Business Innovation driven byBlockchain
11/13/2017
Senior Researcher
Customer Co-creation Project
Global Center for Social Innovation – Tokyo
Hitachi, Ltd., Research & Development Group

Toshiomi Moriki© Hitachi, Ltd. 2017. All rights reserved.

Contents
１. Blockchain technology overview
２. Hitachi’s activities related to Blockchain© Hitachi, Ltd. 2017. All rights reserved.

1１. Blockchain technology overview© Hitachi, Ltd. 2017. All rights reserved.

What is Blockchain?
Distributed processing technologies based on many tech., P2P comm., digital
signature, consensus building, etc.
• Each node has signed a transactional record and issue it.
• All nodes are connected to each other by P2P way, and process it by getting agreements.
• The blockchain system has kept a chain of all the data by “Block” structure, which contains
several transaction records.

2. Approval(agreement)

Data of Tx.
1. Transaction
issuedBlock1

Block2

3. Deal made(connected)

Block3

Data of Tx.

P2P

Hash

Hash valueof prev. block

2. Approval(agreement)

Sharing data among stakeholders
within P2P network, forming
mutual agreement and approval

New block are concatenated in a hash pointerchain after the agreement is established.

Benefit: Sharing reliable data among multiple entities
Many people expect for applications in various fields
such as asset mgmt., general transactions, etc.
© Hitachi, Ltd. 2017. All rights reserved.

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Classification of Blockchain
Two types are known: Public and Consortium ones
 In the financial industry, Consortium/Private type of blockchain would be adopted
quickly in order to meet the requirements of performance and compliance.
 We are considering the balance of each requirement related to use case for financial
application.

TypePublic
Trading reliably b/w many ofRequirements
unknown nodes
Technical
derived from Bitcoin
OriginExamplesBitcoin, Ethereum
Nodes
Many and anonymous nodes
authorization join the network
Strictness of
Mandatory (ex. Proof of Work:
tamper prevention by imposing aconsensus
large amount of calculation process)building

Private/Consortium
Trading frequently b/w
known nodes
derived from distributed
system software
Hyperledger FabricReliable and autholized
nodes join the network.
Optional(only authorized nodes canapprove each transaction)

Enterprise users can use this easier.
© Hitachi, Ltd. 2017. All rights reserved.

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Many efforts and PoCs are undergoing
Many of oversea financial institutes and central banks are accelerating the studies
and increasing the investments into blockchain world.
Visa Inc.

partnering with
Visa Europe andSatoshi Pay to try
micropayment

2016/6

2016/9

Capital One Financial
Corporation

MasterCard
Worldwide

Capital One andGem partnered tobuild a claim
payment
management
system for healthinsurance.

MasterCard,experimentally
released theblock chainAPI.

2016/10

2016/112016/12UBS Group AG

UBS announcesthe "Car eWallet
Project", whichenables autopayment of thecharge fee forelectric cars.

2017/1

Barclays PLC

R3CEV LLC

Deutsche Börse AG

Barclays Silver, incollaboration withWave, tried L / Ctransactions.

R3 has tried with10 rows of identity
registry for KYC.

announced apatent application
on a new bank-tobank collateraltransaction
system based on
the digital coinconcept.

2017/32017/4

JPMorgan Chase & Co.

Santander

tried to apply
blockchain tech toproxy voting
system, which isapplicable togeneralshareholders'meeting etc.

Source: Created by Hitachi based on various press releases and related articlesLondon Stock
Exchange

Partnering withIBM to utilize
blockchain

2017/4

Bank of Canada

Bank of Canada
has built a PoC
wholesalepayment system
by utilizing R3
Corda

2017/52017/62017/8

Monetary Authorityof Singapore

Bank of America
Corporation

started the digital
Singapore dollar
verification project“Ubin.”

Bank ofAmerica,acquired three
new blockchains patents.

© Hitachi, Ltd. 2017. All rights reserved.

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２. Hitachi’s activities related to Blockchain© Hitachi, Ltd. 2017. All rights reserved.

Hyperledger Project
Hyperledger is an open source project hosted by The Linux Foundation todevelop de-facto standard blockchain platform.
Hitachi began researching blockchain technologies in the early 2000’s with
its first patent issued in 2003, and now is a board member of this project.
Hyperledger is a global collaboration including leaders in finance, banking,Internet of Things, supply chains, manufacturing and Technology.
[PREMIER MEMBERS]

 Accenture Airbus
 American Express Baidu CHANGE Healthcare
 Cisco CME Group Deutsche Börse Group Daimler
 Digital Asset Holdings
 DTCC Fujitsu
 Hitachi
 IBM Intel J.P.Morgan NEC R3CEV SAP TRADESHIFT FFan Technology
under Wanda Grouphttps://www.hyperledger.org/members（alphabetical order, 2017/8）© Hitachi, Ltd. 2017. All rights reserved.

Application area of Blockchain
Blockchain enable multiple participants to cooperate securely, using thecommon, synchronized, authentic data source, and are expected to beapplied to various fields. In the Hyperledger Project, we have alreadybegun activities aiming at application in the following business areas.

Finance Streamlined settlement
 improved liquidity
 increased transparency
 new products/markets

Healthcare

Supply chain Unite disparate processes  Track parts and service
provenance increase data flow and ensure authenticity ofliquidity
goods reduce costs
 block counterfeits
 improve patientexperience and outcomes  reduce conflicts© Hitachi, Ltd. 2017. All rights reserved.

Our PoC: Check Digitization in Singapore© Hitachi, Ltd. 2017. All rights reserved.

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Future plans of business area

PoC targetin Singapore© Hitachi, Ltd. 2017. All rights reserved.

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Relationships between JBA and Hyperledger PJ
JBA plans to provide “Collaborative Blockchain Platform” based onHyperledger fabric for banking industry at Oct. 2017. It is aimed to makethe cooperation and collaboration activities easier among stakeholders andreduce development cost of examination environments.
Hitachi is one of the partner vendors of JBA for this platform.
Image of Collaborative Blockchain Platform

They have utilized ourcloud platform poweredby Hyperledger Fabricas their blockchain
network basement.
JBA (Japanese Bankers Association), ” Report of the Review Committee
for the Possibility and the Challenges of Utilizing Blockchain Technology”© Hitachi, Ltd. 2017. All rights reserved.

11Our PoC: blockchain in Supply Chain mgmt. field© Hitachi, Ltd. 2017. All rights reserved.

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New App Proto.(1): SCM enabled by Fintech.
Future banking players can provide new financial applications formanufacturing industry by combining former EDI services /w blockchainand AI technologies.
Traditional business system ＋ AI ＋ Blockchain = New service
EnterprisePartners

EDI service（on Blockchain）(Buyer)Order
Accounts
payableShipment
Acceptancepayment（Supplier）…

EDI database

Order

Shipment Settlement

Payment

Traceability
Management
Blockchain can empower
EDI system to grasp all
the transactions and flowsofpurchased
items,
receipts, deliveries and soon, and process contracts
automatically.

・EDI情報・トレーサビリティ情報

Loantransaction

Lending services
based on P/O transactions
Financial Institutes
screening

Reviewingloan amountAI
EDI：Electronic Data Interchange

Dynamic lending to business partners
is carried out after AI review goes
throught based on information on thesupply chain© Hitachi, Ltd. 2017. All rights reserved.

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New App. Proto.(2): Information sharing b/w stakeholders
in auto. and insurance industries
For automotive related market of USA., we have developed prototype app. for P2P
information sharing system to support many stakeholders to process many ofbusiness steps automatically, such like making new insurance contracts, reports ofaccidents, claims, payments, etc.

Benefits of stakeholders (ex., our assumption)： DMV (Department of Motor Vehicles) can investigate vehicles if it is covered by insurance.
 Used-car dealer can prevent sellers from false reporting reviewed by repair history.
 The manufacturer can detect the deterioration situation of the parts before the failure occurs.
14© Hitachi, Ltd. 2017. All rights reserved.

Use case development
The wave of smartization of other industries is thought to enable businessmodel transformation to connect different industries and solve social
problems. It is expected to bring new business opportunities through direct
chain transactions and information sharing between different industries via
block chains.
Cross industrial services utilizing Blockchain

Finance

Automobile

Settlement
Lifelog

Insurance
Payment

Healthcare Asset
Hospital Lifelog
Records

Lending

Mgmt

Tax
Vote

PublicReal Estate
Registration
ServiceSCM

Distribution・RetailP/O
Buyer

Supplier
Shipment

P/O

Shipment

Acceptance

Settlement

Cooperation through Smart Contract/API
Service/Function© Hitachi, Ltd. 2017. All rights reserved.

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Blockchain use case for Social Innovation“Smartization” of our society has been under development amongconnected industries to create new values and solutions for all people.
IoT and smart contracts will be the key technologies for this world.
“Smartization” of our society

New user needs• Automated contract and payment caused by the rapid penetration of
sharing and economy• Tailored treatment and value-based medical care for reduction of
medical expenses in aging society• New rights management and business model for asset digitization era.

All individuals are much responsible to their own
credit decisions regarding to expansion the P2Ptransactions and purchase agreements.
They need new services to find out suitable partners
for business and helps to make secure contracts.

Insurance
IoT

For Equal Society

Virtual Asset

Aging Society
IoT

BC

VotingTax
payment

PersonalInfo.
(Smartized)

IoT

Assetdigitization

InheritanceservicesBC

Rightsmanagement(Smartized)

BC

Medication
records

Healthcare
records(Smartized)

電力消費
動向記録

Sharing Economy
給油BCCarleases

IoTBC
利用実態型
供給・課金

駐車SmartKeys

IoT
IoT

Real estateleases

飲食Manufacturing
Lines(Smartized)

安定稼働・品質均一化

BC

Payments

SmartContracts

Electricity(Smartized)

素材・材料
記録

Digitalized
designprocesses© Hitachi, Ltd. 2017. All rights reserved.

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Ideation tool for future cross-industrial services
We developed 11 typical pattern of Blockchain use caseto find killer use cases interactively and collaboratively.

BLOCKCHAIN
PATTERN
BOOK© Hitachi, Ltd. 2017. All rights reserved.

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END
Business Innovation driven by Blockchain

11/13/2017
Senior Researcher
Customer Co-creation Project
Global Center for Social Innovation – Tokyo
Hitachi, Ltd., Research & Development GroupToshiomi Moriki© Hitachi, Ltd. 2017. All rights reserved.

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