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Gökhan ELİBOL Deputy General Manager Board Member at Takasbank
We are proud to announce BiGA, the world’s the regulatory authorities and international first physical gold-backed blockchain-based organizations in order to enrich fintech transfer system which is built by Takasbank. ecosystem. Today’s global economic trends come with intense competition. In particular, BiGA is a reference project that is intended developments seen in financial technologies to become a milestone in the adoption gradually becomes more crucial. of blockchain technologies by financial institutions. BiGA is under international Having adopted progress and development patenting process with its innovative as its main objective since the very first features. Especially, BiGA is expected to have day of its foundation, our Bank carries out contributions on Istanbul Financial Center. its activities with a focus on contributions I would like to express my gratitude to the to the Turkish economy. What is more, our Chairman of our Executive Board, our Bank’s Bank has been also serving as an On-Site employees and all the stakeholders of the R&D Center within the brand FinTechHub project for their contributions and support Takas Istanbul since 2017. in the BiGA Project.
The central position of Takasbank in Turkish Capital Markets and our R&D mission have triggered us to work on blockchain technologies.
Special attention is given to collaborations with start-ups and universities, giving R&D incentives to our employees. Meetings with 3 TABLE OF CONTENTS
8 ABSTRACT
10 INTRODUCTION
12 ABOUT TAKASBANK
16 TAKASBANK BLOCKCHAIN VISION
19 SCOPE OF THE PROJECT • GOLD TRANSFER SYSTEM (GTS) PROJECT • GTS-BIGA INTEGRATION • TRANSFER • RECONCILIATION • ISSUANCE • REDEEM
26 TECHNICAL BACKGROUND OF THE PROJECT • HYPERLEDGER • QUORUM • ZERO-KNOWLEDGE PROOF • OTHER TECHNOLOGIES
4
30 FUNCTIONAL DESIGN • BIGA WITH HYPERLEDGER PLATFORM • BIGA WITH QUORUM PLATFORM
36 BIGA PROJECT TEST RESULTS • TEST SCENARIOS • TEST RESULTS • BIGA FUNCTIONS TEST RESULTS
40 TECHNICAL OUTPUTS • OPERATING PRINCIPLES OF DISTRIBUTED SYSTEMS • DIFFERENT BLOCKCHAIN INFRASTRUCTURES • CONSENSUS ALGORITHMS • CRYPTOGRAPHIC ALGORITHMS • BLOCKCHAIN ACCOUNT STRUCTURES • PRE-COMPILED CONTRACTS:
44 BUSINESS OUTPUTS • ASSET TRANSFER • BUSINESS CONTINUITY • PAYMENT SYSTEM INFRASTRUCTURE
5 46 LESSONS LEARNED AND RECOMMENDATIONS
48 FUTURE PLANS • CHANGING THE ZERO-KNOWLEDGE PROOF ALGORITHM • REMOVAL OF THE QUORUM MAKER DEPENDENCY • CHANGING THE CONSENSUS ALGORITHM • SECRET KEY RECOVERY SCENARIOS • CONCEALMENT OF THE PARTIES INVOLVED IN TRANSFER • UPDATEABLE SMART CONTRACT • DEVELOPMENT WITH HYPERLEDGER FABRIC PLATFORM • KNOW YOUR CUSTOMER STUDIES • WALLET APPLICATION FOR PERSONAL USE • EVALUATION OF SOME EXTREME SCENARIOS
6
52 CONCLUSION
53 PROJECT TEAM
54 THANKS
55 ABBREVIATIONS / TERMS OF GLOSSARY
58 APPENDICES
65 REFERENCES
7 ABSTRACT
Popularity of blockchain technology has sector in addition to existing technologies been growing among financial institutions and that such activities can be made recently, particularly those with central within Takasbank. A special attention must positions, which led many foremost be given to the functions such as usage institutions to explore possible applications of decentralized ledger technologies and of this brand new technology. Having digitalization of physically-backed assets, knowledge and experience on blockchain which are in line with the regulations technology is one of the strategic goals of and privacy expectations of transaction Takasbank since it is discovered that it may owners, and through which transactions have a disruptive effect on financial sector. can be monitored by authorities. The With this strategy, Takasbank R&D Center idea to develop a platform using the closely studies blockchain technology for blockchain technology was born in 2017 more than three years. Existing studies within Takasbank. In the mentioned indicate that the blockchain technologies study, a platform allowing for transfer of are not yet mature enough to be used in physically-backed digital gold between the the financial sector. parties through the blockchain technology is established. Not only the distributed It is clear that further development is needed ledger technology is used, but also the to adopt this technology in the financial privacy of transactions is protected.
8 ABSTRACT
Transactions with full privacy, having This document is prepared to give backed by physical assets, without information about the development independent value and the capability of process of the BiGA Project. execution in line with regulations are the features differentiating this project from The offered BiGA Digital Gold is ensured to many other projects announced across have equivalence to one gram gold which the world. In this study, developments can be transferred among stakeholders in are made with two distinct blockchain a controlled and privacy-focused manner. infrastructures outstanding with different The proper functioning and competence technical capabilities. of the technology are tested and technological uncertainties are observed. As a result, a multi-party testing Moreover, it is aimed to pioneer the other process is initiated with five Banks. studies and efforts in the financial sector. Tests are conducted with Albaraka Türk The document provides information on Participation Bank, Garanti BBVA, Kuveyt both the technical infrastructure and the Türk Participation Bank, Vakıfbank and business model of the project. Ziraat Bank. The functionality of BiGA was observed to have 100% success rate. BiGA One Gram Gold INTRODUCTION
The BiGA Project is initiated by Takasbank contributions to blockchain technologies Blockchain Work Group within Takasbank. in the financial ecosystem through various As of then, the developments within the meetings and exchange of information with blockchain technologies are followed up the start-ups in the blockchain ecosystem and the projects that could be implemented developing in Turkey. under Takasbank are evaluated. The idea that Gold Transfer System Project On the other hand, Takasbank achieved its (GTS), whose technical infrastructure is On-Site R&D Center status in 2017. With developed with traditional methods, the R&D vision, blockchain studies are can be developed by using blockchain carried on with project design. Takasbank technology while it was still in the design has efforts on these studies from executive stage had emerged. Therefore, the efforts level. This includes hosting blockchain- for BiGA Project that can be considered as related organizations and ensuring active the blockchain version of the Gold Transfer participation in blockchain focused events. System are initiated. In this paper, we Takasbank has made present details of the first phase of BiGA.
10 INTRODUCTION BiGA One Gram Gold
11 ABOUT TAKASBANK
Having a strategic importance in respect the structure of Borsa Istanbul A.Ş. Currently of the banking and capital markets of providing “Central Counterparty” (CCP) our country, Istanbul Takas ve Saklama services in the Securities Lending Market, Bankası A.Ş. (Istanbul Clearing, Settlement Borsa Istanbul Money Market, Equity and Custody Bank Inc.) (Takasbank) has Market, Derivatives Market and Foreign the license and authorities as the “Central Clearing and Settlement Institution”, Exchange SWAP Market; Takasbank the “Custodian for Pension Funds”, the warrants the execution of transactions “National Numbering Agency”, the under the scope of its CCP activities; and in “Central Counterparty Institution”, the this context, it conducts a comprehensive “Payment and Securities Settlement risk management activity with its advanced System” and the “Investment Bank”. In technological infrastructure. In addition, this context, it is the only institution that is Takasbank Money Market, one of the constantly supervised and audited by the organized money markets in our Country, Capital Markets Board (CMB), the Central which brings together the financial Bank of Republic of Turkey (CBRT), and institutions supplying and demanding the Banking Regulation and Supervision funds and allows for execution of Agency (BRSA). transactions with a term of not more than 6 months, thus creating the comparable The main objective of Istanbul Clearing, market interest rates, is also a platform Settlement and Custody Bank Inc. is to operated by Takasbank. increase the competitive power of our country’s markets by providing settlement On the other hand, Takasbank, one of the and custody services and performing institutions that received an operating financial services and any and all kinds of license from the CBRT and was authorized economic activities under the related laws. as a payment and securities settlement Authorized by the CMB as the Central system within the framework of the “Law Clearing and Settlement Institution of our no. 6493 on Payment and Securities Country, Takasbank provides settlement, Settlement Systems, Payment Services collateral and cash management services and Electronic Money Institutions” (Law), to the other markets in our country is defined as a “Critical Bank” due to the (Commodity Exchange, Energy Market), strategic importance in the banking and including, in particular, the markets under capital markets within the EFT-ESTS system. 12 ABOUT TAKASBANK
Takasbank has expanded its activity areas In addition, TapuTakas System (Title Deed to international platforms as well with the Transfer System) was designed under “Cash Settlement and Collateral Service”, the protocol signed with the General “Global Settlement and Custody Service” Directorate of Land Registry and Cadastre and “Local Settlement and Custody Service” to create time, workforce and cost that it provides through the securities and advantages for all parties via a modern, cash correspondent accounts established secure and technological infrastructure abroad and its SWIFT membership. through: • Simultaneous exchange of the real estate Serving as a bridge between the money and and the related cash sales cost; capital markets by providing reliable, fast • Elimination of the trust issues of parties; wand cost-effective cash transfer service, • Elimination of cash carrying risks; Takasbank offers clearing and settlement • Ease of fast transfer at low cost; services for the markets operating under in order to prevent the problems the structure of Borsa Istanbul within the experienced by buyers and sellers at the framework of the Capital Market and time of exchange of property rights and Borsa Istanbul legislation through online the purchase-sale cost. connection with the organized markets in a fully-automated environment. Takasbank Check Clearing System allowing for payment of checks on account between Takasbank has, in years, expanded its range bank branches and through which all of banking products with instruments functions are managed from a single center including cash and non-cash credit facilities was established by adding to the clearing and aiming to support the completion of and settlement transactions, the collateral settlement. In addition to the cash credit management function previously not facilities that it extends, it conducts its included in the check clearing services, banking activities and executes clearing under article 5 of the Regulation on Check and settlement transactions of Turkish Clearing Transactions. Capital Markets supported with cash and non-cash credit facilities like Takasbank Takasbank was authorized as the central Money Market (TMM), Turkey Electronic settlement bank in order to ensure Fund Trading Platform (TEFAS) and continuous cash flow in the market through Securities Lending Market (SLM) operated timely and accurate execution of payments by it, by minimizing the risks, providing and operation of collateral mechanism for liquidity for the market and aiming error- the Electricity and Natural Gas Markets in free and timely completion of settlement. the energy market.
13 Offering cross-border services to market Our Bank also became an on-site R&D participants as well, Takasbank also Center on 21 April 2017 upon the approval represents Turkey in global organizations of the Ministry of Science, Industry and under its capacity as the international Technology of the Republic of Turkey settlement agency. Activities related under the Law No. 5746. with many projects are continued with the aim of developing the technological The “PERSON-TO-PERSON, ACCOUNT- infrastructure in line with Takasbank’s TO-ACCOUNT” Gold Transfer System, vision to become a preferred institution in one of the most important components international markets. of Istanbul International Finance Center Project, the software and system of which Takasbank provides access to foreign were developed by our Bank and which securities traded in over 65 markets globally will function with the participation of through its current overseas custody Banks, was commissioned by Takasbank, network. Under this service, Takasbank starting to provide services to the system- provides for the safekeeping of capital member banks and customers as of 16 July market instruments through its accounts 2018. Offering important contributions held with international settlement and to finance and capital markets through custody institutions abroad (Euroclear its risk, cash, settlement and collateral and Clearstream) or global depository management services, Takasbank put institutions (Citibank). Our Bank also offers into the service of our national economy, the services covering appraisal, control, an organized Foreign Exchange SWAP reconciliation and reporting to the CMB Market jointly with Borsa İstanbul A.Ş. in relation to the assets of Collective as of January 2018. Having become an Investment Schemes and Personal Pension important alternative to the Over-The- Funds, which are provided as a service Counter (OTC) Markets at which Foreign supporting and strengthening the CMB’s SWAP transactions are intensively supervision and audit function. executed, Borsa Istanbul Foreign Exchange SWAP Market provides its participants Authorized by the Capital Markets Board as with a secure environment in which they the portfolio custody institution on 24 July can execute their transactions without 2014, our Bank provides portfolio custody assuming counterparty credit risk through services for securities mutual funds, the CCP service offered. securities investment trusts, exchange traded funds, real estate investment funds, Through the said projects and and venture capital investment funds. comprehensive activities conducted, Takasbank not only actively supports 14 ABOUT TAKASBANK
A BRIDGE BETWEEN MONEY AND CAPITAL MARKETS
the IFM Project, but also strengthens its of becoming a pacemaker institution position in domestic and international among international settlement and markets; thus, aiming to achieve its target custody institutions. 15 TAKASBANK BLOCKCHAIN VISION
Takasbank’s blockchain R&D studies The work group starts by grasping the go back to as early as 2016 in order to philosophy of blockchain and then focuses comprehend state of the art in financial on the impacts of this technology on technologies. These activities become Takasbank’s role in financial markets. With concrete with a specialist’s dissertation trailblazing vision of Takasbank in financial published in Takasbank. At the same time, technologies, innovative technologies are a work group on blockchain is formed to constantly under watch by Takasbank staff. keep up with blockchain developments.
16 TAKASBANK BLOCKCHAIN VISION
Takasbank is awarded with the title of Capital Markets, was held in October 2017. On-Site R&D Center in April 2017 and A panel specific for senior-level executives FinTechHub Takas Istanbul brand name is was organized in Takasbank in November registered. The companies and researchers 2017 with the contributions of a large working on blockchain are contacted bank with international activities under in order to collaborate with the fintech the scope of overseas collaborations. In ecosystem in this area. addition, Takasbank contributed in many conferences, workshops and panels as a Takasbank staff are encouraged to sponsor or by providing speakers. conduct their academic studies in the field of blockchain. Consultations with As a result, blockchain platforms that can the regulatory and supervisory public be used in the finance sector are identified authorities in the finance sector are made, and the knowledge on such platforms is and support agreements are reached with obtained by studying different business public research agencies. scenarios for each platform. After all, by having comprehensive knowledge The “Digital Transformation in Financial on blockchain, it is concluded that it is Markets and Blockchain Workshop” impossible to implement blockchain in organized in Takasbank, which was the financial sector with current regulations first in this field, attracting high attention and a different approach is needed. Due of the senior-level participants from public to this reason, studies on zero-knowledge and private companies in the Banking and algorithms are initiated.
Takasbank has set as strategic goal, for the upcoming period, to be responsible for the analysis, design, infrastructure, continuous development and management of the Security Transfer Platform planned to be established using the blockchain infrastructure.
17 18 SCOPE OF THE PROJECT SCOPE OF THE PROJECT
The main objective of the project is to Under the project, the integration with the establish an infrastructure that allows GTS managing the processes of storage of transfer of dematerialized gold with certain physical gold in vaults and dematerialization standards, using blockchain technology. of gold is completed. Then, it is possible to The physical equivalents of the gold kept digitalize dematerialized gold and convert in safe custody in the BİST vaults. them into BiGA’s. Therefore, an end- to-end integral structure is established When the existing blockchain projects between the physical asset and digitalized are examined, it is seen that digital assets asset. It is ensured that the transfer, are not backed by an underlying physical reconciliation and reporting of digital asset. In addition, there is a high volatility assets could be realized through the observed in their values in the markets that blockchain infrastructure developed. The are not yet regulated. Also, existing digital infrastructure is designed in a functional assets are not based on a physical asset. In manner, allowing for digitalization and order to avoid unexpected fluctuations in transfer of other assets as well. market value, each digital asset of current financial sector, is predefined on physical Overview basis in blockchain-based solutions. Thus, In this system, three main capabilities a digital asset is to be build which is safe such as issuance, redeem and transfer are from speculations. offered for the digital assets. Furthermore, additional abilities, for example, integration BiGA is the first asset that is to be produced between the blockchain system and with this regard on blockchain platform the GTS, reconciliation, monitoring and which is integrated with the Gold Transfer reporting features are also provided. System, that is a first in the world.
19 Gold Transfer System (GTS) Project The “Gold Transfer System” is announced Gold physically stored at Borsa Istanbul service by Takasbank on 16 July 2018 which vaults is transferred to Takasbank BIST enables interbank transfer of gold balances unallocated pool account without serial held within banks in a dematerialized number info. BIST holds them in the manner. Hence, gold savings in the accounts of banks opened in the name of economic system is expected to increase Takasbank within the country, and their and pave the way for its usage as a financial electronic transfer between the accounts. instrument in the Turkish financial market. GTS enables the accountholders to transfer The Gold Transfer System is comprised of their gold savings among themselves as if certain transactions. Firstly, physical gold they make transfer in currencies. In brief, safely stored at Borsa Istanbul vaults are the EFT of gold is realized with this system. dematerialized by Takasbank.
» Gold physically stored at Borsa Bank Istanbul vault is Physical B transferred to storage on Takasbank BIST the basis of unallocated pool account without serial numbers serial number info. Bank Bank A C
Takasbank Unallocated Gold Unallocated custody Account
Bank A Bank B Bank C » The amounts held in Takasbank Takasbank Takasbank Takasbank BIST Gold Gold Gold unallocated pool Account Account Account accounts are seperated and stored in Takasbank system on an individual member basis.
Takasbank Dematerialized Gold Storage and Transfer System 20 SCOPE OF THE PROJECT
GTS-BiGA Integration With the GTS Project, golds physically End users may conduct their transactions stored at Borsa Istanbul vaults are through a bank. Thus, users may change converted into dematerialized gold and their BiGA assets over the bank (node) and then, dematerialized gold is converted convert them into dematerialized gold at to BiGAs. Thereby, each digital asset is any time. produced with reference to its physical basis. The transformation and reconciliation between the digital asset and physical asset are made.
WEB WEB WEB WEB
WEB
lockchain 1 ISSUANCE
T CONVERSION BİGA lockchain 2 A FROM BOOK-ENTRY ISSUANCE/REDEEM A App App TO ‘BİGA’ erver erver ync REDEEM
Blockchain-4
lockchain 3
GTS BiGA
21 Transfer End-users can transfer their BiGA assets except for the users that are the parties that are created on a 7-day/24-hour basis to the transfer. In addition, the regulatory among BiGA accounts. The institutions authority can also oversee any record participating in the system are each defined any time. However, the other parties may as a node on the blockchain network. These approve the accuracy of the transaction nodes constantly keep a copy of the data while seeing nothing about actual on the blockchain network in their most transaction. The related encrypted recent versions. During the transactions, balances on the blockchain are revised BiGA amounts subject to transfer are sent as a result of the approved transfer encrypted and these values are stored transactions. This verification process is encrypted on the blockchain. Therefore, further explained in detail in the technical nobody can know the amount transferred section of the document.
T A A T A
A T
Issue Issue Redeem
Redeem Member 1 Member 2 Portfolio Portfolio
Client 1 Client 2 Client 3 Client 4
22 SCOPE OF THE PROJECT
Reconciliation Regular controls are made in order to physically stored in vaults at any time. guarantee that the system runs in a In case of any inconsistency due to any consistent manner without any errors. The extraordinary cases; issuance, redeem and main objective of each control is to ensure transfers are automatically suspended. that the total of the assets on the GTS and After the related error is detected and the assets held on the blockchain is equal fixed, the system is enabled again. to the total of the amount of gold
GTS BiGA
edeem Issue edeem Issue
Physically-Backed Blockchain-Based New-Generation Transfer System
23 Issuance The user who is a member of Takasbank accounts held on the Gold-Backed Digital Gold Transfer System dematerializes his Asset Platform. Issuance of the gold are 995/1000 pure LBMA-compliant gold made within the time frame specified in physically stored in BIST vaults. The user accordance with the operating rules of the then transfers the issuance of 1 BiGA in GTS. return for 1 Gram dematerialized gold to its
GTS
DEMATERIALIZED CONVERSION FROM TRANSFER SYSTEM DEMATERIALIZED TO BIGA
PHYSICAL DEVLIVERY ISSUANCE OF BIGA
DIGITAL ASSET PLATFORM BiGA
24 SCOPE OF THE PROJECT
Redeem The user converts its BiGAs, which are held transfers the amount to its accounts on in its accounts, to dematerialized gold, GTS. Redeem process is realized within the thus ensuring that they are out of the time frames specified in accordance with system. The user converts 1 BiGA on the the operating rules of the GTS. Gold-Backed Digital Asset Platform to 1 Gram dematerialized gold and then,
BiGA
BiGA REDEEM CONVERSION FROM BIGA TO DEMATERIALIZED
DIGITAL ASSET GOLD PLATFORM TRANSFER SYSTEM BiGA
PHYSICAL EXIT
25 TECHNICAL BACKGROUND OF THE PROJECT The technical studies for the project are The project is continued solely with the initiated in the last quarter of 2017. Firstly, efforts of Takasbank employees in the efforts are initiated with Hyperledger following stages. The used blockchain Fabric 1.0 platform. At this stage, infrastructure is Hyperledger Fabric and cooperation is established with a fintech then later continues with Quorum platform. company with case studies in this field for These studies are not conducted merely both introduction to blockchain technical on blockchain platforms. For instance, studies and contributing to the fintech new-generation technologies like Docker ecosystem. Moreover, while starting the are frequently used in this project. related activities, collaboration is made with TÜBİTAK BİLGEM Blockchain Research Information on the technical components Laboratory concerning Zero-Knowledge used in the project and the experiences requirements. Thus, the ecosystem and the are provided in this section. technical foundations of the project are established with the expertise of different disciplines brought together. 26 TECHNICAL BACKGROUND OF THE PROJECT
Hyperledger Hyperledger is an open-source platform and operation of smart contracts within supported by Linux Foundation. It is the Hyperledger infrastructure. In addition, first platform without requiring use of event-driven bidirectional interactions are cryptocurrency, on which transactions ensured within the service layer together are conducted through smart contracts with a communication layer located at (chaincode). It quickly becomes popular in a lower level. Although these terms and corporate research projects. Hyperledger structures may sound quite confusing at service layer is considered in three first step, Hyperledger is tested in many main logical categories. These include Blockchain R&D projects since it contains membership services, blockchain services the fundamental elements needed by the and chaincode services. business world. Hyperledger supports five different projects, instead of creating a While membership services provide single blockchain framework. The one that services related with identity, privacy, etc.; stands out among these projects is the blockchain services manage the blockchain Fabric. Thanks to its modular architecture, and consensus structure together with the modules can be replaced as required with P2P protocol built in them. Chaincode the plug-and-play philosophy. In addition, services allow for management there are Iroha, Sawtooth, Burrow and Indy Hyperledger projects.
Zookeeper Kafka Cluster Cluster
Smart Contracts Smart Contracts Smart Contracts
Orderer 0 Orderer 1 Orderer 2
CA 0 CA 1 CA 2
Peer 0 CouchDB 0 Peer 1 CouchDB 1 Peer 2 CouchDB 2
Source: https://medium.com/@abhinav.garg_90821/hyperledger-fabric-multi-orgs-multi-nodes-with-kafka-zookeep- er-and-swarm-cluster-946a94dade0f
27 Quorum It is an open-source platform released provided by this platform as well. Its fast by J.P. Morgan in 2015 as a result of the consensus algorithm running with high modification of the structure of Ethereum precision in spite of its permissioned for the purpose of its usage in financial structure, and its capability to allow for markets. While this platform facilitates execution of transparent and private business processes and the process of transactions are considered as its key overcoming legal restrictions, it is used properties. The developments to be to produce new-generation transaction made in Ethereum infrastructure are applications based on trust, accountability easily reflected to Quorum. The network and transparency. Since it also has Ethereum produced using this platform can be set infrastructure, it offers the advantages up very quickly.
Full Blockchain, Common Public State, Divergent Private State
Participant1 Regulator
in le Bloc chain in le Bloc chain
u lic rivate u lic rivate tate tate tate tate
Participant2 Participantn
in le Bloc chain in le Bloc chain
u lic rivate u lic rivate tate tate tate tate
Participant3 Participant4
in le Bloc chain in le Bloc chain
u lic rivate u lic rivate tate tate tate tate
Source: Quorumwhitepapper-https://github.com/jpmorganchase/quorumdocs/blob/master/Quorum%20White- paper%20v0.1.pdf Zero-Knowledge Proof Zero-Knowledge proof is a model to solve without revealing the information to the proof problems, one of the most common counterparty?”. Cryptologic functions run in the field of cryptology. It is a proof in the background and their assumptions method produced with the motto of “How are used to prove the information. can I prove that I know the information 28 TECHNICAL BACKGROUND OF THE PROJECT
Zero-Knowledge proof must satisfy the Zero-Knowledge proof is not a proof in following three parameters: the mathematical sense of the term. In this method, the information is used for the • Completeness: If the proof given purpose of proving to the receiver through is true and complete, the receiver will manipulation. be convinced that the giver knows the information. The usage of blockchain technologies in • Soundness: If the proof is not false, their current state especially in financial the giver persuades the receiver without areas is considered to be quite difficult due cheating. to regulation requirements. The facts that • Zero Knowledge: If the statement is true, the data are constantly kept updated in the receiver will understand it. The giver’s all nodes and every incoming transaction knowledge is proven with the example is approved by nodes and that the given to the receiver. information about the persons executing the transactions and the related transaction Completeness and Soundness are amounts are kept open on all nodes are properties of more general interactive considered to pose serious obstacles communication with the receiver. Zero against the usage of this technology in the Knowledge can be stated as the proof finance and satisfaction of the regulation method. requirements. Zero-Knowledge Proof model offers a resolution of such issues. Zero Knowledge Proof of Knowledge o idea what x is ut it’s positive and Ayşe must know it. aka. Range Proof x ∈ [0,252 - 1]
“c= gxhr is a commitment to a positive number x
“ rove it
Challen e
esponse Ayşe Ali Kaynak: https://hackernoon.com/bulletproofs-the-new-kid-in-blockchain-security-land-e730fc0efe14 Other Technologies • Programming languages: Java, Go, Innovative technologies for software JavaScript, AngularJS, Solidity development processes are also used in • Supporting solutions: Quorum Maker the project. These technologies are as • Container technology: Docker follows: • Operating system: Linux • Application server: WildFly • Database: PostgreSQL, CouchDB 29 FUNCTIONAL DESIGN
Although there are various alternatives blockchain, every chain has contribution for different platforms and technologies in the consensus and block generation. in BiGA Project, studies are focused on Private blockchain structure determine Hyperledger Fabric and Quorum platforms the persons with whom the information due to their aforementioned capabilities. is shared with. In private blockchain, the Since a closed-loop system and a structure network is not open to everyone. Only to which only the nodes to be authorized by those joining the network can access to the platform administrator can be added the blockchain data. In a public blockchain, are planned, platforms with permissioned the network is open to access by all nodes. structures are selected (permissioned BiGA has a blockchain network that is in blockchain). the permissioned and private category. When current blockchain technologies are In the permissioned blockchains, only intended to use in the financial instruments, the specified nodes can create blocks the infrastructure provided in practice has with specific rights and participate two major restrictions. in the consensus. In permission-less
30 FUNCTIONAL DESIGN
One of the restrictions is the privacy. In BiGA with Hyperledger platform case that all transactions are visible on The BiGA Project with Hyperledger platform blockchain; in addition to the involved presents a design in which every nodes on parties, the other nodes can also view the the blockchain network are designed as transaction detail. The other restriction endorser nodes. The application server, is the failure of control and audit of database and the related services of each transactions by the relevant authority in node in BiGA are defined. case that the transactions are fully closed and private. A separate wallet is not designed in BiGA Project. Users’ account structures and BiGA Project offers a solution to these two the related transactions are conducted restrictions. This design covers the solution by the related node on the blockchain in which the involved nodes can view the through REST services located on the related transactions, the other nodes in server. CouchDB is used as the database the system can validate the accuracy of the for storage of state details. There is at transaction and transfer even though they least one channel by default on the cannot view any data, and the authorized blockchain network built with Hyperledger node can also view the transaction detail. Fabric. Apart from these structures, an The technical provision of this architectural organization, a CA (Certificate Authority) design covers the method of adding zero- and an orderer are used. knowledge proof algorithms to the current blockchain platforms.
ndorser eer 1
rderer
lient ndorser App eer 1
A ndorser eer 1
31 The general view of the design for During the early stages of the Project BiGA is specified in the below figure. A with Hyperledger, the following items Single organization and a single channel are used: structure are used in this design. BiGA • Fabric Configuration: Making the Project Hyperledger Platform studies definitions like the organization, peers, are developed with smart contracts. The channel, etc., production of certificates, use of smart contracts allowed for entry creation of docker images; and definition of other values on the • Smart contract: Making the related infrastructure. The smart contracts on development in Go language; Hyperledger Fabric are developed with • Chaincode Deploy: Loading chaincode Go. and channel properties onto the servers; • Generation of the client java application A separate server is built for each node with Fabric SDK; and configured to run in different • Installation scripts: Editing of cloud- environments. There is no integration formation scripts; made between the nodes except for the • API Layer: Creation of the service layer blockchain network. Thus, a real network for Rest API; environment could be created. • Making the web-based developments Since the project is a closed-loop proof- for Usage, Reporting and Monitoring of-concept project, cloud environment is functions. preferred as the infrastructure in order to more efficiently use the development and testing period. In addition, no personal data are stored on the blockchain network under any circumstances.
BiGA has proved that alternative financial instruments can be deployed on single blockchain.
32 FUNCTIONAL DESIGN
onventional onventional tructure tructure
A I A I
Application Application erver erver
ostgre ostgre Q Q
ync
ostgre Q
Application erver
A I
onventional tructure
BiGA Hyperledger Design
33 BiGA with Quorum Platform Ethereum is another blockchain The business logic required for BiGA infrastructure that is used while designing Project is produced with smart contracts. BiGA Project. At the beginning, it is Solidity, the most popular programming concluded that the plain Ethereum language, is used to write Ethereum-based infrastructure is not adequate for corporate smart contracts. A Java-based integration usage; and that it is more suitable for application is developed to ensure public use. In this context, it is considered communication with such smart contracts; appropriate to use Quorum, permissioned and Web3j library is used in this application. blockchain infrastructure developed by J.P. In addition, the open-source Quorum- Morgan, which is the version of Ethereum Maker project developed by Synechrorn- blockchain infrastructure customized for Finlabs is used to rapidly set up and configure corporate applications. Quorum blockchain network.
Takasbank i A lockchain et ork
TAKASBANK BANK A BIGA-WEB BIGA-WEB
TA A A I A A A I A ync A I A
A I A
BANK B BANK C BIGA-WEB BIGA-WEB
34 FUNCTIONAL DESIGN
During the development of BiGA to encrypt all data related with the Project, it is determined that Quorum transaction, to create some cryptographic blockchain infrastructure and Quorum- proofs for the related transaction, and to Maker tool do not completely meet the post and publish such encrypted data and project requirements. Therefore, some proofs on the network. These transactions customizations are made by creating forks published on the network must be in Quorum and Quorum Maker projects in cryptographically verified on all nodes order to meet such requirements and they via smart contracts and processed as a are adapted to BiGA Project. result of such verification. Cryptographic verifications requiring high performance One of the R&D focuses of BiGA Project is to may be carried out by smart contracts ensure privacy of transactions conducted on the nodes. Since smart contracts run on the blockchain network. Currently, on EVM (Ethereum Virtual Machine) there are some blockchain technologies layer, they create high costs in terms of ensuring transfer privacy (Zcash, Monero, both performance and scale. In order to etc.). However, these technologies work meet these requirements, such activities with the principle of full confidentiality/ are added to Ethereum Pre-Compiled privacy and cannot be monitored by smart contracts running outside EVM anybody except for the parties involved. and developed with Go programming This eliminates the possibility of review language. These smart contracts running and control of transfers by regulatory on EVM execute the verification of authorities. In order to solve this problem, cryptographic proofs by means of Pre- it is aimed to develop a blockchain Compiled contracts. The related block infrastructure compliant with the is created on the blockchain according regulations and ensuring privacy for the to the result of the transaction. Quorum parties that are not subject to the transfer. and Quorum Maker tool are customized Thus, it is ensured that all the transactions and forked to build the cryptographic could be validated by all nodes through proof verification mechanism on the zero-knowledge proofs without knowing Quorum infrastructure. RAFT is used as the contents and that only the regulatory the consensus algorithm during the initial authority could monitor all transfers in the phase of the project. It is planned to be system. changed with other consensus algorithms in the following stages of the project. Different cryptographic proof algorithms are tested in order to meet these requirements. The party that conducts a transaction on Quorum network has 35 BiGA PROJECT TEST RESULTS The BiGA Project multi-party testing Test scenarios process is started upon completion of The following items are tested. the blockchain and GTS integration. • Blockchain node installation script Firstly, BiGA Project is introduced and • Setting up the blockchain network and the related information is shared with participation to the blockchain network the banks currently using Takasbank GTS • Blockchain web installation script system. Five banks including Albaraka Türk • Blockchain wallet operations Participation Bank, Garanti BBVA, Kuveyt • Creation of transactions and monitoring Türk Participation Bank, VakıfBank and of blocks on blockchain Ziraat Bank participated in the tests. • Smart contracts • Balances that can be viewed by the related parties with only Zero Knowledge • Takasbank Gold Transfer System Screens and Integrations
36 BiGA PROJECT TEST RESULTS
Test results Test results are summarized in the table below.
Testing eriod is 14 ays
umber of articipant anks 5
TEST Total umber of ases 44 RESULTS
umber of lanned Test cenarios 126
umber of Test cenarios ecuted 126
The summary of transactions executed during such testing is provided in the table below.
Total umber of Transactions 109
umber of locks enerated 13
umber of Accounts efined 1
TRANSACTION Transferred i As SUMMARIES nits Amount 69 94.229 i As
Issued i As nits Amount 9 136.410 i As
edeemed i As nits Amount 6 10.282 i As
37 BiGA Functions Test Results The functions reviewed under BiGA Project tests are specified in the table below. The testing of functions is successfully completed by all participants
BiGA Albaraka T rk aranti A uveyt T rk VakıfBank Ziraat Bankası Functions Tests articipation ank articipation ank Evaluation
ode installations and participation to the blockchain net ork
Installation of eb application
efinition of i A latform ortfolio Account over the T
i A latform e ser efinition
i A latform e Account reation
ematerialized old i A onversion
i A Issuance
Intra ember i A Transfer ortfolio lient, lient lient
Inter ember i A Transfer ortfolio lient, lient lient
i A edeem
i A ematerialized old onversion
38 BiGA PROJECT TEST RESULTS
BiGA has a parametric infrastructure that allows for the transfer of any digital asset.
This asset transfer infrastructure also allows for digitalization and transfer of any assets in addition to gold.
39 TECHNICAL OUTPUTS
The purpose of this document is to guide are conducted on the basis of the the new studies to be conducted by sharing fundamental principles of blockchain the experiences in BiGA project. It is also approach that differs from conventional aimed to provide a perspective to the data processing, storage, reconciliation entrepreneurs and R&D centers familiar methods and technologies. In this context, with the issue and evaluating project the technical know-how on blockchain and alternatives. In addition, it is intended to cryptography in the project is presented present the concrete outputs and benefits below. to the public authorities following up the studies conducted in this field, and to Operating principles of distributed reach out to the concerned parties for systems: potential collaboration. The technical and In conventional approaches, data are process-related experiences throughout stored in a centralized location and it is the project are shared in this section. shared with the other related stakeholders BiGA Project, proof-of-feasibility studies to the extent required through integration 40 TECHNICAL OUTPUTS
methods. As for blockchain approaches, After careful studies, Hyperledger Fabric data and transactions are simultaneously 1.0 infrastructure is preferred not to be stored at all stakeholders with exactly the used in the project since it does not same format and content. This assures meet the satisfactory maturity criteria the integrity, accessibility, privacy and for a solution to be commissioned in the accuracy of the data no matter who is the production environment. Quorum is used stakeholder. by changing its structure through forking method due to its similar restrictions. Different blockchain infrastructures: Moreover, a similar forking can be made The usage of permissioned blockchain for Hyperledger infrastructure. The project networks is considered as an important is continued with Quorum because it criterion at the initial stage in order to has more accessible resources and the find a corporate solution. In this context, blockchain network can be enabled and trials are conducted with Hyperledger and activated faster with Quorum Maker. Quorum infrastructures. 41 Consensus algorithms: Blockchain account structures: BFT (Byzantine Fault Tolerance) and Blockchain designs present the structures RAFT algorithms are tried in order to allowing users to conduct a transaction guarantee the integrity, accessibility, and to monitor the result and if a privacy and accuracy of data to be stored transaction is conducted over an asset, the at stakeholders since the structure has a resulting balance of such transaction. They distributed architecture. RAFT algorithm are created with Public and Private key is a default with Quorum. With current pairs. While public keys allow for conduct capabilities, it is inadequate for our of transactions over the network, private blockchain approach. keys define the account itself.
Cryptographic algorithms Pre-Compiled contracts: The cryptology and proof algorithms used The development of zero-knowledge proof to simultaneously ensure the privacy of algorithms with intensive mathematical transactions and data transfers among operations on Quorum using Solidity nodes and their traceability by the language is not deemed satisfactory in authorities are considered as the most its current state in terms of performance. important contribution of this project to There are pre-compiled contract structures blockchain ecosystem. As a matter of fact, in Ethereum and Quorum which are not only the aforementioned algorithms used for solving performance-requiring assure the privacy of transactions, but problems and businesses with intensive also the accuracy of encrypted data across transaction requirement. In this project, nodes can be validated by the parties. the zero-knowledge proof algorithms The basic algorithms used in the project, are built using pre-compiled contracts. which are highly valid and applicable in Thus, performance loss is minimized and the literature, are as follows. Quorum platform is forked. These are •Homomorphic encryption expected to contribute to the literature • Range proof with their contents and methodologies. • Equality proof • Diffie Hellman proof • ECDSA (Elliptic Curve Digital Signature Algorithm)
42 TECHNICAL OUTPUTS
43 BUSINESS OUTPUTS
Business outputs are given under three main • Every transaction conducted on existing categories as provided below. These are blockchain networks can either be viewed described as transfer of an asset, ensuring by anyone or cannot be viewed at all. business continuity and establishment of a An encrypted transaction network is payment system infrastructure. established using the zero-knowledge algorithms studied in BiGA Project. This Asset Transfer structure is designed in a manner ensuring • The end-to-end lifecycle of a digital asset that nobody could view the transactions is through digitalization of gold and its except for the sender and receiver of addition to the system established on the such transactions, that the nodes could blockchain network and execution of its approve or reject all transactions without transfer in a secure channel. viewing their contents, and that the nodes identified as authority in the system could view the contents of all transactions at 44 BUSINESS OUTPUTS any time desired. This feature positively • The fact that the database is differentiates BiGA from all known simultaneously the same in all nodes blockchain solutions. Thus, the feasibility eliminates the state of a single point of for establishment of infrastructures failure. Companies may conduct their necessary for widespread deployment activities without considering the scenarios of blockchain-based financial solutions is such as operation of the system with demonstrated. backup/redundancy or disaster recovery, etc. This offers serious benefits in terms of • BiGA has a parametric design that both business continuity and costs. allows for the transfer of any digital asset. Therefore, this asset transfer infrastructure Payment System Infrastructure established also allows for digitalization • Gold Transfer System has person-to- and transfer of any assets other than gold. person transfer feature are expected to From this aspect, BiGA has proved that mobilize gold. It is targeted to further alternative financial structures could be increase the mobilization of gold with extensively deployed through a single BiGA. blockchain infrastructure. • Thanks to the blockchain approach and Business Continuity digital asset transfer system infrastructure, • One of the most important properties it allows for transformation of gold into a brought by the blockchain technology digital payment instrument. is that the database is simultaneously the same in all nodes. Therefore, due to • The nodes to be added to the system are instantaneous reconciliation made on the each planned to be financial institution. system established as such, the system The integration of such institutions with can run on a 7-day/24-hour basis without and their exit from the system can be interruption. realized very quickly through installation automations developed. • The system can continue to run over the other nodes of the blockchain network • It is ensured that the customized reports even if any node on the blockchain can be arranged independently of any network becomes inaccessible. When institution since all data are given to the the inaccessible node is included in the user. Thus, the dependencies suffered by network again, it automatically retrieves the institutions in relation to such reporting and reaches the same level of knowledge are minimized. with the other stakeholders on the network.
45 With the zero-knowledge algorithms studied in BiGA Project, the structure is designed in a manner ensuring that nobody could view the transactions except for the sender and receiver of such transactions, that the nodes could approve or reject all transactions without viewing their contents, and that the nodes identified as authority in the system could view the contents of all transactions at any time desired.
This feature positively differentiates BiGA from all known blockchain solutions. Thus, the feasibility for establishment of infrastructures necessary for widespread deployment of blockchain-based financial solutions is demonstrated.
LESSONS LEARNED AND RECOMMENDATIONS
46 LESSONS LEARNED AND RECOMMENDATIONS
Blockchain is an approach closely followed In this context, for entrepreneurs willing up with a limited number of concrete to deal with this issue from another examples and the impacts of which point of view, we recommend that such are unknown in the fullest sense. Many type of third-party studies and activities researchers and institutions are willing to related with development, packing, conduct studies on this matter that need testing, debugging, deployment tools and many different technical data, knowledge technologies should be performed. and skills in addition to the blockchain approach. This enables the review of the It stands out as an important detail subject through establishment of project that a project of R&D nature with many groups by creating interdisciplinary uncertainties and restraints should not synergy rather than merely conducting be designed and configured in standard personal studies. In fact, it is also difficult corporate information technologies to research, learn, and develop different infrastructures under any circumstances. issues such as advanced mathematics, In fact, it is required to show utmost efforts developing, new-generation software in order to stabilize the development and languages, application virtualization, testing environments in the information etc. in the same project. Considering technologies structures like banking, this situation together with the fact that where information security policies are the blockchain approach is yet on the implemented at the highest level. Instead, bottom rung of the latter; the findings the provision of the entire development that especially stand out include the environment including developer insufficiency of the documents that can computers in a completely isolated be read as references; the lack of stable environment is crucial for the project versions for the frameworks and platforms schedule and success. Cloud environments developed; the lack of desired level of can be considered as a good alternative maturity for the additional technologies for such studies. facilitating the usage of platforms; and the inadequacy of the number of projects and Apart from its technical restrictions, it project documents that can be taken as takes time to properly understand the reference; etc. alternatives brought by the blockchain approach to the conventional perspectives Since software development and its somehow destructive effect. In fact, environments and tools currently used all stakeholders and participants may ask are developed considering requirements each other the question of why we are not in the conventional architectures; the doing it with traditional methods. performance or the intention to perform developments and debugging and tests In addition, similar questions may be using the same tools and methods further frequently encountered while the project is complicate studies. Exhaustive efforts are explained to third parties. As an institution, LESSONS LEARNED AND needed for installation of an environment we define blockchain as an approach, a even for a simple debugging process. philosophy, rather than considering it as a RECOMMENDATIONS technology.
47 FUTURE PLANS
48 FUTURE PLANS
Phase-1 of the project is completed with Removal of the Quorum Maker lessons learned and recommendations dependency for the future studies. In Phase-2 of the It is aimed to eliminate the dependency Project, it is aimed to allow the end users on the Quorum Maker tool used as a to conduct the transactions over BiGA supporting solution in order to rapidly platform via the banks. In this context, activate the blockchain network to be it is planned to continue studies on the established in the Project. headings specified below. Changing the consensus algorithm Changing the Zero-Knowledge Proof It is planned to change the RAFT algorithm Algorithm currently used in the Project as IBFT The cryptologic algorithms that are (Istanbul Byzantine Fault Tolerance) in currently used have some restrictions. These order to correct the deficiencies identified. restrictions should be eliminated especially when we want to use this infrastructure for Secret key recovery scenarios other assets even though it meets adequate A business model will be developed for the requirements for transfer of gold. The recovery of secret keys in case of loss of transaction is conducted within a period such keys to be used by the related parties of nearly 3 seconds in a space of 232. The due to high security requirements of the transaction time increases logarithmically blockchain solution. The fact that Takasbank when the space is increased. The goal here is authorized for custody banking and has is to ensure that the transactions can be adequate business knowledge in this field conducted in 1 second in a space of 264 provides an important advantage for the . development of the required business The size of a transactions covers nearly model. 30 kB in the current transaction structure. Concealment of the parties involved in The transaction size is aimed to be 1 kB transfer as a result of improvement of cryptologic In the transactions currently conducted, algorithms to be used. the contents of transactions are concealed with cryptologic algorithms. The public In addition, the maximum amount that keys representing the identities of the can be transferred may be 232 in size parties to transactions are currently visible. depending on the space under the current The public keys will also be hidden with an conditions. The maximum amount that additional development to be made. can be transferred will be increased when FUTURE PLANS the space is 264.
49 Updateable smart contract As required by the fundamental operating In this context, the current transaction principles of the blockchain, it is essential struc ture and the modified zero-knowledge that the content of a block generated should transaction structure will also be developed not be changed. However, it is required with Hyperledger Fabric platform. that especially smart contracts should be updated in time considering the potential Know Your Customer studies business requirements. In this context, The accounts to be used on the blockchain studies will be conducted on updating of are created by the institutions under smart contracts without any distortion in the current structure. The reason to this the consistency of data between the blocks. is the requirement to know the actual Development with Hyperledger Fabric identity of the account holders on the Platform blockchain platform. Since identity details It is planned to make developments with are received from the institutions after alternative blockchain platforms in order they are approved, this obligation is on to have a higher performance in BiGA the account of institutions. It is planned platform. that in the upcoming periods, a digital
50 FUTURE PLANS
identity platform through which identity Evaluation of some extreme scenarios details can be approved independently • Studies to be conducted for the business from the institutions will be developed model and technical solution regarding and thus, dependency on institutions will the actions to be taken in case of loss of be minimized and that personal users can secret/private keys manage their own accounts. • Working on preventive solutions against the possible scenario of hijack of specially Wallet application for personal use authorized accounts by malicious parties; In the following phases, after ensuring • Working on the actions to be taken in that personal users can conduct their case n nodes maliciously act against the transactions on their own, it is planned consensus on a network with n nodes; to develop a mobile wallet that will allow individuals to use the system more The headings listed above are considered comfortably. as the issues to be dealt within the new projects in the upcoming period.
51 CONCLUSION The blockchain that made its debut for with a high added-value with both its the first time in 2008 has become popular business model and its technical solution. after overvaluations in cryptocurrencies that have occurred in 2017. The studies As with every technology and innovation, for usage of blockchain in corporate life understanding the blockchain without have also started in the same period. conducting R&D projects seem impossible The fact that this research process that in the short run. At this point, we would we, as Takasbank, actively started in 2016 like to emphasize the importance for the has reached to this point with a concrete institutions and entrepreneurs evaluating project is considered as an important blockchain to proceed with pilot projects milestone. It is expected to put forward as soon as possible. The importance of the idea of developing a project after teamwork extending from top level to individuals and entities conduct some the specialized personnel working on the literature researches and follow up the project, the business unit employees and breaking news in this field. However, it is of the external stakeholders stands out as an great importance to determine the correct important factor for the conclusion of the business scenario and to ensure that the project. project team focuses on this activity and the senior executives assume a pioneering As Takasbank, we are proud that we have role in this field on a concurrent basis. led the persons and entities conducting studies on blockchain with our studies that Setting off with the vision of becoming the focuses on full privacy and compliance one that is followed instead of the one that with regulations, which seemed to be the follows the developments on blockchain, biggest obstacles preventing the usage of Takasbank has completed an R&D project this technology in the financial areas.
52 PROJECT TEAM
PROJECT TEAM
Gökhan ELİBOL Project Sponsor
İlker KUŞCU Nesrin ÖZKURT IT Director Business Unit Director
Mustafa ATAHAN Faruk Selman LEKESİZ Project Manager Project Manager
Mustafa ŞENTÜRK Muhammet EVİRGEN Ramazan BARDA Mustafa KELEŞ Software Specialist Software Specialist Software Specialist Software Specialist
Elvan SAKANCI M. Fatih BAYINDIR Kadir SARI Analyst Information Security Specialist Infrastructure Specialist
53 For their valuable contributions in our BiGA Project, we would like to extend our gratitude individually to the Chairman of the Board of Directors of our Bank and Borsa Istanbul General Manager Mr. Mehmet Hakan Atilla and the members of our Board of Directors; to our Deputy General Manager Mr. Gökhan Elibol; to our former senior managers Mr. Murat Çetinkaya, Mr. Mahmut Kayacık and Mr. Ekrem Arıkan who provided full support from the beginning of the Project; to BiGA Project Team and to all our Takasbank colleagues, to Assoc. Prof. Dr. Mehmet Sabır Kiraz and to TÜBİTAK BİLGEM Blockchain Laboratory; to Assoc. Prof. Dr. Kamer Kaya from Sabancı University; to the distinguished managers and employees of Albaraka Türk Participation Bank, Garanti BBVA, Kuveyt Türk Participation Bank, Vakıfbank and Ziraat Bankası; and to the fintech ecosystem that shared their opinions and technical support with us during the different stages of the project.
Istanbul Takas ve Saklama Bankası A.Ş.
54 ABBREVIATIONS / TERMS OF GLOSSARY
ABBREVIATIONS / TERMS OF GLOSSARY BFT (Byzantine Fault Tolerance): BFT the troubleshooting systems. It is difficult is a state of distributed information for the other components to declare technologies systems in which a system, that the component that appears to be particularly components of the system may inconsistent has failed and to remove it fail and there may be missing information from the network; because they must first about whether a component is faulty or not. reach a consensus on the component that The term is named by a metaphor called has failed. The BFT is the reliability of a as the “Byzantine Generals’ Problem”. This fault-tolerant computer systems against metaphor means that actors must reach a such conditions. consensus on the common strategy in order to prevent the failure of the system that BiGA: The value of 1-gram 995/1000 pure may cause a disaster; however, some actors LBMA-compliant gold on the Blockchain are not trustworthy. In BFT, a component platform. 1-BiGA equivalent to 1-gram gold. like a server may display different symptoms to different observers, thus BiGA Project: Means all studies and appear to be inconsistent by being both activities conducted for the development faulty and appearing to be operational in of BiGA Blockchain platform. 55 BiST: Borsa İstanbul (Istanbul Stock Digital Identity: An identity that allows Exchange) a person, organization or an electronic device to be recognized in a network. Blockchain: A continuously growing distributed database that was firstly Docker: A computer program realizing introduced by Bitcoin, in which records are virtualization at operating system level linked to each other using cryptographic that is also known as ‘containerization’. It elements. The records in this database are was firstly released in 2013 and developed packaged as blocks and linked with the by Docker, Inc. summary values of the blocks that precede them in order to be protected against EFT: Electronic Fund Transfer alteration. Fork/Forking: Modifications made in Confirmation: The act of approval of a the blockchain protocols in order to transaction by a Blockchain network. This protect the blockchain history, to prevent operation is done through mining on inconsistencies or to add new features. some Blockchain networks. Distributed Ledger: A type of database with its copies stored and spread across Consensus Algorithm: Consensus different servers, different countries or algorithm means the protocols proposed different institutions. Records constantly for resolution of a problem of reaching a grow as they are added and stored one consensus in computer science. after another.
Consensus Process: The steps that a Fungible Custody: The type of custody group of peers take to reach a consensus service in which an asset stored is stored about the content on a distributed ledger. jointly with the assets of the same properties and any asset from the shared Dematerialization: Conversion of a area is returned in case of a refund. physical asset into a digital asset. GTS: Gold Transfer System Digital Commodity: A non-physical commodity with a market value that can Issue / Issuance: The conversion of be transferred electronically and is limited dematerialized gold in the GTS system to in quantity. BiGAs. 56 ABBREVIATIONS / TERMS OF GLOSSARY
LBMA: London Bullion Market Association RAFT offers a general path for distribution of a state machine in a group of computer Node, Peer: A computer connected to systems and ensures that each node in the the blockchain network. group reach a consensus on the same state transition series. There are many open- Permissioned Blockchain: The source reference applications in addition Permissioned Blockchain uses an access to the applications completely developed control layer to manage those that have with Go, C ++, Java and Scala. access to the network. Unlike public blockchain networks, the endorsers on Redeem: The conversion of BiGA the blockchain networks are reviewed balance on the blockchain system into by the network owner. They do not trust dematerialized gold balance in the GTS anonymous nodes for verification of system. transactions or they do not benefit from the network effect. Smart Contracts: The contracts written in a programming language. Smart Quorum Maker: Quorum Maker is a tool contracts can be executed automatically allowing users to establish and manage a and perform transactions on distributed Quorum network. Manual arrangement ledger structures. of configuration files and generation of nodes is a slow operation and open to Stable Coin: Digital currencies indexed errors. Quorum Maker can create any against an asset with a fixed value. number of different configuration nodes dynamically with reduced user logins. It Token: Digital assets that can be owned. provides a wizard-like interface with a series of questions that will direct the user Transaction Block: A set of sequential while creating nodes with this tool. transactions that aggregate a certain number of transactions and that are added RAFT: RAFT is a consensus algorithm to the Blockchain as a summary. designed as an alternative to Paxos. It was aimed to be more comprehensible than Wallet: The structure that stores the Paxos through development of a different private key of the owner. logic; but it was proved that it was secure and it offered some additional features. 57 APPENDICES
58 APPENDICES
59 60 APPENDICES
61 62 APPENDICES
63 64 REFERENCES
REFERENCES
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