization

• Which counterparty maintains the

authoritative system of record?

• The underlying databases are still subject to

data entry errors

Opportunities for “standard” digital transformation

But…

13

Blockchain-enabled digital transformation is different

Distributed system with distributed ledger

Secure

Authenticated counterparties digitally sign SBLC requests,

updates and claims.

Shared

Applicants and beneficiaries collaborate in near real-time using

standardized templates.

Distributed

Each member of the network can use the blockchain to validate

the other counterparties.

Authoritative

Each immutable SBLC entry is written once thereby increasing

visibility and auditability while reducing error rates.

With blockchain, it’s possible to create new, more efficient processes

14

SBLC Flow with Blockchain

Smart Contract Update

1. Applicant agrees to transact with Beneficiary via SBLC

2. Applicant submits SBLC request to the ledger

3. Applicant bank issues SBLC

Applicant Issuer Advisor Beneficiary

5. SBLC activated with expiration date; transaction complete

3. Beneficiary bank reviews and advises SBLC

SBLC Process:

Ledger Process:Smart Contract Update

Smart Contract Update

Issuance time from weeks to hours

Increased sales and

speed of delivered

services

Transparency across

all participants

Types of Blockchain networks

Consortium

Woodgrove

Financial

Contoso

Bank

Northwind

Traders

Bank b

Insurance c

Investment

consortium

c

Bank A

Blockchain

Location 1

Location 2

Location 3

Location 4

Department

A

Department

B

Public

blockchain

Person a

Woodgrove

Financial

Person B

Northwind

TradersBank 6

Bank 1

Consortium

6

Public ConsortiumPrivate

• Many, unknown participants

• Writes by all participants

• Reads by all participants

• Consensus by Proof of Work

• Known participants from one org

• Write permissions centralized

• Reads may be public or restricted

• Multiple algorithms for consensus

• Known participants from multiple orgs

• Writes require consensus of n participants

• Reads may be public or restricted

• Multiple algorithms for consensus

o Superset of public chain Ethereum

o Addresses enterprise needs

• Confidentiality, scalability, permissioning

o Real –world compatibility is key measure of success

o Not a specific product -> focus on specs

o Dogfooding governance on blockchain

Enterprise Ethereum Alliance

Enterprise Ethereum Protocol Stack

Quorum

20

Blockchain evolving from simple ledgers, to cryptlets that fetch trusted

and agreed-upon external data needed to execute Smart Contracts

Smart Contracts are unable to access external data or events based on time or market conditions. Calling code or

data outside of a Smart Contract or blockchain breaks the general trust barrier and authenticity of transactions.

Cryptlets will allow the blockchain to access external data securely, while maintaining the integrity of the blockchain.

Microsoft Innovation

Strategy + Roadmap

Introducing Cryptlets – Secure Distributed Middleware

Blockchain ledger

A bank, hedge fund and insurance company enter into a

SmartContract

Everyday at 4 PM GMT it needs a calculated rate like:

(LIBOR * .04%) + Diff(Gold)

Cryptlet Fabric - Update

Smart Contract Package

Properties LogicLedger

Cryptlet

Trust Binding

Cryptlet Fabric - Update

AzureKey Vault

Cryptlet Fabric

We’ve delivered an open, broad, and flexible cloud across the stack

Applications Management Clients

Web App Gallery

Dozens of .NET & PHP CMS and Web apps

Infrastructure Databases App Frameworks

SQL Server

+Hundreds of community supported images on VM Depot

Azure BaaS

Hyper Scale

Enterprise Grade

Hybrid

Microsoft Azure | An Open Cloud

27

IDChain - удаленная идентификация

https://github.com/RosEvroBank/IDChain

What’s Next?

https://convergence.vc/99-of-blockchain-startups-are-bullshit-4cf11a549895

Platform Services

Infrastructure Services

WebApps

MobileApps

API Apps

Notification Hubs

Hybrid

Cloud

Backup

StorSimple

Azure SiteRecovery

Import/Export

SQL Database DocumentDB

Redis Cache

AzureSearch

StorageTables

SQL DataWarehouse

Azure AD Health Monitoring

AD PrivilegedIdentity Management

OperationalAnalytics

Cloud Services

BatchRemoteApp

ServiceFabric

Visual Studio

ApplicationInsights

VS Team Services

Domain Services

HDInsight MachineLearning Stream Analytics

Data Factory

EventHubs

Data LakeAnalytics Service

IoT Hub

Data Catalog

Security & Management

Azure ActiveDirectory

Multi-FactorAuthentication

Automation

Portal

Key Vault

Store/Marketplace

VM Image Gallery& VM Depot

Azure ADB2C

Scheduler

Xamarin

HockeyApp

Power BI Embedded

SQL Server Stretch Database

MobileEngagement

FunctionsCognitive Services Bot Framework Cortana

Security Center

Container Service

VM Scale Sets

Data Lake Store

BizTalkServices

Service Bus

Logic Apps

API Management

Content DeliveryNetwork

Media Services

Media Analytics

Blockchain ArchitectureBlockchain data source Data Ingest Analysis Publish Visualize

Azure

REST

API

Azure ML

Scoring the transactions

Azure Blockchain Service

Azure Event Hubs

Stream Analytics

Stream Analytics

Blockchain

Transactions

Blockchain Transactions Stored as events into Azure Data Lake

Live Dashboards

Current State | POC Framework

Provide Off-Chain Data

& Advanced Analytics

• Off chain data support

• Document support

• Data Lake support

• Reduce friction for staff with

SQL, ML, Reporting skills to

use chain data

• Reduced friction for chat

bots, holographic

Adaptability, Extensibility,

and Composability

• Chain “bake offs”

• Multi-chain PoCs

• Multi-contract scenarios

• Advanced contract pattern

support

• Flexibility to swap out storage,

DB, DLTs

• Support for other Azure

platform services

Enable Enterprise Identity

and Key Management

• Enterprise identity

integration in a

consortium context

• Multi-factor

authentication support

• Key management

• User, contract names in

UX vs. addresses

Dramatically reduce PoC

time, cost, and risk

• Address customer pain

point of 8-12 week PoCs

that cost upwards of

$300K

• Library of contracts and

templates for scenarios

Mutual Pet Insurance at Azure Ethereum Blockchain Consortium

Get up to an 80% refund of the cost of veterinary services

Pet identification based on the photo

Pet owner facial scoring

«Live» smart contract LexiCard

Just started

100+

signed contracts

Microsoft Platforms &

tools: Azure Blockchain as

a Service, Microsoft Bot

Framework, Cognitive

Services

Hackathon award

Blockchain DevCon

Microsoft 2016

Currently in Russia

Plans to start also in

EU and US

Pet owner scoring

Microsoft ML

Pet identificationMicrosoft Cognitive

38

SIGN UP FOR AN AZURE ACCOUNT

• https://azure.microsoft.com/en-us/solutions/blockchain/

SETUP BLOCKCHAIN NETWORK ON AZURE

• Create your custom private/consortium network

https://azure.microsoft.com/en-us/documentation/templates/

DEPLOY DEV/TEST BLOCKCHAIN ENVIRONMENT TO LEARN

• Marketplace Offerings: https://azure.microsoft.com/en-

us/marketplace/?term=blockchain

• Azure Quickstart Templates:

https://github.com/Azure/azure-quickstart-templates

How do you

get started?

START BUILDING OUT SCENARIOS AND APPS

Develop your own Smart Contracts and Dapps using Visual

Studio Solidity Extension:

https://visualstudiogallery.msdn.microsoft.com/96221853-33c4-

4531-bdd5-d2ea5acc4799/

CONNECT WITH BLOCKCHAIN ENGINEERING TEAM

• Join Blockchain Azure Advisors group on Yammer:

http://aka.ms/AzureAdvisors