GDPR and distributed ledger: so who owns the data? Problems of existing commercial activity registers. Federated DLT systems

Let's see which of the large corporations, non-profit organizations and governments are using blockchain to solve their problems, and in the comments we will discuss which of the presented cases should be applied in Russian realities.

Many corporations still work with piles of paper and even handwritten documents, transmitting them to colleagues via fax, as well as with multiple databases scattered across different countries and continents. Such complex designs no longer suits business, and corporate giants are beginning to seek salvation in decentralized systems.

(By the way, the LANIT group has just created a competence center for the formation of new business models based on blockchain technologies, distributed registries and digital platforms - DTG (Digital Transformation Group), of which I am the head.)

So, here is the translation of the cases that I promised you.

The bank's management also noted that it was considering the issue of accounting for crypto assets. The company's chief executive Lloyd Blankfein mentioned this on Twitter: “Still thinking about #bitcoin. I haven’t come to any conclusions yet – neither for nor against. I remember that once upon a time people were already very skeptical - when gold coins began to be replaced with paper money.”

3. Mining giant BHP Billiton implements blockchain for contract management and analytics

BHP uses contractors in the mining process, contracting with geologists and courier companies on different continents to collect samples and carry out analysis.
BHP will insist that their contractors use an Ethereum-based system and host internal documents on the IPFS system. This is a peer-to-peer distributed file system, often used in blockchain implementations.

4. Maersk teams up with IBM for a joint project

Global suppliers are seriously suffering from the abundance of paper documents. In the case of perishable goods, loss or delay in transit of documentation can lead to serious losses. Blockchain integration could have a significant impact on the efficiency of global trade, given that 90% of goods on the global market are transported by maritime logistics companies.

In September, Maersk also entered into a partnership agreement with blockchain startup GuardTime, which launched a maritime insurance blockchain platform together with Microsoft and with the participation of insurance companies ACORD, Willis Towers Watson, MS Amlin and XL Catlin.

5. UPS, FedEx And BNSF Railway Join The BITA Community

The goal of the commonwealth is to unite companies involved in freight transportation and develop uniform standards in the process of testing blockchain applications.

6. Petroteq creates a distributed ledger for Pemex (for reference, this is the first oil company to accept cryptocurrency)

We know Pemex as the first oil company to accept cryptocurrency as payment. The company employs 100,000 people and has an extensive network of suppliers and business contracts.

Petroteq, PetroBLOQ's blockchain-based enterprise platform, will enable oil and gas companies to conduct global operations.

7.

Using a system created on the basis of the Ethereum blockchain platform, banks participating in the project will be able to anonymously exchange Legal Entity Identifier data.

Participating banks will be able to check their data using legal entities and quickly adopt new rules.

Banks have also experimented with blockchain, seeing it as a way to streamline back office work, which could free up up to $20 billion, according to estimates.

8. Manufacturers and sellers of products Walmart, Tyson, Unilever, Nestle, Kroger, Dole, McCormick and others are uniting for a pilot blockchain project

Walmart has been working with IBM since 2016, and through this partnership, it has been able to reduce the tracking time for mango shipments from 7 days to 2.2 seconds.

Thanks to the addition of 9 more large food suppliers, the level of safety in this area (where such cooperation is very rare) can significantly increase.

Howard Popoola, Kroger's head of food safety, told Reuters: "This is an opportunity for us to express a common message and show the world that food safety will not be the basis for competition."

9. The UN is exploring the possibilities of DLT (Distributed Ledger Technology) and blockchain for organizing humanitarian aid and climate research

Distributed ledgers will help decouple climate data from political issues. Last year, many U.S. scientists became concerned that federal research libraries could be closed and their databases altered or deleted as the new head of the EPA took office. environment USA).

The UN was already developing a project based on the Ethereum blockchain platform to send humanitarian aid to Syrian refugees. The World Food Program has used blockchain to monitor Ethereum-based food vouchers that can be traded in markets.

10. TEPCO has entered into a partnership with Electron

Electron is poised to become the data provider from which energy suppliers can obtain asset information and record transactional changes. Its services can also be applied to utilities such as telecommunications and water supply.

11. Illinois government tests distributed ledgers for licensing

The project's goal is to digitize medical credentials and use smart contracts to automate the licensing workflow in the state of Illinois.

12. The Brazilian government is experimenting with uPort

Built on Ethereum, the platform allows users to edit their own profiles, and the Ministry will verify the legitimacy of uploaded personal documents.

13. Evernym works with the Illinois Department of Security

* * * * * * * * *

On current moment Even the world's giants are just starting to work on blockchain projects. Many cases are just testing ideas and the first step towards the formation of new business models. It is most interesting to observe the emergence of digital ecosystem operators (see case No. 4), who are able to increase the efficiency of interaction between participants within a large distributed business process. Blockchain is becoming the technological basis of such ecosystems.

At the same time, we see that blockchain can be used not only for financial organizations. Logistics, retail chains, healthcare, oil production and energy... I think in a year the list of industries will expand significantly.

The opinion of Habr readers is interesting - do you think that Russian companies will soon show interest in solving similar problems using blockchain and distributed registries? Which of the described cases, in your opinion, are applicable to Russian realities? Are our companies ready to understand the philosophy of shared benefits from working in ecosystems?

P.S. By the way, why are 19 corporations mentioned in the title of the article? We were surprised ourselves, but still decided not to change the name. Maybe you have the answer?

Technology distributed registry: Beyond blockchain. Report of the UK Government's Chief Scientific Adviser.

Preface

Human progress is characterized by the growth of new technologies and the human ingenuity that discovers them.

With distributed ledger technology, we may be witnessing one of those potential explosions of creativity that allows for extraordinary heights of innovation. It may be that this technology can provide new level trust in a wide range of services. Just as the open data policy, as we have already seen, has radically changed the relationship between citizens and the state, so the transparency of these technologies can change our lives for the better. financial markets, supply channels, customer and b2b services, and public registers.

We know that we will be challenged as Distributed Ledgers evolve and disrupt our understanding of data and how we store it. The UK is uniquely positioned to explore these phenomena and enable our public services and our economy to make the most of this technology. We already have world-class digital capabilities, innovative financial services, a strong research community and growing private sector expertise.

It is vital that our key assets - including the Alan Turing Institute, the Open Data Institute and research center Digital Catapult – worked together with the private sector and international partners to unlock the full potential of this technology.

Therefore, we both take great joy in working together in leadership positions in this area and look forward to working with other agencies to develop these opportunities. And also, work on understanding how it can be applied this technology so that UK citizens and its economy can benefit significantly.

Introduction

The algorithms that enable distributed ledgers are powerful, disruptive innovations that have the potential to change the way public and private services are delivered, as well as increase productivity through a wide range of applications.

Registers have been at the heart of business since ancient times and were used to record information about many things, but mainly about assets such as money or property. At first, clay tablets were used for recording, then papyrus, parchment and paper. However, during all this time the only notable innovation was the introduction computer equipment, which was initially used simply to transfer information from paper into digital code. For the first time, algorithms are making it possible to co-create digital distributed ledgers that have properties and capabilities that go far beyond traditional paper ledgers.

A distributed ledger is essentially a database of assets that can be distributed across a network of diverse sites, geographic areas, or organizations. All network participants can have their own, identical copy of the ledger. Any changes to the registry are reflected in all copies within a few minutes, and in some cases, seconds. The assets in the registry can be financial, legal, physical or electronic. The security and reliability of the assets stored in the registry is carried out cryptographically using “keys” and signatures that control who can perform what actions in the register. general register. Registry entries can also be modified by one, a few, or all participants in the network, depending on the rules of the network.

This technology is based on the “blockchain,” a technology invented to create the peer-to-peer (decentralized) digital currency Bitcoin in 2008. Blockchain algorithms allow Bitcoin transactions to be combined into “blocks” and added to the “chain” of existing blocks using a cryptographic signature. The Bitcoin ledger is designed to be distributed and “unchecked,” meaning anyone can add a block of transactions as long as they can piece together the cryptographic puzzle to add each new block. The incentive for this is a reward in the form of twenty-five bitcoins for each “block” that completes the puzzle. Anyone with internet access and the computing power to complete the cryptographic puzzle can add blocks to the ledger. Such people are called “Bitcoin miners” (from the English “mine” to mine). The analogy with “mining” is quite appropriate, since the process of “mining” Bitcoins is energy-intensive, since it requires large computing power. It has been calculated that generating Bitcoin requires over 1 Gigawatt of power, which could be comparable to Ireland's electricity use.

Bitcoin is the electronic equivalent of cash. The authenticity of cash is verified by its appearance and certain characteristics, in the case of banknotes this is serial numbers and other means of protection. But in the case of cash, there is no ledger to record the transactions and there is also the problem of counterfeiting of both coins and banknotes. In the case of bitcoins, a transaction ledger guarantees their authenticity. Both money and bitcoins must be stored in a safe place, in a real or virtual wallet respectively - and if they are not properly monitored, then both money and bitcoins can be stolen. The fundamental difference between conventional currencies and Bitcoins is that the former are issued by central banks, while the latter are issued in agreed quantities by the global “collaborative” effort that is Bitcoin technology. Cash as a method of exchange and trade dates back thousands of years and its origins include cowrie shells, minted coins and now Bitcoin.

But this report is not about Bitcoin. It's about the algorithmic technologies that make Bitcoin possible, and their potential to transform ledgers as tools capable of recording, producing, and securing huge amount transactions. So the basic approach of the blockchain can be modified to combine rules, smart contracts (also the term “ smart contracts”), digital signatures and a number of other new tools.

Distributed ledger technologies can help government agencies collect taxes, pay pensions, issue passports, enter land registry records, guarantee supply chains for goods, and generally ensure the accuracy of property records. government activities and services. In the UK's National Health Service, these technologies provide the opportunity to improve healthcare by improving and validating the quality of services and securely sharing records according to strict regulations. Depending on the circumstances, technology makes it possible to to individual recipients services to control access to personal data and find out who used it.

Existing methods for managing data, especially personal data, typically use large, traditional IT systems located within a single institution. Added to these are a number of network management systems and messaging systems for communication with the outside world, which increase the cost of using the IT system and its complexity. Highly centralized systems exhibit high costs of any failure. They can be vulnerable to cyber attacks, and the data is often out of sync, out of date, or simply incorrect.

In contrast, distributed ledgers are inherently much more secure from attacks because instead of a single database, they are multiple copies of the same database, and thus, to be successful, a cyber attack must be carried out on all copies simultaneously. The technology is also resistant to unauthorized modification or hacking, since network participants will immediately detect changes in one of the parts of the registry. In addition to this, the methods used to protect and update information mean that participants can share data and be confident that all copies of the ledger match each other at any given time.

But this does not mean that distributed ledgers are completely immune to cyber attacks, because if someone can find a way to “legally” change one copy, then they will change all copies of the ledger. Thus ensuring the security of distributed registries important task and part common problem ensuring the security of the digital infrastructure on which modern society depends.

Governments of some countries are already beginning to use distributed ledger technologies in their work. For example, the Estonian government has been experimenting with distributed ledger technology for several years, using one implementation of the technology known as KSI (Keyless Signature Infrastructure), developed by the Estonian company Guardtime.

KSI allows citizens to verify the accuracy of their records in government databases. It also seems impossible for insiders with privileged access to work with data within a government network to carry out illegal activities. The ability to assure citizens that their data is correct and stored securely has enabled Estonia to launch electronic services such as the e-Business Register and e-Tax. These services have reduced the administrative burden on the state and citizens. Estonia is one of the “Digital 5” or D5 group of countries, which also includes the UK, Israel, New Zealand and South Korea. There is an opportunity for the UK to work with these and other like-minded states and learn from them how to implement blockchain and related technologies.

The business community quickly appreciated the opportunities that opened up. Distributed ledgers can provide new ways to secure ownership and confirm the origin of goods or intellectual property. For example, Everledger provides a distributed ledger that guarantees the authenticity of diamonds from mining and cutting to sales and insurance. On the market with relatively high level document forgery, this technology makes authentication more efficient and makes it possible to reduce the number of fraud cases and prevent the entry of “blood diamonds” into the market.

The big challenge is communicating with senior policymakers and the public about the importance of these new technologies - and this is one of the main objectives of this report.

The first difficulty in communication is the strong association of blockchain technology with the Bitcoin system. Bitcoin is a cryptocurrency, so named because cryptography underlies the generation and tracking of the currency. Bitcoin is viewed with suspicion by citizens and government officials because it is associated with criminal transactions and “dark web” trading sites such as the Silk Road Internet portal on at the moment not working. But digital cryptocurrencies are of interest to central banks and public financial institutions around the world, who are studying them with great interest. This is because the electronic distribution of digital currency provides high returns. And unlike physical currency, digital currency accompanied by a ledger of transactions, which is not the case with physical cash.

The second communication challenge is the confusing range of terminology. The terminology is explained by Simon Taylor, who has provided a list of definitions at the end of this review. One term that can confuse users is “distributed,” which leads to the misconception that if something is distributed, there is therefore no entity or owner who fully controls it. This may be true, or it may be different - it all depends on the chosen registry model. In practice, there is a wide range of distributed ledger models with varying degrees of centralization and various types access control to meet various business needs. These can be either “uncontrolled” registries, which allow data to be added to anyone and cannot belong to anyone; and “controlled” registries, which may have one or more owners, and only they can add entries to the registry and check its contents.

The key idea is that by fully understanding this technology, government and the private sector can choose a model that in the best possible way meets a specific purpose, balancing security and centralized control for convenience and the ability to share data between institutions and individuals.

As with most new technologies, it is difficult to fully assess all future uses and threats. And in the case of each new technology the question is not whether the technology itself is good or bad. The questions are: what uses can the technology have? for what purpose? and in what form can it be used and how does it guarantee safety?

To answer these questions, the UK Government Science Office has convened a group of experts from business, government and academics to assess the potential of distributed ledgers for use by government and the private sector, and to identify the actions that government and other stakeholders will need to take to facilitate the use of distributed ledger technology. registries to obtain benefits and avoid possible harm. The purpose of this was to decipher the terminology of this technology for a policy audience and provide government officials with its concept and basis for their decisions on where it should be applied and how best to introduce it.

To summarize, distributed ledger technology provides governments with a platform to reduce fraud, corruption, errors and the cost of paper-intensive processes. It has the potential to redefine the relationship between government and citizen on issues of data sharing, transparency and trust. It has similar opportunities for the private sector.

This brief overview describes eight key recommendations from our experience. They are presented in the form summary description key points from seven chapters that describe the concept, technology, public administration, privacy and security, disruptive potential, applications and global perspectives. The chapters were written by experts in distributed ledger technology in a language that should be accessible to people who are not experts. I am extremely grateful to these experts for their guidance and insightful contributions.

Mark Walport, Chief Scientific Adviser to Her Majesty's Government, December 2015

To view the study results in detail, you can download the study in PDF format below.

Blockchain technology is changing industries around the world. Blockchain is guiding organizations, governments, financial institutions and payment platforms into a new age digital technologies. It is radically changing everything around us, and despite this, many have no idea what blockchain is or how it works.

Today we will tell you the basic things you need to know about blockchain and blockchain technology.

What is blockchain?

Blockchain is an open, distributed ledger that can efficiently record transactions between two parties so that they can be continuously verified. Blockchain technology underlies other cryptocurrencies. Without blockchain, cryptocurrencies could not exist in the form in which they exist today.

Why is blockchain technology so important?

For a long time, a key role in our modern world played contracts, transactions and their registration. Our legal and political systems are based on treaties and transactions in virtually every major area.

Contracts, transactions, and records are used to preserve assets or establish departmental boundaries. They are used for identification and to chronicle events.

Every day, the world around us is governed by contracts and transactions. However, the way we record these contracts and transactions is outdated. These important tools have not kept pace with the digital revolution.
As one Harvard Business Review article puts it: “They are like a rush-hour traffic jam stuck in a winning Formula 1 car.” The same article states: “In the digital world, the way we regulate and maintain administrative controls must change.”

This is why there are so many companies wanting to implement blockchain technology in various activities; the potential benefits of this are enormous.

Blockchain could eliminate the need for lawyers, brokers and bankers

It’s worth thinking about the importance of blockchain from this perspective: a huge part of the world’s infrastructure is represented by various kinds of intermediary structures, or intermediaries.

We are not talking about those intermediaries who take part of the profit for the sale of goods and services. We mean lawyers who act as intermediaries between the people and the law, or bankers who act as intermediaries between individuals and their access to credit institutions. There is a possibility that in the future, as a result of the use of blockchain technology, lawyers, brokers and bankers may become unnecessary.

Instead of relying on intermediaries, blockchain technology will allow individuals, organizations, computers and algorithms to freely interact with each other.

We can already see this in the example of blockchain and . When two people want to transfer each other or another cryptocurrency, they don't have to go to the bank and pay a huge commission. They perform peer-to-peer transactions via the blockchain.

How does blockchain work?

Blockchain is a distributed ledger in which contracts and transactions are recorded using a digital code.
The digital code itself, as well as transaction records, are stored in a common transparent database. The database is decentralized, which means that it is managed by people (“nodes”) located in different countries peace. Such a decentralized system protects the blockchain from hacking, deletion and modification.

All actions we take using blockchain have a digital record. This means that every process, transaction, task, transfer of funds has its own digital record. Each record can also lead us to a specific person: it has a signature that can be identified, verified, stored and distributed. Ultimately, this allows organizations or individuals to conduct business more cost-effectively: with blockchain, we have a secure, verifiable, and permanent way to keep a record of transactions between two parties.

Could blockchain fail in its attempt to change the world?

There is currently a huge buzz around the world about blockchain. Blockchain startups are emerging every day. Many compare this to the Internet revolution of the early 90s, when companies were eager to harness the power of this amazing discovery.

This is not a fact yet.

Some call our attention to security issues outside of the blockchain - such as the infamous fall of Mt. Gox in 2014, as a result of which users lost 450 million US dollars. Others recall the history of technological innovation. To set the stage for most major technological changes, significant changes are required at the technological, governmental, organizational, and societal levels.

For such a significant change as the full implementation of blockchain technology, numerous modern institutions would have to be destroyed.

Here's how the Harvard Business Review explains it: "It would be a mistake to rush ahead with blockchain innovation without understanding how it can be managed."

The Technology Behind Blockchain

As we mentioned above, blockchain is a distributed digital ledger. It is an Internet-based peer-to-peer network.

Decentralization

One of key characteristics This technology is that it is a distributed database. It is decentralized. The database exists in many copies on many computers. All these copies are identical. Computers or nodes form a peer-to-peer network; this means that there is no single central database or server.

Nowadays, organizations have central databases, or servers, where all information is stored. This makes these servers an object hacker attacks. Blockchain decentralizes data and makes it publicly accessible but encrypted. Many people believe that this way the data becomes invulnerable. When a transaction occurs on the blockchain, data about this new transaction must be sent to all node computers on the network. This means that the blockchain is constantly synchronized over time as a “worldwide ledger.” Instead of multiple conflicting registries, we get a single “true” version.

Digital signatures

Another key feature of blockchain is that every blockchain transaction is digitally signed using a public crypto key.

A public crypto key involves the use of two keys: public and private. The shared key is used to sign and encrypt the sent message, and anyone can access this key. Only the recipient owns the private key, and only he can decrypt the transaction. Shared Keys are used not only to encrypt messages, but also to confirm identity.

Transaction blocks

Blockchain has this name because it is literally a chain made up of blocks.
Each block of the blockchain consists of a list of transactions. Each block also contains a header. The headers contain three types of metadata, including structured data about transactions within the block, a timestamp and proof-of-work algorithm data, and a reference to the parent block, or to the previous block, using a hash.

Using these three types of metadata, each block is linked to the others to form a blockchain.

Who invented blockchain? Who is this?

Blockchain technology was first introduced in an article entitled “: Peer-to-Peer Electronic monetary system", the author of which is . This article described the principles of blockchain technology. All blockchain innovations can be traced back to . He is the inventor of Bitcoin and blockchain.
Who is this? Nobody really knows this. Perhaps he is a Japanese lone wolf. Or perhaps it is a group of people. left the development and blockchain in April 2011, although he has not participated in the development since December 2010.

Here are a few things we know, or think we know, about the mysterious creator of the blockchain:

• When he introduced, Nakamoto stated that he was Japanese, born on April 5, 1975.
• However, many believe that the use of traditional Japanese name was just a screen; The focus of most personality research is on cryptography and computer science experts living outside Japan, mainly in the United States and Europe.
• Why don't people believe that Nakamoto is Japanese? One of the main reasons is that all of his online posts are written in perfect English; many believe he is English or Australian due to his use of British idioms (such as "bloody hard") in his forum posts.
• Another clue to Nakamoto's personality lies in the time imprints he left behind: Swiss developer Stefan Thomas analyzed all the posts left by Nakamoto on the forums and found that he did not post information at certain intervals throughout the entire period; Taking this into account, it was concluded that Nakamoto resides in the Eastern Time Zone, or the Central Time Zone; this narrowed the search to North America and parts of Central and South America(it is assumed that Nakamoto is one person with normal mode day).
• The first “breakthrough” in the field of personal identification occurred in 2015, when, during a parallel investigation, Wayard and Gismondo revealed that the inventor could be the Australian programmer Craig Steven Wright. In May 2016, Wright told the BBC that he was Satoshi Nakamoto; but since Wright did not provide evidence, most people believe that he was simply misleading everyone or trying to attract attention to himself. Others are firmly convinced that Wright is Satoshi.
• There are those who believe that this is a group of people that includes Nick Szabo, a “secret Hungarian-American” and a brilliant developer, Dorian Nakamoto, a Japanese living in California, given the name at birth, and Hal Finney, the first person who also worked on software. Interestingly, Hal Finney is Dorian Nakamoto's neighbor in California. Some believe that he was the one who wrote the forum posts for his neighbor, while others suspect that he used the neighbor's name to confuse his pursuers.
Satoshi is without a doubt the most anonymous billionaire in the world.

What will happen next?

We are just beginning to see the promise of blockchain technology. Innovations in the blockchain space are making this technology more and more attractive and applicable to various organizations outside of the crypto world. Financial institutions, political organizations, providers cloud storage and even online casinos have begun to use blockchain technologies. We have no idea where blockchain technology is headed next, but we can't wait to see it.

Get to know this brand new technology and IBM's contribution to its development. The entire global community is betting on how fundamentally blockchain technology will change the way organizations conduct their financial transactions. Let's look at how the blockchain network works, what makes it unique, and how IBM is helping to improve it. First, a little background.

Role of registries

In today's interconnected and globally networked world, economic activity occurs through commercial networks that blur national, geographic, and jurisdictional boundaries. As a rule, such networks are intertwined trading platforms, where manufacturers, consumers, suppliers, partners, active participants market or intermediaries, as well as other interested parties, own, manage, and exercise their rights and privileges over values ​​known as assets.

Assets can be tangible and physical, such as cars and houses, or intangible and virtual, such as stock certificates and patents. Taking ownership of assets and transferring them, known as a transaction, creates value for business networks.

As a rule, the participants in transactions are various buyers, sellers and intermediaries (for example, banks, auditors or notaries), commercial agreements and contracts between which are entered into various registers. In commercial activities, several registers are typically used to maintain records of assets owned and assets transferred by participants to each other in various types of activities. Registers are accounting systems economic activity and interests of enterprises.

Model register looks like this:

Problems of existing business registers

The registers used today in business activities are largely imperfect. They are ineffective, expensive, and their operation is opaque and susceptible to fraudulent manipulation and illegal actions. These problems are a consequence of the use of third-party centralized systems based on trust, such as financial, settlement and clearing organizations and other intermediaries of existing organizational structures.

Such centralized registry systems create a kind of interference and obstacles that extend the execution time of transactions. Their lack of transparency, as well as their susceptibility to corruption and fraud, has led to controversy. At the same time, their settlement, execution of reverse transactions and insurance of transactions are quite expensive both in terms of money and time - all these risks and uncertainties lead to missed business opportunities.

In addition, the unordered copies of the registries used in own systems each participant become the reason for making erroneous commercial decisions based on temporary unreliable data. In the best case, making a decision based on current information is postponed while different copies of the registers are brought into conformity.

What is blockchain?

Terms used in blockchain technology and their use cases

Blockchain is a tamper-proof digital ledger public use, which keeps records of transactions on a public or private peer-to-peer network. The registry, distributed among all network nodes, continuously records the history of transactions with assets between peer (same order) network nodes in the form of blocks of information.

All approved transaction blocks are connected into a chain - from the initial block to the last one added, hence the name of the technology - block chain. Thus, the blockchain acts as a single source of reliable data, and participants in the blockchain chain see only those transactions that relate specifically to them.

How does a blockchain network work?

Instead of turning to third parties, such as financial institutions, as intermediaries for transactions, blockchain network nodes use a special consensus protocol to agree on the contents of the registry, as well as cryptographic hashing algorithms and digital signatures to ensure the integrity of the transaction and transfer of its parameters.

The consensus mechanism ensures that distributed ledgers are exact copies, which reduces the risk of fraudulent transactions, since outside interference can occur in many places at the same time. Cryptographic hashing algorithms, such as the SHA256 computational algorithm, ensure that any change in transaction inputs, no matter how small, will result in a different hash value appearing in the calculation results, indicating that the transaction inputs are likely to be compromised. Digital signatures guarantee that transactions are carried out by legitimate senders (signed private keys), and not by attackers.

A decentralized peer-to-peer blockchain network makes it impossible for individual participants or groups of participants to control the underlying infrastructure or destabilize the entire system. All network participants are equal and connect to it using the same protocols. Participants can be individuals, government agencies, organizations or associations of all listed types of participants.

Essentially the system records chronological order conducting transactions with all network nodes that have recognized the validity of transactions through the selected consensus model. The result is irrevocable transactions agreed upon by all network participants in a decentralized manner.

In traditional commercial networks, all participants maintain their own duplicate ledgers, discrepancies between which lead to disputes, increase settlement times, and also require the involvement of intermediaries with all the associated costs. At the same time, the use of distributed registries based on blockchain technology, in which transactions cannot be changed after consensus is adopted and entered into the registry, can save entrepreneurs time and money, as well as reduce possible risks.

Blockchain technologies promise greater transparency of interaction between interested parties, improved automation, adaptation of registries to individual requirements, as well as a higher level of trust in record keeping. Blockchain consensus mechanisms have the advantage of a consolidated and organized data set, with less error and quasi-real reference data, and allowing participants to make changes to the descriptions of their assets.

Since no single participant has a central source of origin for the information contained in a distributed ledger, blockchain technologies increase trust and ensure integrity. information flow between participants.

The immutability of blockchain mechanisms leads to lower audit costs and increased transparency of regulatory compliance. And because contracts entered into on blockchain-based commercial networks are smart, automated, and final, businesses benefit from high speed execution, reduction of costs and risks, as well as timely settlements under contracts.

Benefits of blockchain for business

To figure out if blockchain is right for you, ask yourself the following questions:

1. Is a commercial transaction network used?
2. Is participant consensus required to confirm transactions?
3. Are auditing and source tracing mandatory?
4. Should the transaction record be immutable or tamper-proof?
5. Should the dispute resolution procedure be final?

If you answered yes to the first and at least one other of these questions, then in your case the use of blockchain technology will be beneficial. In order for the blockchain to become effective solution, network required. However, the network can be different types. This may be a network between organizations in the form of a value chain, or a network within one organization. Within an organization, a blockchain network can be used to distribute data between departments or, alternatively, to create an audit or corporate control network. In addition, the network can exist between by individuals, who, for example, need to store data, digital assets or contracts on the blockchain.

Introducing the Linux Foundation's Hyperledger Project

Requirements for companies to use blockchain

We believe that blockchain is a truly revolutionary technology that has the potential to transform commercial networks. We also believe that this technology should be developed in open access with the participation of other technology companies and industries. That's why IBM continues to provide Hyperledger Fabric code.

From IBM's point of view, industrial blockchain technologies have the following characteristics:

• The controlled and shared ledger is a strictly applied system of record (SOR) and the only source of true data. It is visible to all participants in the commercial network;
• a consensus protocol agreed upon by all participants in the commercial network ensures that the ledger is updated exclusively through transactions confirmed by the network;
• cryptography provides protection against unauthorized access, authentication and integrity of transactions;
• Smart contracts contain the terms of the participants' agreements regarding the business activities that occur on the network. They are stored in the matching node of the blockchain and are activated as a result of transactions.

In addition to this, industrial blockchain technology must meet key industry requirements such as performance, person identification, private and confidential transactions. The Hyperledger Fabric architecture was designed to meet these needs. It is also designed using a pluggable consensus model, allowing enterprises to choose the optimal algorithm for their network.

Where to start?

IBM offers flexible platforms and secure infrastructure to help you develop, deploy and manage blockchain networks. Learn more about blockchain solutions

Distributed ledger technology: beyond blockchain. Report of the UK Government's Chief Scientific Adviser.

Preface

Human progress is characterized by the growth of new technologies and the human ingenuity that discovers them.

With distributed ledger technology, we may be witnessing one of those potential explosions of creativity that allows for extraordinary heights of innovation. This technology may prove to be able to provide a new level of trust to a wide range of services. Just as the open data policy, as we have already seen, has radically changed the relationship between citizens and the state, so the transparency of these technologies can change for the better our financial markets, supply chains, client and b2b services, and public registers.

We know that we will be challenged as Distributed Ledgers evolve and disrupt our understanding of data and how we store it. The UK is uniquely positioned to explore these phenomena and enable our public services and our economy to make the most of this technology. We already have world-class digital capabilities, innovative financial services, a strong research community and growing private sector expertise.

It is vital that our key assets - including the Alan Turing Institute, the Open Data Institute and the Digital Catapult think tank - work together with the private sector and international partners to unlock the full potential of this technology.

Therefore, we both take great joy in working together in leadership positions in this area and look forward to working with other agencies to develop these opportunities. And also work to understand how this technology can be applied so that UK citizens and its economy can benefit greatly from it.

Introduction

The algorithms that enable distributed ledgers are powerful, disruptive innovations that have the potential to change the way public and private services are delivered, as well as increase productivity through a wide range of applications.

Registers have been at the heart of business since ancient times and were used to record information about many things, but mainly about assets such as money or property. At first, clay tablets were used for recording, then papyrus, parchment and paper. However, during all this time, the only noteworthy innovation was the introduction of computer technology, which at first was used simply to transfer information from paper to digital code. For the first time, algorithms are making it possible to co-create digital distributed ledgers that have properties and capabilities that go far beyond traditional paper ledgers.

A distributed ledger is essentially a database of assets that can be distributed across a network of diverse sites, geographic areas, or organizations. All network participants can have their own, identical copy of the ledger. Any changes to the registry are reflected in all copies within a few minutes, and in some cases, seconds. The assets in the registry can be financial, legal, physical or electronic. The security and reliability of the assets stored in the registry is carried out cryptographically using “keys” and signatures that control who can perform what actions in the general registry. Registry entries can also be modified by one, a few, or all participants in the network, depending on the rules of the network.

This technology is based on the “blockchain,” a technology invented to create the peer-to-peer (decentralized) digital currency Bitcoin in 2008. Blockchain algorithms allow Bitcoin transactions to be combined into “blocks” and added to the “chain” of existing blocks using a cryptographic signature. The Bitcoin ledger is designed to be distributed and “unchecked,” meaning anyone can add a block of transactions as long as they can piece together the cryptographic puzzle to add each new block. The incentive for this is a reward in the form of twenty-five bitcoins for each “block” that completes the puzzle. Anyone with internet access and the computing power to complete the cryptographic puzzle can add blocks to the ledger. Such people are called “Bitcoin miners” (from the English “mine” to mine). The analogy with “mining” is quite appropriate, since the process of “mining” Bitcoins is energy-intensive, since it requires large computing power. It has been calculated that generating Bitcoin requires over 1 Gigawatt of power, which could be comparable to Ireland's electricity use.

Bitcoin is the electronic equivalent of cash. The authenticity of cash is verified by its appearance and certain features, in the case of banknotes these are serial numbers and other security features. But in the case of cash, there is no ledger to record the transactions and there is also the problem of counterfeiting of both coins and banknotes. In the case of bitcoins, a transaction ledger guarantees their authenticity. Both money and bitcoins must be stored in a safe place, in a real or virtual wallet respectively - and if they are not properly monitored, then both money and bitcoins can be stolen. The fundamental difference between conventional currencies and Bitcoins is that the former are issued by central banks, while the latter are issued in agreed quantities by the global “collaborative” effort that is Bitcoin technology. Cash as a method of exchange and trade dates back thousands of years and its origins include cowrie shells, minted coins and now Bitcoin.

But this report is not about Bitcoin. It's about the algorithmic technologies that make Bitcoin possible, and their potential to transform ledgers as tools capable of recording, processing, and securing huge numbers of transactions. So the basic blockchain approach can be changed to combine rules, smart contracts (the term “smart contracts” is also used), digital signatures and a number of other new tools.

Distributed ledger technologies can help government agencies collect taxes, pay pensions, issue passports, enter land registry records, guarantee supply chains for goods, and generally ensure the accuracy of records of government activities and services. In the UK's National Health Service, these technologies provide the opportunity to improve healthcare by improving and validating the quality of services and securely sharing records according to strict regulations. Depending on the circumstances, technology can enable individual service recipients to control access to personal data and discover who has used it.

Existing methods for managing data, especially personal data, typically use large, traditional IT systems located within a single institution. Added to these are a number of network management systems and messaging systems for communication with the outside world, which increase the cost of using the IT system and its complexity. Highly centralized systems exhibit high costs of any failure. They can be vulnerable to cyber attacks, and the data is often out of sync, out of date, or simply incorrect.

In contrast, distributed ledgers are inherently much more secure from attacks because instead of a single database, they are multiple copies of the same database, and thus, to be successful, a cyber attack must be carried out on all copies simultaneously. The technology is also resistant to unauthorized modification or hacking, since network participants will immediately detect changes in one of the parts of the registry. In addition to this, the methods used to protect and update information mean that participants can share data and be confident that all copies of the ledger match each other at any given time.

But this does not mean that distributed ledgers are completely immune to cyber attacks, because if someone can find a way to “legally” change one copy, then they will change all copies of the ledger. Thus, ensuring the security of distributed registries is an important task and part of the general problem of ensuring the security of the digital infrastructure on which modern society depends.

Governments of some countries are already beginning to use distributed ledger technologies in their work. For example, the Estonian government has been experimenting with distributed ledger technology for several years, using one implementation of the technology known as KSI (Keyless Signature Infrastructure), developed by the Estonian company Guardtime.

KSI allows citizens to verify the accuracy of their records in government databases. It also seems impossible for insiders with privileged access to work with data within a government network to carry out illegal activities. The ability to assure citizens that their data is correct and stored securely has enabled Estonia to launch electronic services such as the e-Business Register and e-Tax. These services have reduced the administrative burden on the state and citizens. Estonia is one of the “Digital 5” or D5 group of countries, which also includes the UK, Israel, New Zealand and South Korea. There is an opportunity for the UK to work with these and other like-minded states and learn from them how to implement blockchain and related technologies.

The business community quickly appreciated the opportunities that opened up. Distributed ledgers can provide new ways to secure ownership and confirm the origin of goods or intellectual property. For example, Everledger provides a distributed ledger that guarantees the authenticity of diamonds from mining and cutting to sales and insurance. In a market with relatively high levels of document forgery, this technology makes authentication more efficient and has the potential to reduce fraud and prevent blood diamonds from entering the market.

The big challenge is communicating with senior policymakers and the public about the importance of these new technologies - and this is one of the main objectives of this report.

The first difficulty in communication is the strong association of blockchain technology with the Bitcoin system. Bitcoin is a cryptocurrency, so named because cryptography underlies the generation and tracking of the currency. Bitcoin is viewed with suspicion by citizens and government officials because it is associated with criminal transactions and “dark web” trading sites, such as the currently defunct Silk Road Internet portal. But digital cryptocurrencies are of interest to central banks and government financial institutions around the world, who are studying them with great interest. This is because the electronic distribution of digital currency provides high returns. And unlike physical currency, digital currency comes with a ledger of transactions that physical cash does not have.

The second communication challenge is the confusing range of terminology. The terminology is explained by Simon Taylor, who has provided a list of definitions at the end of this review. One term that can confuse users is “distributed,” which leads to the misconception that if something is distributed, there is therefore no entity or owner who fully controls it. This may be true, or it may be different - it all depends on the chosen registry model. In practice, there is a wide range of distributed ledger models with varying degrees of centralization and different types of access controls to meet different business needs. These can be either “uncontrolled” registries, which allow data to be added to anyone and cannot belong to anyone; and “controlled” registries, which may have one or more owners, and only they can add entries to the registry and check its contents.

The key idea is that by fully understanding this technology, government and the private sector can choose the model that best suits a given purpose, balancing security and centralized control for convenience and the ability to share data between agencies and individuals.

As with most new technologies, it is difficult to fully assess all future uses and threats. And with every new technology, the question is not whether the technology itself is good or bad. The questions are: what uses can the technology have? for what purpose? and in what form can it be used and how does it guarantee safety?

To answer these questions, the UK Government Science Office has convened a group of experts from business, government and academics to assess the potential of distributed ledgers for use by government and the private sector, and to identify the actions that government and other stakeholders will need to take to facilitate the use of distributed ledger technology. registries to obtain benefits and avoid possible harm. The purpose of this was to decipher the terminology of this technology for a policy audience and provide government officials with its concept and basis for their decisions on where it should be applied and how best to introduce it.

To summarize, distributed ledger technology provides governments with a platform to reduce fraud, corruption, errors and the cost of paper-intensive processes. It has the potential to redefine the relationship between government and citizen on issues of data sharing, transparency and trust. It has similar opportunities for the private sector.

This brief overview describes eight key recommendations from our experience. They are presented as a summary of key points across seven chapters that cover concept, technology, governance, privacy and security, disruptive potential, applications, and global perspectives. The chapters were written by experts in distributed ledger technology in a language that should be accessible to people who are not experts. I am extremely grateful to these experts for their guidance and insightful contributions.

Mark Walport, Chief Scientific Adviser to Her Majesty's Government, December 2015

To view the study results in detail, you can download the study in PDF format below.