APN31 - D9 - Blockchain for Architects Introduction to Blockch - 336828

Gartner Application Strategies & Solutions SummitSummit 2017 4 – 6 December 2017 / Las Vegas, NV Blockchain for Architects: Introduction to Blockchain and Blockchain Platforms for Enterprise IT Paul Vincent CONFIDENTIAL AND PROPRIETARY This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Blockchain — Still at Mega Hype? expectations Initial Coin Offering Distributed Ledgers Blockchain (in China) Blockchain in Government Blockchain in Banking and Investment Services Internet of Things API Economy Blockchain Quantified Self Cryptocurrency and Blockchain Regulation Blockchain in Education Blockchain in Life Science Blockchain in Insurance Decentralized Autonomous Organization Blockchain in Utilities Blockchain in Healthcare Complementary Currency Blockchain in Supply Chain Cryptocurrencies Blockchain in Manufacturing Digital Commodity Blockchain for CSPs Exchanges Smart Assets The Programmable Economy Blockchain-Based ACH Payments Smart Contracts Digital/Cryptocurrency Fiat Stable Cryptocurrency Green Money Ricardian Contracts Bitcoin Blockchain in Oil and Gas Blockchain in Retail Blockchain for Customer Service As of August 2017 Peak of Innovation Trough of Plateau of Inflated Slope of Enlightenment Trigger Disillusionment Productivity Expectations time Years to mainstream adoption: obsolete less than 2 years 2 to 5 years 5 to 10 years more than 10 years before plateau Ref: From "Hype Cycle for Blockchain Business, 2017," 10 August 2017 (G00332628) 1 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Blockchain — Still at Mega Hype? expectations ICO Initial Coin Offering Blockchain (in China) Blockchain in Government Distributed Ledgers Blockchain in Banking and Investment Services Internet of Things API Economy Blockchain Quantified Self Cryptocurrency and Blockchain Regulation Blockchain in Education Blockchain in Life Science Blockchain Blockchain in Insurance Decentralized Autonomous Organization Blockchain in Utilities Blockchain in Healthcare Complementary Currency Blockchain in Supply Chain Cryptocurrencies Blockchain in Manufacturing Digital Commodity Blockchain for CSPs Exchanges Smart Assets The Programmable Economy Blockchain-Based ACH Payments Smart Contracts Digital/Cryptocurrency Fiat Stable Cryptocurrency Green Money Bitcoin Ricardian Contracts Bitcoin Blockchain in Oil and Gas Blockchain in Retail Blockchain for Customer Service As of August 2017 Peak of Innovation Trough of Plateau of Inflated Slope of Enlightenment Trigger Disillusionment Productivity Expectations time Years to mainstream adoption: obsolete less than 2 years 2 to 5 years 5 to 10 years more than 10 years before plateau Ref: From "Hype Cycle for Blockchain Business, 2017," 10 August 2017 (G00332628) 2 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Where to look for your blockchain project? 3 © 2017 Gartner. All rights reserved. . and/or its affiliates. Understanding bitcoin's success 2. What are blockchain solutions? 3.Key Issues 1. Inc. Where to look for your blockchain project? 4 © 2017 Gartner. Inc.Key Issues 1. All rights reserved. What are blockchain solutions? 3. . Understanding bitcoin's success 2. and/or its affiliates. Inc. chronologically ordered chain Ledger Replicated Across Peer-to-Peer Network  Trust through massive replication across network Node  Process for consensus — "shared Node truth" — is proof of work/"mining" Node Node Node  Optional extension of programmatic Node behavior attached to transactions Node Node ("smart contracts") 5 © 2017 Gartner. All rights reserved. never ending. .What Is a Bitcoin Blockchain?  Bitcoin ledger records transactions Distributed Ledger of Bitcoin Transactions (Tx)  The most proven + most distributed ledger! "Genesis Block Block Block Block Block" of Tx of Tx of Tx of Tx  Chain of transaction records. and/or its affiliates. grouped in blocks. 000 merchants allow bitcoin payments  134Gb sized ledger >17M >300K >$80B wallets TXs per day managed TXs = Transactions Source: "Blockchain.Bitcoin = Blockchain Success  100.info/charts/market-cap) 6 © 2017 Gartner. Market Capitalization" (https://blockchain. . All rights reserved. Inc. and/or its affiliates. Bitcoin — Currency or Investment? Source: https://coinmarketcap. Inc.com/currencies/bitcoin 7 © 2017 Gartner. All rights reserved. and/or its affiliates. . Versus Tulip Market. . Inc. All rights reserved. and/or its affiliates. C17th See: Tulip Mania 8 © 2017 Gartner. . and/or its affiliates. Inc. All rights reserved.Bitcoin Blockchain Technology Issues  Not a true distributed database  Consensus mechanism to determine creator of next transaction block is expensive  Transaction block + chain replication + miner mechanism limit performance  Centralization of processing 9 © 2017 Gartner. Bitcoin Gold … 10 © 2017 Gartner. Inc. . and/or its affiliates. All rights reserved.3 TPS hashes 80% in practice processed of mining is per sec by 4 miners Hard forks! Segwit2X.Bitcoin Limitations 5Q 18 (10 ) <3. Bitcoin Cash. business-value-add of blockchain by 2025 Source: "Forecast: Blockchain Business Value. 2017-2030" (G00325744) 11 © 2017 Gartner. All rights reserved. and/or its affiliates. Inc."Blockchain Fever" Continues $176 B Est. Worldwide. . . What are blockchain solutions? 3. Inc. Where to look for your blockchain project? 12 © 2017 Gartner. and/or its affiliates. All rights reserved.Key Issues 1. Understanding bitcoin's success 2. and/or its affiliates.Blockchain Principles History of events/transactions represented across blocks Cryptographically linked. . Decentralized time-based. Inc. All rights reserved. consensus blocks of records Previous blocks mechanism cannot be altered without rewriting all subsequent blocks Distributed Ledger Blockchain Distributed P2P Network 13 © 2017 Gartner. . logistics and provenance Supply chain  Fine-Grain Dynamism Voting records. Government citizen identity and digital currency Intellectual property assets by musicians. lyricists. shipping. Inc. Energy sector and distribution Source: "The Disruptive Potential of Blockchain Technology" (G00327607) 14 © 2017 Gartner. refining.… Leading to Blockchain Use Cases Industry Use case examples — some in trial status  Decentralized Trust Healthcare Medical records and clinical trials  Valued Digital Assets Trade finance. All rights reserved. and/or its affiliates. Media industry choreographers. authors and other creative Real estate Property transactions Transactions about oil and gas extraction. registry of property ownership. All rights reserved. .Blockchain: Volatile Market With Overlap and "Coopetition" Infrastructure Software Professional Services Smart Contracts Financial Services Boutique Services Distributed Ledgers ~90 "blockchain" platforms today! 15 © 2017 Gartner. and/or its affiliates. Inc. All rights reserved.Requirements for Enterprise Blockchain  Scalable to global economy  True open source from inception  Well-specified protocol with multiple independent implementations  Modular architecture and open APIs enable ecosystem No Platform Today Covers These  Battle-tested via public blockchain deployment  Transparent governance with agile effective response to threats  Configurable for private or hybrid blockchain  Bug-resistant smart contract capability  Ecosystem of third-party tools and frameworks 16 © 2017 Gartner. Inc. . and/or its affiliates. Example Blockchain Platforms Ethereum Web Client Browser App Transactions Key Generation Networking/JSON-RPC Server Core Ethereum Blockchain P2P Ethereum Wire Protocol Decentralized Network JSON-RPC = JavaScript Object Notation-Remote Procedure Call. P2P = Peer-to-Peer 17 © 2017 Gartner. All rights reserved. Inc. . and/or its affiliates. Inc. All rights reserved. P2P = Peer-to-Peer 18 © 2017 Gartner.Example Blockchain Platforms Ethereum Web Client Browser App Transactions Hyperledger Key Generation Networking/JSON-RPC Server Core Ethereum Blockchain P2P Ethereum Wire Protocol Decentralized Network JSON-RPC = JavaScript Object Notation-Remote Procedure Call. and/or its affiliates. . P2P = Peer-to-Peer 19 © 2017 Gartner. and/or its affiliates.Example Blockchain Platforms Ethereum Web Client Browser App Transactions Hyperledger Key Generation Networking/JSON-RPC Server R3 Corda Core Ethereum Blockchain P2P Ethereum Wire Protocol Decentralized Network JSON-RPC = JavaScript Object Notation-Remote Procedure Call. All rights reserved. Inc. . All rights reserved. FIVE distributed ledgers will be "mainstream" commerce platform enablers.Strategic Planning Assumption By 2025. and/or its affiliates. . Inc. 20 © 2017 Gartner. What are blockchain solutions? 3. Understanding bitcoin's success 2. Inc. All rights reserved.Key Issues 1. . and/or its affiliates. Where to look for your blockchain project? 21 © 2017 Gartner. .Blockchain Benefits Traceability of Records Improve Trust Immutable Records 22 © 2017 Gartner. Inc. All rights reserved. and/or its affiliates. Smart Contracts: Be Careful What You Wish For  The Smart Contracts Goal:  Removal of manual intervention and oversight. e.. from legal counsel  Reduction in associated legal costs. digitally manifest agreement with the power to re-engineer itself dynamically. fees and process (time)  Speed of contract creation and execution  Automated transfer of funds via computer recognizable/definable events  Flexibility in contract execution A legally binding. Carse) 23 © 2017 Gartner. Source: Finite and Infinite Games (James P. . All rights reserved.g. via the implementation of an implicitly encoded set of rules without the need for human intervention or oversight. depending on the terms and conditions of the market/commercial context to which it applies. Inc. and/or its affiliates. What business benefit can be derived from a decentralized. Are large blockchain R&D projects in China + Japan a competitive threat? 6. Inc. and/or its affiliates.Considerations for Blockchain Projects 1. Is there a community consensus for participation in a system of trust? 2. distributed system of trust among partners/peers/suppliers/customers? 3. What user experience is required in a decentralized. application context? 4. digitally distributed. How will digitalized "Things" in smart contracts regarding assets of value impact the business model? 24 © 2017 Gartner. Do the organization's risk management and legal policies and processes accommodate the use of smart contracts? 5. . All rights reserved. Benefits Versus Costs Access to new markets Project failure/missed expectations System Change Virtual asset creation/distribution duplication management No central point Efficiency gains Security and privacy Operational risk of failure Traceability Immutability Technology Implementation Integration of records of records Distributed ledger versus Partnership and ecosystem central authority management/governance Benefits Costs Source: "How to Develop a Business Case for Blockchain Projects" (G00323011) 25 © 2017 Gartner. . and/or its affiliates. All rights reserved. Inc. All rights reserved. . Inc. and/or its affiliates.Alternative Technologies to Consider for "System of Trust"? Event log:  Append-only Distributed (create + read)-only database:  Cloud-scale dbPaaS  In-memory data grid  Hosting by trusted party 26 © 2017 Gartner. . 27 © 2017 Gartner.Strategic Planning Assumption Through 2018. All rights reserved. Inc. and/or its affiliates. 85% of blockchain-named projects will deliver business value WITHOUT using a blockchain. 2017." 10 August 2017 (G00332628) 28 © 2017 Gartner.5-10 Years to Go Before Mainstream Bitcoin Blockchain ICO Ref: From "Hype Cycle for Blockchain Business. All rights reserved. . and/or its affiliates. Inc. APIs  Be wary of too much investment too soon 29 © 2017 Gartner. .Recommendations  Do the math: Consider the collaboration and leadership needs to drive a blockchain consortium in your community of interest. All rights reserved. distributed vs owned ledger. and/or its affiliates. security. Inc.  What's the need? Will a smart contract fill the requirement? Centralized or distributed ledger?  Undertake measured R&D/innovation POCs: – Realistic use case  Consider exploiting an existing blockchain framework: – Considerations are messaging standards. Inc. All rights reserved. .Ride the Wave or Get Swept Along? Traceability of Records Improve Trust Immutable Records 30 © 2017 Gartner. and/or its affiliates. . What Kind? Rajesh Kandaswamy and Fabio Chesini (G00320247)  The Evolving Landscape of Blockchain Technology Platforms Ray Valdes. and If So. stop by Gartner Research Zone. and/or its affiliates. Inc. Martin Reynolds and Ray Valdes (G00323596) For more information. 31 © 2017 Gartner. All rights reserved.Recommended Gartner Research  How to Determine If You Need a Blockchain Project. David Furlonger and Rajesh Kandaswamy (G00315765)  Practical Blockchain: A Gartner Trend Insight Report David Furlonger and Ray Valdes (G00325933)  Understanding Blockchain Platform Architectures and Implementation Styles David Furlonger.