Blockchain

by Cisco
Build trust-based business
networks for digital transformation

© 2018 Cisco and/or its affiliates. All rights reserved.

Executive summary

Blockchain, called the “tech breakthrough megatrend” by PWC¹, is rapidly gaining broad acceptance. According to IDC, global
spending on this innovative technology is expected to reach $2.1 billion in 2018.² Across the globe, industries are investigating ways
to use blockchain to increase trust across their business value chains and address primary challenges around complexity, transparency,
and security.

83% 10%
of executives
believe trust is the
Global GDP that is
likely to be stored
$9.7B
cornerstone of the on Blockchains expected Blockchain
digital economy by 2027 market by 2021

Although blockchain has the potential to transform the business As we move from experimentation to widespread adoption in the
landscape, important challenges to wider adoption remain. First, enterprise, Cisco is leading several efforts to make blockchain
platform standards need to be established that meet the complex technology enterprise ready. In this paper, we’ll explore:
needs of the enterprise. Furthermore, customers are looking for • What blockchain is and why it is important
industry-specific solutions to transform their business processes. • The role of blockchain in transforming the business
Finally, interconnectivity of multiple independent blockchain • How Cisco is developing blockchain technology for enterprises
networks is needed to unlock the true value of blockchain. • How Cisco is bringing together ecosystems, standards
and alliances to drive industry adoption

© 2018 Cisco and/or its affiliates. All rights reserved.

Table of Contents

01 Executive summary

03 What is blockchain?
03 Enabling a new level of trust

04 What is driving the blockchain revolution?

05 How big is the opportunity?

06 Supply chain
06 Internet of things
06 Smart cities

07 Making blockchain enterprise ready

07 The Cisco framework

08 Platform overview
09 Interfaces
10 Infrastructure and network
11 Security and analytics

12 Building an ecosystem for industry solutions

13 Unlocking value through interoperability

14 Trusted IoT Alliance
14 Hyperledger Project
14 Enterprise Ethereum Alliance
14 Digital Chamber of Commerce

15 Conclusion

© 2018 Cisco and/or its affiliates. All rights reserved.

What is blockchain?

Blockchain technology enables multiple parties to reach an

agreement on the authenticity of a transaction in a decentralized
manner. These outcomes are then permanently recorded
across a shared database known as a blockchain, which is
cryptographically secured.

Because the blockchain ledger is shared among all participants

involved, no one has sole ownership over the information that is
recorded on the blockchain. This makes sure that the information
cannot be tampered with. Multiple blockchain configurations
are in use today that utilize different methods of reaching an
agreement or consensus, depending on the type of blockchain
network. For example, today’s well-known bitcoin blockchain
operates as a permissionless network in which anyone can
participate. Alternatively, many enterprises are choosing to
operate a permissioned blockchain in which only known entities
may participate as this model provides more privacy, speed,
and administrative tools to manage the network.

Enabling a new level of trust

The true innovation of blockchain is its ability to automate trust
among the parties using it. Transactions are settled in a collective
fashion and recorded on a distributed ledger, which removes
the need for an established third party to create a trusted
relationship. Participants can directly use the blockchain as the
source of truth instead of one another.

This embedded trust allows consumers, enterprises, and

governments to automate how they manage any transactional
relationship. The Economist refers to this capability as the
“trust machine” that will fundamentally transform the way we
do business.⁶ Trust automation can dramatically simplify business
processes by eliminating the need for intermediaries that
were previously required to coordinate the exchange of
business-critical information or assets.

© 2018 Cisco and/or its affiliates. All rights reserved.

What is driving the blockchain revolution?

The rise of the API economy has transformed how we use technology in the enterprise. However, although technology has advanced,
methods of doing business over the Internet have not kept pace. Today’s organizations must increasingly manage data and transactions
among a large number of untrusted parties, creating business challenges around transparency, complexity, and security:

Transparency Complexity Security

Lack of visibility into a product’s journey Global trade and commerce today The centralized architecture of
across global supply chains leads to involve multiple intermediaries such as information across applications, users,
challenges in identifying that product’s financial institutions, brokers, and third and devices provides nonsanctioned
provenance, with serious implications parties, thus leading to increased hackers a single point to attack to gain
to counterfeiting, health, and safety. costs of doing business. access and control.

Counterfeiting is estimated to
cost U.S.-based semiconductor
companies more than
Suppliers in emerging markets
today pay interest on receivable
financing as high as
20B
$7.5B
IoT devices will be online by

30%
⁸ 2020, representing a significant
per year ⁷ number of attack surfaces⁹

Blockchain-based technologies can build a foundation for trust in the enterprise through the digitization of business processes,
tokenization of assets, and codification of complex contracts. These technologies can enable business ecosystems, consisting of
both internal and external partners, to securely interact and transact without human intervention and dramatically simplify operations
for large enterprises.

© 2018 Cisco and/or its affiliates. All rights reserved.

How big is the opportunity?

Traditionally, institutions such as banks, governments, and

corporations have played the role of managing risk to facilitate
trade and commerce. Now, for the first time, organizations
can use technology to manage this risk to lower uncertainty
and reduce everyday transaction costs of doing business.⁹
This transformation promises to have a significant effect on
our broader economy. The transformation toward an era of a
programmable economy is expected to deliver efficiencies and
new business value in excess of $3 trillion by 2030.13 This will
be driven primarily by improved cash flow, asset provenance,
and native asset creation, as well as new trust-based business
models.13

The transformation toward an era of

a programmable economy is expected
to deliver efficiencies and new
business value in excess of

$3T by 2030.

© 2018 Cisco and/or its affiliates. All rights reserved.

As the effects of blockchain permeates across our economy, it will transform industries that today rely on centralized infrastructure
and business processes.

Supply chain
Blockchain can enable manufacturers to improve track and trace
of components and finished goods across a supply chain and
enable new applications around anticounterfeiting, supplier and
purchaser financing, or management of supply chain disruptions
and recalls.

Entire product lifecycle tracked on the blockchain to eliminate counterfeiting

Shipping Distribution
Supplier Manufacturer Customers
company channel partner

Internet of Things
The decentralized and autonomous model of the blockchain 3
makes it an ideal foundation for the Internet of Things. This model
eliminates single points of failure and creates a more secure and Perimeterless
peer-to-peer
resilient platform on which devices can run. attestation of devices

1
Device manufacturer
registers new devices
and operational forensics Registration and data
on the blockchain 2 forensics follows every
device across its lifecycle

Smart cities
Cities can use blockchain to create a secure and common
ledger to manage real-time data around transportation, energy,
and utilities. This will help cities streamline how they interface
with citizens, reduce resource consumption, and share public
data with authorized third parties.

© 2018 Cisco and/or its affiliates. All rights reserved.

Making blockchain enterprise ready

Most of today’s blockchain efforts are still in the experimental • As large enterprises with complex business relationships
stage, and many proofs of concept have yet to gain widespread look to build blockchain networks at scale, true value will
adoption. As permissioned blockchains continue to evolve, be unlocked by the interconnectivity of many independent
industries and governments are still working through a set of blockchain networks.
primary challenges:
As companies move from proofs of concept to large-scale
• As organizations evaluate platforms, they are looking for an enterprise deployments, they are looking for the right partner
established set of standards that meets the complex needs to help them succeed. Cisco is developing a comprehensive
of the enterprise. foundation for enterprises to build trust-based business
networks on the blockchain.
• Although blockchain is a transformational technology,
organizations are ultimately looking for industry-specific
solutions to transform their business processes.

The Cisco framework

The Cisco® blockchain framework details the necessary elements for a simple, secure, scalable enterprise-grade blockchain
that is based on Cisco’s propriety technology. Our blockchain framework is composed of the following reference groups:

1 Platform 2 Interfaces 3 Infrastructure

and network 4 Security
and analytics

© 2018 Cisco and/or its affiliates. All rights reserved.

1. Platform overview
Cisco is building a blockchain platform (Figure 1), defined by a composable platform architecture that enables specific implementations
to meet desired use-case requirements across different industries. Composability enables services to be upgraded over time, with
new features introduced as blockchain technologies advance. Taking advantage of modern microservice design patterns, the platform
architecture helps future-proof an enterprise’s investment in blockchain. The platform core consists of multiple layers, each including
multiple subservices, with many customizable using pluggable interfaces.

Figure 1. Cisco blockchain framework: platform

Performance
Management Ease of Adoption
Provide control Integrate with existing
and visibility backend systems Ease of
Development
Middleware and 3rd Platform Interface
Increase ease
and dev speed
Party Integrations
Information
Confidentiality
Orchestration Manage data with fine
grained access controls

Identity and Policy Composable

Framework
Adapter
Smart Contracts Language Engine
Optimize solution
for use case
Adapter
Distributed Ledger Consensus Enterprise Scalability
Hardened Scale with high
Security Scalable Communications Layer throughput and speed
Protect business
and customers Hardware
Security Module Infrastructure and Network

Communications layer and distributed ledger

A set of services that enable blockchain nodes to communicate
with each other and maintain consensus with respect to the
ledger state.

Smart contracts
A pluggable smart contract engine, executed in a secure environment
that supports familiar developer languages such as JavaScript,
GoLang, and Python.

Identity and policy

An identity and policy layer that is responsible for tasks such as
authentication, authorization, and identity management.

Orchestration
An orchestration layer that ties all the other service levels together as
part of a “service mesh.” Enterprises can use their tool of choice, such
as Kubernetes, Rancher, and Docker swarm. The orchestration layer
facilitates tasks such as adding and removing nodes, made simple
via the administrator portal.
© 2018 Cisco and/or its affiliates. All rights reserved.
2. Interfaces
When evaluating any new enterprise blockchain technology, it is important to consider the ease of deploying and managing the network,
developing applications with best-in-class tools, and integration with existing enterprise systems. Our blockchain framework includes
interfaces that expose the necessary functionality to perform these objectives, enhancing overall ease of use. Figure 2 offers a closer
look at these interfaces.

Figure 2. Cisco blockchain framework: interfaces

Multiple Personas DevOps Auditors/ Finance/

Developers
Consuming Interfaces and SecOps Analysts Billing

Connection to Supply Connection to

DApp 1
Chain Systems (SCM) peer Blockchains

Cisco Blockchain Connectors (Marketplace)

ERP, SCM, CRM, Vertical Specific
Security/Logging
and Blockchain Middleware
Connectors
Interconnectivity e.g. Track and Trace
DApp 2

Core Platform Interfaces

Assurance
Consortium Application/ Physical Consortium
Analytics: Threat
and User Smart Contract Network and Node Billing and
QoS and Analytics
Management Management Management Reporting
SLA Reporting

Platform Portal with Graphical User Interface

Software Development Kit (SDK) and Platform Application Programmable Interfaces (APIs)

Platform Core

Platform interface
The native platform interface is composed of a software developer kit
(SDK) with flexible APIs, as well as an administrator portal that exposes
important SDK functionality via an intuitive graphical user interface.

Middleware and connectors

To further simplify ease of use and accelerate enterprise adoption,
the blockchain platform architecture defines a middleware and
connector interface that integrates with existing centralized enterprise
systems as well as other blockchain networks. This is achieved
via a library of native and third-party application connectors and
© 2018 Cisco and/or its affiliates. All rights reserved.
middleware, made available via a developer marketplace.
3. Infrastructure and network
Our hardware-independent blockchain framework defines a set of standards to address infrastructure-level security risks, including
reference architectures to deploy on the premises: in an enterprise's demilitarized zone (DMZ), in the cloud, or via a hybrid deployment.
Furthermore, the platform provides flexible support for a choice of infrastructure technologies, including hardware security modules
(HSMs) and WAN optimization tools such as software-defined WAN.

Figure 3. Cisco blockchain framework: infrastructure and network

mTLS HTTP/2
FlexVPN

HSM

HSM

Cloud Nodes On-premise Nodes

© 2018 Cisco and/or its affiliates. All rights reserved.

4. Security and analytics
A common misconception is that the distributed nature of
blockchains makes them inherently secure. However, without
the correct design measures, they can be prone to multiple
threats, including:

Distributed-denial-of-service (DDoS)
and Sybil attacks

Attempted collusion between blockchain nodes: the

private blockchain equivalent of a 51 percent attack

Exploiting vulnerabilities in smart contracts,

including reentrancy attacks

Routing attacks

Side-channel attacks at the infrastructure layer

Replay attacks

Our blockchain framework is completed with end-to-end

security and analytics, spanning the infrastructure layer through
to the interface layer. Additional protection is also provided by
a blockchain application firewall, or BAF. The BAF is analogous
to a web application firewall (WAF), which detects and protects
against various attack vectors by inspecting for unusual patterns
using analytics. For example, a BAF might detect unusual traffic
from an agent that could represent an attempted DDoS attack.

Analytics also measure the performance of the blockchain

network to provide enterprise SLAs and service assurance.
Cisco’s leadership in network security and application analytics is
helping redefine security and analytics for enterprise blockchain.

Figure 4. Cisco blockchain framework: security and analytics

Performance
Management
Provide control
and visibility
• Performance
Analytics
• Activity logs
for auditing
• Threat detection
and alerts

© 2018 Cisco and/or its affiliates. All rights reserved.

Building an ecosystem for industry solutions

In addition to robust platform standards, organizations are looking to partners to build industry-specific solutions for large-scale adoption.
As companies explore enterprise solutions and industry use cases, they will need experienced partners, including:

Cloud service providers System integrators Industry specialists

Hybrid deployments will dominate the Integrating with an organization’s SMEs and industry consultants can
enterprise blockchain space. Major legacy systems requires professional focus deeply on specific industry
cloud providers are already offering or expertise. Systems integrators will be requirements, assist with business case
about to announce blockchain tools and essential partners for building enterprise and ROI calculations, and make sure of
templates. We expect more blockchain blockchain solutions and will work closely compliance to industry regulations for
offerings as cloud providers rush to with app developers as they create each specific deployment.
capture the momentum. new tools.

Cisco is building an ecosystem to support blockchain adoption that brings together service providers, ISVs, and startups, as well as key
consulting partners to create end-to-end industry solutions for the enterprise. This comprehensive approach to innovation is one that
will future-proof our customers and partners while fully harnessing the possibilities of this radical new technology.

© 2018 Cisco and/or its affiliates. All rights reserved.

Unlocking value through interoperability

Each blockchain network represents a unique value chain, such as a manufacturing supply chain, a consortium of companies with
interconnected IoT devices, or even a smart city. As blockchain networks grow and expand, these discrete networks will increasingly
need to interact with one another. This close interaction will require new interoperability standards and protocols, as well as security
toolkits to help secure these discrete blockchain bridges.

Internet Scale Trust Network

V
M V V
M V
V M
V
V M M
V
M V
V
M
V M
M V
V V
V
M
M M
M V
V

Multi-provider blockchain networks with

open standards and global interoperability.

A primary focus of Cisco’s blockchain effort is around creating a common data model for digitized physical assets that can be deployed
on any existing blockchain network, including well-known platforms in the Hyperledger project and Enterprise Ethereum.

For example, Cisco envisions the ability for an asset to be digitized on one blockchain network type and transferred to others, while
maintaining a cryptographically secure record of ownership or custody. Figure 10 shows how this capability could be used to track the
import and export of goods.

Figure 5. Vision to track and provide continuity of chain of custody in heterogeneous blockchain operating environment

Physical assets digitized

on BlockchainA.
Received on BlockchainC.
Verified on BlockchainB.

BlockchainA BlockchainB BlockchainC

© 2018 Cisco and/or its affiliates. All rights reserved.

To deliver a true Internet-scale trust network that is interoperable,
Cisco is working with a number of industry and ecosystem
partners to develop standards and tools for blockchain
technology to reach its full potential in the enterprise.

Trusted IoT alliance

Cisco is leading industry adoption
efforts thorough the Trusted IoT Alliance,
which is platform independent and
focuses specifically on developing an
interoperability framework for digitized
physical assets and their smart contract
libraries that live on blockchain networks.
The Alliance is also focused on addressing
challenges around scale and performance,
through the launch of the first-of-its-kind
test net for blockchain, enabling engineers
to access a global open-source test
environment for the development
of blockchain solutions.

Hyperledger project
Hyperledger is an open-source
umbrella project for multiple enterprise
blockchain platforms and associated
technology. Cisco is a founding member
of the Hyperledger project; chairs
the architecture working group; and
participates in the organization’s identity,
marketing, and use-case working groups.

Enterprise Ethereum Alliance

Cisco officially joined the Enterprise
Ethereum Alliance (EEA) in July 2017
to partner with industry leaders in
developing open industry standards
for enterprises looking to address
issues around scalability, privacy, and
confidentiality on the Ethereum blockchain.

Digital Chamber of Commerce

Cisco is an Executive Committee
member of the Chamber of Digital
Commerce, the world’s leading trade
association representing the digital asset
and blockchain industry. Cisco and the
Chamber are spearheading efforts to
promote the acceptance of digital assets
and blockchain-based technologies through
education, advocacy, and collaboration with
policymakers and regulatory agencies.

© 2018 Cisco and/or its affiliates. All rights reserved.

Conclusion

Blockchain has the potential to change the rules by automating Cisco is building a comprehensive foundation for enterprise
trust, increasing transparency, and simplifying business processes. blockchain technology that brings together our strengths in
However, to unleash its full potential, it needs to be based on an high-availability distributed systems architecture as well as
established set of standards that meets the complex needs of the best-in-class capabilities around security, identity, and
enterprise. In addition, today’s organizations are seeking industry- cryptography. To accelerate enterprise adoption, we’re also
specific solutions to transform their business processes and need bringing together a world-class ecosystem of partners and
the ability to build blockchain networks that are interoperable. alliances to deliver a true Internet-scale trust network. As
businesses look to realize the promise of this transformative
technology, Cisco is focused on making blockchain enterprise
ready, and we encourage you to contact your Cisco
representative to learn more.

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affiliates. All rights reserved. 12. http://blockfund.it/research-1/ 13. http://blockfund.it/research-1/