Blockchain Study Group Framework

Description:

Blockchain is emerging as revolutionary technology that will enhance the digital economy and business management. It is a distributed database structure used to create a digital transaction ledger. Instead of resting with a single provider, it isshared among a network of independent computers that validate the transactions logged on the blockchain. These transactions record the exchange of assets resulting in a more transparent and publically verifiable system.

The chain itself is a chain of code, where each link in the chain records the log of certain events (transactions) and is added to the chain permanently. When a block of code is added, independent devices with access to the chain’s network approve the code and thus everyone on the technology has verified the transaction- implicating universal trust.

The maturity of blockchain technology varies dependent upon its application. For GE’s purposes, we must evaluate whether to become an adopter of the technology or a leader in its development in light of its maturity in various business practices. IBM has developed its own private blockchain which it will launch on September 9th for use within its $44 billion financing businesses- while new business transactions will be executed bank to bank, record-keeping of such transactions will be done on blockchain. For another example, Bank of America Merrill Lynch, HSBC and Infocomm Development Authority of Singapore (iDA), through the Hyperledger project, have developed a blockchain prototype for trade finance. In March, Bank of America successfully tested blockchain and smart contracts to manage post-trade lifecycle events for credit default swaps. Additionally, IDA developed a blockchain-based invoice trading platform (code-named TradeSafe) that uses the distributed ledger technology developed by Ripple. Invoices and bills of ladings are given unique identifiers and stored on this distributed ledger.JPMorgan has started testing a program for blockchain solutions in international remittances, USD transactions between London and Tokyo, a project created in cooperation with Digital Asset Holdings. In summary, the technology seems more mature for implementation in recording of GE’s intercompany payments.

By contrast, the technology is in its infancy in regards to supply chain and distributed energy applications. However, certain companies in this space, such as Skuchain and Fluent, are proposing solutions to boost supply chain efficiency. Fluent focuses on supply chain finance to track and approve invoices in order to prevent them from being refinanced on the company’s private blockchain. In terms of distributed energy, new models of energy sharing are emerging where consumers are exchanging electricity via blockchain. People with solar panels and storage batters would sell excess power to their neighbors without such technology and the blockchain ledger will verify, record, and settle transactions of energy transfer virtually.

Goal:

The aim of our study is to discover the future of blockchain technology and its potential applications within GE. We will look at how the technology will disrupt our businesses and explore where we can become a leader in blockchain development in order to further increase efficiency for ourselves and our customers.

To date, we have identified four areas which could be impacted or improved through the implementation of blockchain technology:

  1. Management as a Service: records management in the following businesses

The application of management as a service through accurate and trusted record keeping would apply to all businesses. This includes inventory management, asset tracking and recording of transactions/events. We have gathered information on use case examples specific to the businesses below.

Gartner sees that Record Management/Record Keeping has areas of development focus:Title Records, Ownership, Voting, Intellectual Properties, and Healthcare that are in this segment.

Industry Lead Developments Examples (2):

Honduras: The Honduran government has partnered with a Texas-based company, Factom, to build a secure land title registry using the underlying features of blockchain. It will be doing this project in tandem with a title software company that also uses blockchain technology. Apart from building a database of land titles, this application could also allow citizens of Honduras to have more-secure mortgages and contracts.

Royal Philips: Tierion, a company specializing in collecting data and recording it in the blockchain, recently announced the completion of its first project with Royal Philips. Though further specifics have not been disclosed in public, in 2016, it is expected that the company will disclose the development undertaken. Also, speculations are around the potential usage of instant, interoperable patient records; a platform to decentralize healthcare data that's also cheaper to maintain and access; and security-enhanced records in the blockchain, which after recent breaches, highlight the healthcare industry's vulnerability when it comes to cybersecurity. Among other factors, these will see block chain as an innovative and soon-to-be-necessary resource for the healthcare industry.

Startup Lead Developments Examples (3)

Counterparty is a P2P financial platform and a distributed, open-source Internet protocol built on top of the bitcoin blockchain and network.

IdentityMind offers a full anti-money-laundering program enabling banks, money service businesses and money transmitters to meet U.S. (FinCEN) and worldwide

Outlier Ventures, a Europe-focused blockchain incubator, has launched an Uphold-based (formerly known as Bitreserve) decentralized P2P lending application called MoneyCircles, to allow underbanked and underserved individuals to access loans with greater flexibility. MoneyCircles issues smart contracts to verify and authenticate identities and settlements directly on the platform. The smart contacts can be written by independent "circle groups" on the platform, creating a trust-score-based relationship between lenders and borrowers on its payment network. MoneyCircles aims to allow savers and lenders to build a positive relationship with financial institutions by reconciling these two parts of the market. By encoding data in ordinary bitcoin transactions, Counterparty extends bitcoin's functionality. Besides providing users with a decentralized exchange, it has the ability to create virtual assets, issue dividends, and create price feeds and bets. Counterparty enables anyone to create smart contracts on the bitcoin blockchain.

GE Applications

Oil & Gas: records management for parts and maintenance

Aviation: Parts traceability and authenticity. Currently, every plane maintains a paper log of all its parts (from implementation to repairs to retirement). This paper log can be digitized onto blockchain technology so that these records can be read and managed from anywhere without compromising authenticity.

Healthcare:

  • Life Sciences: The chain of custody for cell and gene therapy is important as the timing of the “transactions” that occur during this therapy is vital to its success. Transparency and trust are required for such transactions, and blockchain can provide the secure digital tracking of events in the process of delivering such cells to the patient.
  • Biobanking: Blood or stem cells are deposited and made for later use. The blockchain ledger would record and timestamp the status of all deposits- including gathering, movement, and withdrawal of bio assets with associated information such as time and location of the deposit and demographic of the donor.
  • Patient record-keeping: All services performed for the patient are recorded in one place, eliminating complications that arise from having multiple patient records and slow down the treatment process. Patients could own their own records through EMR management if all records were kept on the blockchain- providing portability and flexibility.
  • Medical Records: MIT Graduate students developed MedRec, a system for managing medical records on the Etherium blockchain. It links medical records across the variety of doctor’s databases and includes personal sources of data- FitBit and 23and Me. The system will be useful in transparency of health records for families and future generations, ensures security of record keeping, and allows for the patient and/or doctor to update the records in real time. Miners for MedRec are medical researchers who are allowed access to the census-level data. A medical research plus a clinical blockchain.

Digital:Potential integration with our Asset Performance Management (APM) solution from GE Digital. We intent to combine the APM application with our Energy Management System (EMS), bringing additional service to our EMS customers.

  • Can we compare/compete with our cybersecurity offer from Wurldtech?
  • Public vs. Private blockchain: Is Digital team working on the EU digital agenda and privacy related issues? Can these two topics relate?
  • Auditing, Escrow etc…. (What is our differentiation here?)

Why Blockchain?

In all use cases above, the argument for blockchain, as opposed to other technologies, comes down to the trust that the technology intrinsically provides. Assurance that all record keeping is valid, accurate, and immutable is gold in the process of managing records– keeping records on blockchain would increase efficiency, eliminate double-truths or manual reconciliation, and ensure that multiple people can view a record at a given time.

Other blockchain opportunities: recording of Hash information into secure public blockchain, record management to provide transparency to regulators and auditors, leverage emerging blockchain standards for record management.

How would this help differentiate GE?

Gartner sees the following GE differentiators in Blockchain “deployments”:

  • GE Brand
  • GE Global Footprint
  • Legacy of GE digital finance trustworthiness
  • Evolving success of GE Predix ecosystem and associated partner/developer networks

Others?

______

Specifically, how would this differentiate your GE business? What can blockchain do for your business record management?

______

What are some partners?

Filament has pilots going with Flex and manufacturing, and Coca Cola on inventory management and asset tracking. They have expressed interest in doing a pilot with GE.

Are there other partners?

______

Potential Concerns/Common Pitfalls

  • Record management directly in Public Blockchain vs. Private Chain
  • Recording and sharing of company sensitive data
  • Recording of data in unstructured (somewhat unproven) format
  1. Supply Chain management

Supply chain management becomes a complex process with the involvement of multiple parties in multiple jurisdictions and subsequently differing processes for recording and management of the supply chain.

GE Applications

Smart Contracts: We need GE examples if anyone has seen any need here? ______

Oil & Gas:Traceability in the supply chain from raw material to finished good in the Oil & Gas industry- an example of a complex process that could leverage blockchain to track the product from raw material to finished good and through the life cycle. This means tracking batches of metal produced, forgings the metal is used in, machining operations, assembly, usage in service, product repairs, and retirement.

More?

How would this help differentiate GE?

GE is evolving to models where GE is paid for the uptime in supply chain management. With a more sophisticated supply chain management, customers and vendors may be more likely to do business with GE. However, since we expect this technology to be an industry-wide disruption, the key is to capture more customers before competitors also simplify their supply chain management, using the blockchain in a similar way. i.e. Race for time, We need to capture customers faster, Simplification

Specifically, how would this differentiate your GE business? What can blockchain do for your business supply chain?

______

How does information gathered from Predix applications impact supply chain management currently and would this change with the implementation of blockchain? ______

Why Blockchain?

Blockchain allows for the tracing of limited critical set of items with a select set of vendors/suppliers. It is capable of API integration with ERP solution or analytics solution and can supply data for most important customers- providing value first. Blockchain can do what other technologies cannot because blockchain eliminates the need for third party trust verification- public verification of this product lifecycle management means greater trust in the product itself and transparency in the wear and tear of the product. The technology requires all parties in the chain to record activity and any/all other parties to verify each transaction. With increase authenticity through real time verification, accuracy and efficiency of supply chain recording and management would increase.

Is there a similar technology that can do just as good of a job that we are using or not using in general that is competing with Blockchain? ______

On a granular level, can this technology (Blockchain) or another technology unlock “trapped cash” within supply chain?

______

How else can this be applied to the supply chain managed by your business today?

______

Potential Concerns/Common Pitfalls:

  • Large scale, industry-wide consortium initiatives vs. creating strong alliances with small groups
  • Focus is often on a too large geographical footprint, with too many data points (data ocean overload).
  1. Intercompany transactions

The GE Global Research team asserts that internal GE cash flow management capabilities would benefit from blockchain technology- eliminating the need for trusted third parties, like banks, or internal audit processes. With the fulfillment of asset transfer, blockchain technology can ensure payments through smart contracts for GE2GE payments.

GE Applications

Treasury:

GE Global Research: In terms of mobile money growth, exploring options to assist power utilities with better and more efficient means of cash collection. This could be applied internally.

How would this help differentiate GE?

Internal efficiencies. GE could use smart contracts on the blockchain to streamline finance documentation between GE’s businesses, overall reducing cost by eliminating the need for human jobs surrounding reconciliation of intercompany financial transactions.

How would this differentiate your GE business? How would you implement blockchain technology to execute intercompany payments? What does this do to your current functions whose role is to execute intercompany payments?

______

Why blockchain?

Blockchain technology would simulate an interpersonal transfer of cash, eliminating the need for banks or a third party source. The technology digitizes the process so transfer of money between GE businesses (or between businesses and Corporate) would be faster and automated through smart contracts. It would automate low volume/high value transfers. Open records would be kept for validation of these transactions.

Potential Concerns/Common Pitfalls: company driven vs bank driven transactions, very early stage so not a lot of analysis has been done and solutions available.

  1. Distributed Energy

This involves a decentralized system of energy exchange- consumer to consumer exchange of electricity via blockchain. People with solar panels and storage batters would sell excess power to their neighbors without such technology. The buyer and seller of the excess energy still pay a fee to an energy retailer for using the network for the transfer of power, but the retailer’s profits are lessened. The blockchain ledger will verify, record, and settle transactions of energy transfer virtually. Business models for these energy retailers must adapt.

Current powered by GE is in the beginning stages of exploring the potential for blockchain solutions to impact the energy industry. Blockchain applications for Distributed Energy Resources (“DERs”) currently seem to be focused on creating decentralized energy exchange marketplaces enabling consumer-to-consumer energy and REC sales. An example pilot project would enable “prosumers” (consumers of electricity who also produce power and can sell it back to the grid) with solar panels and storage batters to sell excess power and RECs to their neighbors. The buyer and seller of the excess energy still pay a fee to an energy retailer for using the network for the transfer of power, but the retailer’s profits are lessened. The blockchain ledger in this case may serve multiple functions, including production verification, record keeping, and virtual energy transfer transaction execution & settlement.

Several trials in U.S. and Netherlands (mostly by academia) are investigating the feasibility of creating a cryptographically secured, distributed peer-to-peer energy exchange and managing the exchanges among prosumers and consumers. Example projects include an MIT initiativeand the U.K. government's "Innovate U.K." initiative. An additional example is the use of blockchain technology to process energy exchanges in a community microgrid in Brooklyn, New York. Participants provided an open peer-to-peer energy exchange environment with a cryptographically secured decentralized platform of Ethereum. (Gartner)

The Energy Blockchain Ecosystem:

Virtual Grid—still researching

GE Applications

  • Virtual Power Plants
  • “Trustless” energy production or transaction verification
  • Smart contracts for DERs
  • Uberization of DER energy attributes (ex: valuing load shifting, demand response, & frequency regulation separately and optimizing energy storage battery utilization to maximize revenues from next day market conditions)
  • Secure utility data transmission at scale

Current (other GE applications)

  • Develop and control “trustless” blockchain-based DER monitoring
  • Develop unique Ethereum smart contracts to optimize DER economics
  • Build marketplace platform to enable and control C2C and C2Market transactions
  • To run, likely requires buy-in of regulators (state and federal), utilities, and ISOs

GE Differentiator

Gartner sees the following GE differentiators in Blockchain “deployments”:

  • GE Brand
  • GE Global Energy Innovator
  • Existing Global Installed Base
  • Evolving success of GE Predix ecosystem and associated partner/developer networks

How else would this differentiate GE?