Introduction to Azure Blockchain

>>Hello everyone and welcome to
the first episode of Block Talk. We’re going to talk about
everything related to Blockchain and Azure all up. My name is Zeyad Rajabi. I’m a Program Manager
on the Blockchain Team.>>I’m Cody Born. I’m
a Software Engineer on the Azure Blockchain Team.>>All right. In this episode, we’re going to give you guys a very high level overview
of Azure Blockchain. We’re going to cover
an introduction to Blockchain. Again, we’re not going to go into the technical details of Blockchain. If you guys are interested
in understanding the technical aspects of how
Blockchain works all up, let us know in the comments. We will definitely dedicate at least an episode on
that if you’re interested. What we want to do is give you guys an understanding of
what Blockchain is, where it’s applicable in
the enterprise scenarios, and then lastly, cover what are we doing in the Azure
Blockchain space all up.>>So let’s take a look
at what Blockchain is and how it’s different
from a traditional system. So in a traditional system, you have a single operator
of a full application stack, so from the front end all
the way down to the database. Now, this works really well
for most applications, but there’s some applications
that require multiple parties. In that case, you need
a single operator of this database and that requires
you to trust that single operator. This will break down when
you have multiple parties that don’t necessarily
trust each other. This role of that central operator
is important and will often be delegated out to a third party for some fee and that also introduces some inefficiencies
in the process. So, with the Blockchain System, each member on the network
has equal ownership of this database and has
the ability to have full transparency into what’s
going on and provide guarantees around the validation of the transactions that are
going into this database. So we see this really important in certain industries
that are maybe more inefficient or have
some additional expense because they’re having to hire
this trusted third party. So let’s look into how a
Blockchain works underneath. So with a Blockchain, you have multiple nodes
that are each run by different parties within
this multi-party system. Now, each of these nodes is
constantly talking to the other nodes and provides a shared state
that each of the nodes has, and that shared state is
something that we call a ledger. The important thing about
this shared state is that each of the nodes validates
the transactions that go into this to make sure that they are valid
according to its own rules. So there’s no top-down leadership or central authority on this network. Each node is responsible
for maintaining their own set of data and
their own validation rules. So it could be that one of these nodes goes rogue and start
submitting invalid transactions, but all the other nodes
will essentially ignore those transactions or
that state update. So this is really nice because it provides some rules that
ensure that no one is going in and deleting some
information or modifying some information after
the fact that doesn’t follow some shared rules. So, an example of this is
immutability in transactions. So, being able to ensure
that a transaction once it’s present can never be changed is a really important factor
of Blockchain.>>Cool. Thanks Cody.
So let’s talk about where do we see Blockchain all up. Now, I’ll be the first one to admit, there’s a ton of hype
related to Blockchain. I think the reason why there’s
a lot of hype is again, when you’re talking about the different capabilities
of Blockchain, the promise of getting rid of intermediaries and the ability
to share data all up, I think people get really fascinated
and interested about that. But what happens is I don’t think the scenarios where
Blockchain is a bit more is not really every single scenario. I think people get
mistake Blockchain has this magic hammer that can work everywhere and can fix
any kind of problem.>>That’s right.>>Just like a hammer can’t fix
every problem in the house, you should not use Blockchain
all up for all problems. I think there’s some fundamental
questions you want to answer before you figure out what
scenarios make the most sense. Do you have a particular checklist in mind where you think
Blockchain makes sense?>>Yes, I think->>Versus not.>>Your point that right now
because it’s such a new technology. Everyone’s trying to
figure out what are the nails now that
they have this hammer. So, it’s important to not discourage customers
from exploring that, but you also want to
make sure that they’re not applying this technology
in the wrong way. So typically, when we’ll talk
to customers, we’ll ask them, do you have any kind of
intermediary that in your process that you’d be able to have more efficiency without
this intermediary? Or do you not have an intermediary and you would really like to use
an intermediary but right now, it’s just too expensive in order
to have someone fill that role? So, it’s really about
this intermediation.>>Yeah. In addition to that, I would think it’s also
about the ability, not only to the social media, but the ability to basically cross those trust boundaries and
the ability to share data or information across those trust
boundaries without the need of some central authority or without the need of having
to deal with reconciliation. So if you and I don’t
trust each other and we’re all have our own datasets, we need a way to figure out who’s right and who’s
the right set of data.>>Yeah. So one example
of this is that, we’re actually working
with the Xbox team coming up with something that we call Xbox royalties which is a royalty
system built on Blockchain. So this is where Xbox is
providing payments out to all of the developers and
they’re using Blockchain to provide this transparent
view of the world. The nice thing about this is that it’s a real-time state
where they can go and see what their current balance is and this allows them
to properly estimate at the end of the day how much assets they actually own and they can make proper risk
analysis accordingly.>>Right. Let’s talk about this couple of scenarios
here I think related. I will give you guys
some real-world examples here. This list that we’re
showing here is not an exhaustive list of all the
different scenarios out there. We certainly want a deep dive into the scenarios where we’re
working with customers directly. Again, if you’re interested in any particular scenarios that you’ve heard us working with
customers, let us know. We can do a session dedicated
to that particular scenario. But let me give you guys examples of where we are working
with certain customers. So, for example, one is with Maersk. Maersk as you know is a shipment company that
ship goods from port A to port B. So, we worked with them as well
as insurance companies to build a real-time risk assessment system built on how Blockchain
for insurance rates. So, whenever the boat shipping the goods travels to some waters or the weather
conditions changes, in real-time, you can adjust the insurance rates related
to the goods being shipped. That’s one perfect example. We’re working with
several other examples related to manufacturing and supply chains. So in supply chain, this is a good example where
they don’t have an intermediary. The reason they don’t have
one is because the cost of hiring or creating
intermediary to track all the different steps along
the supply chain would just be too costly for the supply chain
and in the end, would cost consumers more money because we have to pay the price
for that particular tracking. So, we’re working with
several different customers related to provenance and
supply chain tracking. For example, from farm
to table scenarios. We’re working with several
companies around loyalty points and loyalty tracking across different industries and
different organizations. One other thing that I
think is interesting from a Blockchain perspective is that I think people concentrate
on Blockchain being very, very specific to financial scenarios. It goes far beyond
just financials and you think about it from what’s applicable
from the financial industry. We’ve seen things and tried
to trade finance with payments and with those set of
scenarios and even bank guarantees. But it goes far beyond that. Other examples that
we’ve seen are things where governments are
using it for tracking of digital assets like land and car registrations and that
helps deal with some of the fraud related to
ownership of those goods. So again, there is very high-low
view of some of the scenarios. We’re more than happy to dive into the details of some
of those scenarios. Just let us know which ones
you’re interested in. So, when you look at Blockchain, the first question you
asked is why isn’t it being broadly used across the board? The truth of the matter
is, it’s hard. Blockchain is hard to
develop on top of. Then the analogy I like to use, and I think I’ve told you
this before, is like, “Hello world, I’m
Blockchain.” That’s hard. Hello world, and connect
that to an existing system like a Dynamics SAP, SalesForce, or Office 365. Good luck. That’s
very, very difficult. The reason why you see
a picture of an island there is the analogy I like
to give people is, it’s like me throwing
you onto an island, just the Blockchain Island. If you want to just live
on the Blockchain Island, just do Blockchain stuff,
you’re all good. But in reality, when you’re building these
enterprise applications, you need that island to be connected to things
that you care about. Whether it’s Office, or whether it’s Integration into
existing systems, or you may even have a process
where you’re sending an email with a PDF attachment, and that’s part of your transaction, and you want to connect that and have that transaction be pushed
onto the Blockchain. That’s not very easy to go do. So, our whole strategy in Microsoft is really related to getting
you off that island, getting that island, be able to connect to everything
that you care about, make it very easy for you
to develop on top of that, and building those bridges. Whether that is related to how
you create your business logic, how you build up
the integration patterns, or how you even deal
with some of the legis. I think there’s
several different aspects, and we’re going to cover in many of these episodes how we’re
tackling a lot of these things, and how we’re building those bridges, and how can you leverage
those bridges in your solutions.>>So let’s take a look
at everything that we’re doing within Microsoft
and Blockchain. So within Azure, we’ve set up a variety of
different ledger technology, so you can deploy straight
out of the marketplace. We make it really easy to deploy
the first member on the network, and also to join existing networks. So the different ledger
technologies that will support are Ethereum, Hyperledger Fabric,
Corda, and Quorum. So you really have your pick of
which ledger technology you want. We want to make it
really easy to switch between these different technologies.>>But I think also the nice thing
about it is it’s a marketplace. So, if you are a publisher out there, and you want to publish
your own ledger networks, or your own implementation of it, it’s an open marketplace. So, you can easily go do that
and add that to the marketplace, so anybody can go and use it. Think of it as like an App Store.>>Yeah. We have worked with a lot of third-party customers in order to get their solutions out
there in the marketplace. So, this is a really good
opportunity to reach your market. So, the second thing that we’ve built is a an abstraction
on top of Blockchain. So, we often hear, “Hey, I’ve set up this Blockchain network, but now I don’t really
know what to do with it. How do I start building my
Blockchain applications?” So, we’ve built a tool
called Blockchain Workbench, that is really setting up all the
scaffolding that you would need. We’ve developed a scaffolding
with working with hundreds of different customers
over the past couple of years, and figured out this
is the right pattern that you can apply
towards Blockchain. So, some of the difficult things
are key management. How do I handle these Blockchain keys and make sure that my employees
are keeping it secure. We wrap all of the smart contracts
and an authenticated API. So, you can make very simple
rest request to each one. We handle all the
authentication for you. We also have a lot of enterprise integration
into existing systems that you would normally
expect within Azure. We have a ton of examples and samples online on how
to build these things.>>We’re going to give you guys several episodes
dedicated to Workbench. All the way from
the high level review, all the way to the details
of how the systems work.>>That’s right, yeah.
Another effort within Microsoft is, within Microsoft research,
we’re building out a formal verification system
of Smart Contracts. So, this is really cool because
Smart Contracts have historically been like a very weak point
in a lot of systems, because it typically
handles a lot of assets, or very high risk compute. It’s important that
these Smart Contracts are written a bug-free from day one, because once you publish it, it’s immutable, you can’t
go back and edit it. So, we built this from
verification tool that allows you to formally prove that
your smart contract is to spec. Make sure that you’ve flushed out all the bugs before you deploy it. Another effort is
decentralized identity. So, today a lot of identity systems, they are the owner of your identity, they have all of your data. As we’ve seen recently, this has been a big problem where people are
responsible for this data, and they don’t necessarily manage it the way that we’d want them to. So, decentralized identity
is all about putting that data in the hands
of the consumer, and giving them the ability
to selectively show different parts of their identity
to different third parties, and being able to take
that identity away if they see that it’s being used improperly. Finally, and one of the other efforts within Azure is
confidential computing. So, this is something like
hardware enclaves as a service. You can run some amount
of some computation, or handle some data without
even having the ability to peek and see what’s
going on under the scenes, what kind of computations
are being ran, or what kind of private sensitive
data is being computed on. So, this is cool because it provides a nice augmentation to blockchain, and it handles a lot of
the confidentiality and the efficiencies that have been traditionally lacking in
the blockchain space. So, we see that these two things
have worked together really well.>>Cool. I think the
next several episodes, we’re going to go into a deep dive into several of
these different things, plus very technical details
on specific things, like for example, use of one
of our APIs for example. That being said, thanks so much
for watching our episode one. Any feedback is much appreciated. Please leave your comments. In the meanwhile, you can
follow us on different ways.>>Yeah. So, we have
a Twitter channel @MSFTBlockchain. You can also subscribe to this
on YouTube or on Channel9.>>Cool. Thanks so much, guys.>>Thank you. [MUSIC]

3 thoughts on “Introduction to Azure Blockchain”

  1. Great to see the creation of this content. I'm looking forward to all the episodes. Would like to get a clear vision and understanding of all of the work you put into your blockchain offerings, and how that would be useful for a customer. Thanks!

  2. Thank you for providing insight into Blockchain and showcases its beyond capability although for the time being people are focusing more on the Financial Side of Governance for fraud detection and reliability

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