Introduction of Blockchain miyabi

Blockchain
What is Blockchain?

3

Feature of Blockchain

5

Types of Blockchain

6miyabiWhat is miyabi?

7

miyabi's Solutions
Coin Solution

10

KYC Solution

11

Smart Contract Solution

12

Traceability Solution

13Intellectual Property Solution

14

Open Data Solution

15

Case Study

16

What is Blockchain?
Blockchain is the underlying technology that powers bitcoin,allowing it to function as a value transferring application. It isa new type of high-security database which achieves Byzantine fault tolerance in addition to distributed ledger technology.
Blockchain is different from current distributed databases because it implements a hash chain and consensus algorithm.

Distributed Ledger
A distributed ledger is a means of storing data across several
servers rather than on a single server. Since the data in the ledger is distributed to multiple servers, the data will not be lost even
if the data in one server is corrupted. A distributed ledger does
not have a single point of failure and as a result, allows for highavailability.

Byzantine Fault Tolerance
A Byzantine fault-tolerant blockchain will continue working as
long as the number of Byzantine nodes are less than a certain
threshold. Legacy systems did not have Byzantine fault tolerances, and server corruption would result in the entire system beingcompromised. To prevent this kind of system failure, servers may
have double or triple redundancy. However, the system still may
not be completely resistant to hacking.

Consensus Algorithm
A consensus algorithm is a rule governing the distribution of data
between multiple servers. Setting a rule to reach consensus inadvance allows for the elimination of data manipulation and illicit
transactions.

Hash Chain
A technology used for the prevention of data manipulation on adistributed ledger. It is constructed of data "blocks" which areconnected in a line to form a "chain."
3

The birth of miyabi

December 2016

bitFlyer announces the release of theirunique “miyabi” blockchain.

PoC allow the fundamental
technology of virtual currencies
to take the spotlight2016 and on

PoCs of blockchain technologies
begin
PoC and verifications of the blockchain
technologies begin and spread from Financial industry to non-financial industries.

February, 2014

THe Ethereum Project begins
The Ethereum Client, a platform enabling
the execution of smart contracts, is released.

October, 2011

Creation of various currencies

The birth of altcoins
Litecoin is released. Other altcoin, ornon-bitcoin virtual currencies, enter themarket one after another this year.

Jan, 2009

The first block is created
The first transaction is performed. The
first block, known as the “Genesis Block”
is created.

The birth of bitcoin

October, 2008

Bitcoin white-paper published
Satoshi Nakamoto publishes a white-paper on "Blockchain" and "Bitcoin"

Source：William Mougayar "The Business Blockchain"© 2019 bitFlyer Blockchain, Inc. All rights reserved

4Feature of Blockchain
Resistant to data
tamperingHigh transparency ofrecording data

Automation of transaction
execution

The transaction data in the blockchain is stored in the block which
are connected one after another.
Since future blocks are dependant on the data previous blocks,
when past data is manipulated
all the data that follows must also
be updated otherwise there willbe transactional inconsistencies.
This leads to a high degree oftamper-resistance.

To record the data in the blockchain, the authenticity of the writer must be verified. Because datarecords are always checked by allparticipants, data managementwith high transparency can beachieved.

Many types of operations alongwith data processing can be automated on the blockchain by creating programs which interacts withtransactions. Secondary transactions or escrow transactions canbe performed by using blockchain.

Blockchain technology applications
Although there are only few use cases in Japan, blockchains are still widely used globally.
Estimate of the size of the industries impacted by blockchain in 2030 (1 USD=JPY 100)

Transaction management- Testament services- IoT- Electricity related services

200Sharing economy

USD Bil- digital contents- tickets management- C2C auctions

10USD Bil

130

Domestic

USD Bil10

USD Biil

Document management- Real estate deeds and leasing agreements- electronic health records- family registies

Virtual currencies, Points Platforms

670- local currencies- sales coupons- loyalty points programs

USD Bil*1

320

USD Bil

Supply Chain- Retail- Management of precious metal- Authenticity checking for work of art
and other high value items

Global3,000
USD Bil*2*1 Source: "平成27年度 我が国経済社会の情報化・サービス化に係る基盤整備" METI (April 28th, 2016)*2 Source: "Forecast: Blockchain Business Value, Worldwide, 2017-2030" Gartner (March 2nd, 2017)© 2019 bitFlyer Blockchain, Inc. All rights reserved

5Types of Blockchain
Private Blockchain / Consortium Blockchain
There are administrators on the blockchain and those administrators make decisions. There are many benefits to using them, for example, it is easier to reach consensus and throughput is relatively high comparedto public Blockchains. Therefore, it is used by corporate clients as the enterprise blockchain solution.

Public Blockchain
There is no administrator on the blockchain and anybody can freely join the network, browse records andapprove transactions. Since the network is decentralized, data manipulation becomes more difficult as
more participants join the network.

PublicAdministrator

None

Network Participatiuon

Free

Consensus Algorithm

Restriction of transaction
browsingMining（PoW / PoS）

No restriction

Consortium

PrivateMultiple companies /Single

Organizations
Registration required

Registration required

SingleSingleVoting / Authenticity

Self-approval

Can be restricted

Supply Chain

Use case or application

Virtual currencies

Transaction management
Sharing economy
Wire transfer etc

Platform/Product© 2019 bitFlyer Blockchain, Inc. All rights reserved

Bitcoin
Ethereum

miyabiHyperledger fabricEnterprise Ethereum Alliance6What is miyabi?
“miyabi” is bitflyer’s original blockchain. By applying the characteristics of blockchain, we have been able to transform a publicblockchain into a consortium/private blockchain by removing thepublic blockchain pain points.

Incredible speed compared to public blockchains
By using our original consensus algorithm, we have been able toreduce the time for transaction approval (adjustable between 1-4seconds) and achieved the highest standard throughput (1,5004,000 tps)

Securing finality
Public blockchains only have a slight possibility to nullify the pastconsensus. Since miyabi uses its own original consensus algorithm, an authenticated transaction will be permanently finalized.

Customization
As there is a flexible smart contract, it can be customized so thatthe blockchain can be utilized for various operations.

Securing the safety of transactions
As miyabi can detect abnormal transactions before it creates ablock, it secures the safety a distributed ledger.

7Superiority of miyabi
Deep understanding of blockchain
Experiences in the development and the operation of cryptocurrency exchange

1位

As Japan’s No.1 cryptocurrency exchange withthe largest volume*1, we gained the experienceand cutting-edge knowledge about how block-9

Number of domestic patents
acquired as of March 2019

chain truly functions and how we should manage
it through the development of wallet services anddaily operations for trading.

5
Patent for blockchain-related technologies

33B

C

During our reasearch, we have obtained patents
by changing ideas and understanding to utilitymodel. The number of blockchain-related patents

Awe possess is one of the highest in Japan.

*2*1 : based on research by Bitcoin Japan. Then number is from Nov. 2016 to Nov.2018. It is the total volume including actuals trading, leveraged trading and derivatives.
*2: researched by us. The number of patents which includes the word “blockchain” in the name of utility model, explanation, and claims. We excluded the patents
which had been taken before Satoshi Nakamoto announced his thesis in 2008.

Best in class capabilities
and performance
as of March 12th, 2019

Architecture (Type of blockchain)

Consortium / Private blockchain

Consensus Algorithm

BFK2

Network Participation

Approval required

Finality

Yes

Smart Contract

Yes

Throughput

4,000tps at maximum
Read time until the block is finalized

Read time until the block is finalized(Latency)© 2019 bitFlyer Blockchain, Inc. All rights reserved

1-4 seconds
Default 4 seconds (adjustable)8miyabi's Solutions

miyabi's various use cases allows us to provide a solution to suit your needs

Coin Solution
Issuing tokens/coins/points and transferring them
You would be able to issue and transfer your original tokens/coins/points to youremployees and clients immediately without a significant investment.

Estimated use case
▎ Internal coins / benefit packages▎ Real-time transactions between corporate clients▎ Points or royalty programs which could be used to your clients on EC sites or retail stores

Coin Solution overview

chargetransfertokens/coins/points

useruserpayment
charge back© 2019 bitFlyer Blockchain, Inc. All rights reservedshop10

KYC Solution
KYC platform which could be used across multiple companies
By participating a network which enables access to the certificate authority that holds
KYC information on behalf of corporate clients, it is possible to improve convenience andstreamlining of KYC operations.

Estimated use case
▎ KYC when buying/selling real estate▎ Opening accounts for financial institutions

KYC Solution overview

certification/ regiter

identification
CA 1

userservicer

CA 2certificatedsign© 2019 bitFlyer Blockchain, Inc. All rights reserved

11Smart Contract Solution
Electrify internal approval and contracts by using electronic signature
By protecting the data from tampering, it streamlines the process of internal approvals andeliminates paper-based communication.

Estimated usec ase▎ Related to contract conclutions

Smart Contract Solution overview

company B

contract sharing
B2B

company A

person incharge

person incharge

Once all signatures
are collected, thesmart contracts automatically process theauthorizer

contract sharing
B2C

userindividual© 2019 bitFlyer Blockchain, Inc. All rights reserved

12Traceability Solution
Certification of raw materials and manufacturing processes in supply chain
By recording the process from the procuement of raw material to sales, it is used to certifythe quality of products. It may also be used for audits as well.

Estimated use case
▎ A food maker can certify the quality and safety of the product through a QR code
▎ Certification for land of origin of conflict minerals when submitting the report

Traceability Solution overview

raw material
procurement

manufacture

sales
auditorraw material
providermanufacturer

distributor

user© 2019 bitFlyer Blockchain, Inc. All rights reserved13

Intellectual Property Solution
Certifying and securing the transparency of intellectual property rights
It enables to management the intellectual property right by making theprocess transparent

Estimated use case▎To manage the copyrights of movies and music which would be used in program
production and game creation, and the copyright of photographs which would beused for advertisements and articles.

Intellectual Property Solution overview

copylight（right of adaptation）

copylight（original）

user

licenseoriginal
authorproduction
company

distributer

originalauthor© 2019 bitFlyer Blockchain, Inc. All rights reserved

14

Open Data Solution
Big data collection and application platforms
The database which could certify the all data sources can be utilized in many ways suchas digital marketing and IoT analysis.

Estimated use case▎ Segmentation information analysis for data marketing▎ Insurance services which are provided according to clients’ health data
▎ Optimized production and efficient sales order management for manufacturers

Open Data Solution overview

usercollection

general data basecollection
IoT sensor

purchasing
actiondevicecollection /analyzation
person inchargecollection

mobile/wearable© 2019 bitFlyer Blockchain, Inc. All rights reserved

15Case Study
miyabi has already been used in several industries. One ofJapan’s top corporate clients uses them for daily operations
and services. Here is a preview of what we've done.

Production
Sekisui house
Rental real estate management
It is the first project to manage real estate information with blockchain technologies. Rental property information can be browsed via miyabi. In addition to the property information, owner information, contract information, rentee information is recorded. Also, such activities as information, payment reports for house rent arerecorded. There are plans to record repair and renovation information in the future as well.
We are also considering to form a consortium across different industries as well as cooperating with otherreal estate related companies.

Insurance company
Insurance office work
The communication between operation centers and sales offices used to be paper-based, such using Fax
which was extremely time consuming. ｍiyabi has replaced the paper-based communications, and operations have been streamlined. As a result, issuing insurance policies has become much quicker than in thepast, and the risk of information leakage and loss has been minimized. Operating costs have been reduced
as well since there is no need to maintain a security infrastructure anymore.

Manufacturer
Internal coin
Handling digital currencies using miyabi. Transfering, transactions, charging coin and charge backs havebeen achieved through miyabi. The client is aiming to use digital coins for inter-company transacations,sharing services, leases, and tokenized securities. The client is expects to develop a lot of business by using
blockchain.

© 2019 bitFlyer Blockchain, Inc. All rights reserved.

16

General trade company
Renting property management platform
Designed a platform to manage KYC, explanationsof important notices for renting a property, lease
contracts, and activity data utilization.

Trust bunk
Housing sales contrat
Designed a platform to prepare housing sales
contracts, to process until the execution by usingblockchain.

PoCBlockchain study group
Domestic trasfer
Developed a system to make domestic payments
between banks by using blockchain.

Japanese bankers association
A platform for PoC

bitFlyer has provided a platform for PoCs somembers can conduct their own PoCs using theenvironment.

Insurance company
Anti-social power information management
Designed a system to share information of antisocial organizations with multiple financial institutions so they may create new ecosystem for
information sharing.

Travel company
Blockchain data management
bitFlyer designed the architectural system to reduce the burden of information management which
required operators to gather information scatteredin each service system.

Internet bankFinancial platform with digital currency

Real estate company
KYC
Designed a system to issue a certificate for electronic signatures so that the company may operate
as a certificate authority.

Mass medium
TV coin

An infrastructure to manage coins to enable money

Designed a system to provide coins and couponstransfer, factoring, contract management, and riskduring the TV shows to collect marketing data.

management.

Prepaid card company
Prepaid card Payment

Telecom company
Insentive points

Developed a system to substitute magnetic cards

Designed a result-reward system for sales people

with an expiry date. Issuance of the cards, balancecharges, and payments at the retail store wereto incentivize them through points.

achieved by using blockchain.
© 2019 bitFlyer Blockchain, Inc. All rights reserved17

〒107-6237 Midtown Tower 37F, 9-7-1 Akasaka, Minato-ku, Tokyo

blockchain.bitflyer.com
bitFlyer Blockchain, Inc.
* This document is intended to give an overview of the blockchain and introduce our blockchain
business. It is not intended for solicitation in the Group's virtual currency exchange business.
* "Blockchain" is registered a trademark of bitFlyer Blokchain, Inc.
© 2019 bitFlyer Blockchain, Inc. All rights reserved