WEEK 7 — DIGITAL TRANSFORMATION

Week 7: Blockchain Technology

Agenda

  1. 1Blockchain definition
  2. 2Smart Contracts
  3. 3Business use cases of blockchain and smart contracts
Dr. Davood WadiDigital Transformation
Two people in profile exchange a transaction document on the left; a red arrow points into a framed screen holding three chained blocks (Block 1, Block 2, and a red verified Block 3)Blockchain LedgerBlock 1Block 2Block 3Secure · Transparent · Immutable

CHAPTER 01

Blockchain

CLASS DISCUSSION

  1. 1How can we ensure that our digital transactions are secure and that the products we buy are genuine?
  2. 2What are some situations where having a shared, unalterable record would be beneficial?
  3. 3What if you could eliminate the need for intermediaries in your business dealings? How would that change the way you operate?
  4. 4How can we ensure that all parties involved in a transaction agree on the details and that there's no dispute later on?
Two people in profile face each other, each with a speech bubble, in conversation

CORE CONCEPT

Blockchain & Why Does Blockchain Matter?

Blockchain is a digital system that records information

  • securely,
  • transparently,
  • in a way that's difficult to alter.
Three stacked selectable rows for 1. Security, 2. Transparency, and 3. Efficiency; 1. Security is selected in red1. SecurityRecords securely2. TransparencyRecords transparently3. EfficiencyDifficult to alter
Security: Ensures the integrity and security of digital transactions.

ARCHITECTURE

Features of Blockchain

Four stacked selectable rows for Features of Blockchain: 1. Decentralized, 2. Immutable, 3. Consensus, and 4. Programmable; 1. Decentralized is selected1. DecentralizedP2P vs. Cloud2. ImmutablePermanent Record3. ConsensusAll Parties Agree4. ProgrammableSmart Contracts

Decentralized: No single point of control; data is distributed across a network.

  • Contrast with cloud computing
Exercise · Match up

Match each core feature of blockchain with how it operates in a shared shipping ledger.

Blockchain Feature

In the Shipping Ledger

Tap a term, then the example it goes with.

CHAPTER 02

Smart Contracts

AUTOMATED AGREEMENTS

Smart Contracts

A smart contract is a self-executing program

Contains the terms of an agreement written directly into lines of code.

It is stored and replicated on a blockchain.

Solana, Ethereum, etc.

Three selectable stages of a Smart Contract: 1. Terms in Code (a written agreement translated into lines of code), 2. On Blockchain (replicated across nodes on networks such as Solana and Ethereum), and 3. Self-Executing (automatically executing payment when conditions are met); 1. Terms in Code is selected in redAgreement → CodeEthereumSolanaReplicated NodesSolana · EthereumAuto-Executes1. Terms in Code2. On Blockchain3. Self-Executing

QUESTION

Question

Come up with a use case for the immutability and programmability of smart contracts

Interactive 7-domain selector for smart contract use cases; Deed management is selected1. Deed2. Legal3. Voting4. IP5. Crowdfund6. Insurance7. EducationDeed managementAuto Title Transfer → Verified Deed
  1. 1.Deed management (e.g. real estate, tangible good, digital goods)
  2. 2.Legal contracts
  3. 3.Voting Systems
  4. 4.Intellectual Property Management
  5. 5.Crowdfunding
  6. 6.Insurance
  7. 7.Education

CHAPTER 03

Supply Chain Management

SUPPLY CHAIN

Smart Contracts in Supply Chain Management

Three stacked selectable rows for Supply Chain Smart Contracts: 1. Automation, 2. Transparency, and 3. Trust; 1. Automation is selected1. AutomationFixes: Manual Delays2. TransparencyFixes: Tracking Gaps3. TrustFixes: Mistrust

Traditional Issues in Supply Chain Management

  • Inefficiencies in tracking and monitoring shipments.
  • Lack of transparency leading to mistrust between suppliers and buyers.
  • Manual processes causing delays in payments and documentation.

Automation: Automatically trigger actions like payments upon delivery confirmation.

CASE STUDY

Case Study: Amazon

Background:

  • Amazon faces delivery delays and payment issues in their supply chain, affecting supplier relationships and cash flow.

Implementation: Integrating smart contracts with IoT sensors to monitor shipments and automate payments.

Five stacked selectable rows for Amazon's supply chain smart contract process; 1. Order is selected1. Order2. Tracking3. Delivery4. Record5. Support

Process:

Order Placement: Buyer places an order, triggering a smart contract.
Exercise · Put it in order

Arrange the five stages of an IoT-and-smart-contract supply chain process in the order they occur.

Tap a step, then the number where it belongs.

CHAPTER 04

Real Estate & NFTs

DIGITAL OWNERSHIP

NFTs

Non-Fungible Tokens

Popularity and adoption surged in 2021 with celebrity adoption

Used for status signaling

Verifiable certificate of ownership

Three selectable rows illustrating Non-Fungible Tokens (NFTs): 1. 2021 Surge (rising adoption bars on a screen with celebrity adoption), 2. Status Signaling (a crown badge on a screen linked to a person), and 3. Ownership (a digital certificate on a screen verifying asset ownership); 1. 2021 Surge is selected in red1. 2021 SurgeCelebrity Adoption2. Status SignalingDigital Identity3. OwnershipVerified Certificate

CLASS DISCUSSION

  1. 1If you own a house, how do you prove to others that you are the owner?
  2. 2What if somebody forged a deed? What resort do you have?
  3. 3What are some of the challenges when you wish to sell your house?
Two people in profile face each other, each with a speech bubble, in conversation

REAL ESTATE

Smart Contracts in Real Estate

FeatureTraditional ContractsSmart Contracts
ExecutionManually executed; signed on paper or digital formats.Automatically executed when predefined conditions are met.
Trust RequirementRequires trust in intermediaries (e.g., brokers, attorneys).Trust is minimized; relies on blockchain technology for security.
Involvement of IntermediariesOften requires multiple intermediaries (lawyers, notaries).Reduces or eliminates need for intermediaries, speeding up processes.
Timeframe for TransactionsCan take weeks or months to complete due to manual processing.Can be completed in minutes to hours through automation.
CostOften associated with higher costs due to intermediary fees.Lowers costs by minimizing fees related to third parties.
Dispute ResolutionGenerally requires legal action or mediation in case of disputes.Built-in mechanisms can provide automated dispute resolution.
Data SecurityVulnerable to forgery and data manipulation.High security with immutable records on the blockchain.
Visual comparison of Traditional Contracts (top, in blue) and Smart Contracts (bottom, in red) in Real Estate for feature 1: Execution1. ExecutionTraditionalManual · PaperSmart ContractAuto-Executed1234567
Exercise · Sort into groups

Sort each property transaction characteristic into Traditional Contracts or Smart Contracts.

      Tap a card, then tap the group it belongs to.

      CHAPTER 05

      Financial Services & Legal Contracts

      CLASS DISCUSSION

      1. 1Imagine you are planning on buying a home. To secure the funds, you explore different mortgage options. What challenges you might face when researching the best mortgage option?
      2. 2As a car owner, you have car insurance. If a collision occurs, what are the steps necessary to receive compensation? How can these steps be simplified using blockchain?
      Two people in profile face each other, each with a speech bubble, in conversation

      FINANCIAL SERVICES

      Smart Contracts in Financial Services

      Automate loan disbursements or insurance claims based on predefined conditions.

      Three stacked selectable rows for Smart Contracts in Financial Services; 1. Traditional Issues is selected1. Traditional IssuesCostly · Lengthy2. Auto-DisbursementLoans & Claims3. TransparencyReduces Disputes

      Issues of Traditional Systems

      • Costly processes due to manual interventions.
      • Lengthy processing times lead to frustrations among customers.

      Automate Processes:

      • Loan disbursements triggered by conditions such as credit score or document verification.
      • Insurance claims paid automatically upon verification of required conditions.
      • Enhance Transparency: All parties have access to the same information, reducing disputes.

      CASE EXAMPLE

      Smart Contracts in Financial Services: Loan Approval

      A bank uses smart contracts to streamline the loan approval process.

      Process:

      • Customer submits loan application.
      • Smart contract verifies identity, credit score, and other conditions.
      • Automatic loan disbursement upon confirmation.

      Outcomes:

      • Reduced processing time from days to minutes.
      • Lower operational costs and less human error.
      SIMULATED. Interactive Bank Loan Smart Contract: applicant submits loan application on the left, smart contract on the center screen checks identity and credit score (740 vs 680 threshold), resulting in automatic loan disbursement in minutesScore 740 ≥ 680 → Auto-DisbursedSIMULATED1. ApplyID & Docs: VerifiedDays → Minutes2. Smart Contract3. DisbursedCredit Score: 740 (Threshold: 680)
      Knowledge Check

      A credit union replaces its manual small-business loan review with a blockchain smart contract. When a bakery owner submits a loan application, what happens next in the smart-contract workflow and what outcome does it produce?

      Exercise · Match up

      Match each legal contract concept with how it appears when a startup hires a freelance web developer.

      Legal Contract Concept

      Startup & Web Developer Scenario

      Tap a term, then the example it goes with.

      CHAPTER 06

      Voting, Intellectual Property & Other Use Cases

      CLASS DISCUSSION

      1. 1What are the issues the in the traditional voting systems?
      2. 2How are these issues usually resolved?
      3. 3What steps can be taken to mitigate these issues?
      Two people in profile face each other, each with a speech bubble, in conversation

      VOTING SYSTEMS

      Smart Contracts in Voting Systems

      Ensure transparent and tamper-proof vote counting.

      Five stacked selectable rows for Smart Contracts in Voting Systems; 1. Immutable is selected1. Immutable2. Decentralized3. Auto Tally4. Transparent5. Conditions

      The Challenge in Traditional Voting Systems

      • Vulnerability to Fraud: Traditional voting methods are susceptible to ballot tampering, miscounts, and fraud.
      • Lack of Transparency: Voters and stakeholders often lack visibility into the vote counting process, undermining trust.
      • Complexity and Inefficiency: Manual counting processes can lead to errors and delays in results.
      • Post-Election Disputes: Controversies arise from ambiguous voting procedures and results.

      Immutable Ledger: Central feature that ensures all votes are recorded and cannot be altered once submitted.

      Exercise · Which one is it?

      Each election scenario below highlights a specific blockchain voting feature. Identify which feature is at work.

      Once a citizen casts their digital ballot, the record is permanently locked so no official or hacker can alter or delete the vote afterward.

      Which concept does this case show?

      CLASS DISCUSSION

      1. 1Imagine you invented a new machine. What are some of the barriers for registering a patent?
      2. 2When you upload original content on YouTube, how can you ensure nobody else would steal your content and reupload it?
      Two people in profile face each other, each with a speech bubble, in conversation

      INTELLECTUAL PROPERTY

      Smart Contracts in Intellectual Property Management

      Automate licensing and tracking of intellectual property usage.

      Four stacked selectable rows for Smart Contracts in Intellectual Property Management; 1. IP Barriers is selected1. IP BarriersInfringement & Delays2. Coded TermsSelf-Executing3. Created FirstImmutable Ownership4. Auto RoyaltiesLicensing Enforced

      Complexity of Contracts:

      • Licensing agreements often involve complicated terms and conditions.

      Infringement Risks:

      • Difficulty in monitoring unauthorized use or infringement of IP rights.

      Inefficiency in Enforcement:

      • Time-consuming legal processes to enforce rights and collect royalties.

      APPLICATIONS

      Other Use Cases of Smart Contracts

      Three stacked selectable rows for Other Use Cases of Smart Contracts: 1. Crowdfunding, 2. Charity, and 3. Education; 1. Crowdfunding is selected1. CrowdfundingMilestone Release2. CharityBitcoin Tracking3. EducationAuto Certificates

      Crowdfunding

      • Automatically release funds to projects upon reaching specified milestones.
      Exercise · Which one is it?

      Identify which smart contract application domain each real-world scenario illustrates.

      Backers fund a clean-energy startup; the smart contract holds the pool and releases each tranche of capital only when the team completes a verified prototype milestone.

      Which concept does this case show?

      CONCLUSION

      Conclusion

      KEY TAKEAWAYS

      1. 1What are Blockchains?
      2. 2What are Smart Contracts?
      3. 3What business sectors can benefit from blockchains and smart contracts?