pSophiaTX Whitepaper The Blockchain for Business Date nbsp; 13.11. 2017 Authors Jaroslav KACINA, Martyn C. HARLER, Marian RAJNIC and team of SophiaTX nbsp;1 nbsp;Disclaimer This document is the property of SophiaTX, občianske združenie, with its registered seat at Rajsk 2341/15, 81108 Bratislava-Star Mesto, the Slovak Republic, company ID 51074567, registered with the Register of Civil Associations of the Ministry of Interior of the Slovak Republic “So-phiaTX”. All products and companies referenced in this document are used for research and ination purposes only and all referenced parties retain their respective intellectual property rights. nbsp;2 nbsp;Contents Abstract 4 Introduction 6 About SophiaTX and Equidato Technologies AG 6 Blockchain Overview 7 Blockchain for Business and B2B Space 8 Enterprise Applications and Blockchain 8 Challenges 8 Market and SAP Ecosystem 10 Solution and Roadmap 12 SophiaTX Blockchain- Use Cases 13 Use Case One One-to-One Document Exchange – Invoice to Customer 14 Market Situation 14 Traceability 14 Solution 14 Use Case Two Multi-Party Ination Exchange 16 Market Situation 16 Solution 16 Use Case Three Collaboration Across Entire Value Chains - Track and Trace in Pharma 18 Challenges in Pharmaceutical Supply Chains 18 Counterfeit products 18 Compliance 19 Traceability and Recalls 20 How Blockchain can address these Key Challenges 20 Supply Chain Process Model 22 Supply Chain in Pharma Industry Figure 3 22 Technology and Architecture 23 Overview 23 Sequence Diagrams 24 User Authentication and Authorisation 24 Application Build and Deploy 25 Transaction sent to SophiaTX Blockchain from ERP / CRM System 25 Transaction sent to ERP / CRM System from SophiaTX Blockchain 26 User Services - Certified Backup Authority 26 nbsp;3 nbsp;User Services 26 SophiaTX Browser 26 Authentication Engine 27 Logic Engine 27 Encryption 27 Process Description for Encryption Triggered by Users 28 Process Description for Decryption Triggered by Users 28 Testing and Publishing Engine 30 Data Store and Analytics Engine 30 Marketplace 31 App Store 31 Dev Store 31 Application Library 31 Blockchain 32 SophiaTX Token and its usage 33 Go-to-Market Strategy and Driving Successful Adoption 34 Defining the SophiaTX Blockchain Approach and Learning from Other Blockchains 36 Glossary 41 References and Sources 43 nbsp;4 nbsp;Abstract There is a lot of enthusiasm in the technology community about the recent advances of blockchain use-cases which reach far beyond the financial industry. nbsp;One area which offers significant value is the use of blockchain in a company’s operational and management processes. Effectively all companies run these operational processes on enterprise resource planning software ERP which often includes a variety of modules such as accounting, controlling, procurement, logistics, warehousing, manufacturing, project management, quality management, and sales and distribution. To advance blockchain into nbsp;business operations, the blockchain must integrate with ERP and other enterprise applications such as SAP. As an example, 76 of the world’s transaction revenue touches SAP systems1. This sector has been relatively untouched until recently when SophiaTX an-nounced their first project , an open source blockchain plat and marketplace designed for businesses of all sizes “SophiaTX Blockchain”. SophiaTX Blockchain is the first plat focusing on integrating blockchain with SAP and other major ERP, CRM, and SCM systems aiming to expand the possibilities of enterprise applications with the trust and security that comes with blockchain technology. The SophiaTX Blockchain can be thought of as three components a blockchain designed and built specifically for business environment, a development plat with integration APIs to SAP and other enterprise applications, and a marketplace for both industrial companies and a global com-munity of experts, consultants, and developers to buy and sell apps. SophiaTX Blockchain is a public blockchain plat with a focus on use by businesses of all sizes, i.e. from large global enterprises to small local businesses and eventually to end consumers. It allows for businesses to join and participate across the entire value chain, enabling SophiaTX Block-chain the best possible drive for global adoption. This choice, over the alternative of a private blockchain, supports the goal of creating a truly holistic collaboration. The flexible and scalable solution will serve as the foundation for new applications with specialized processes and modules for companies where peer to peer architecture and decentralization is de-sired and beneficial. The adoption of the SophiaTX Blockchain is supported by a marketplace which includes process flows, use case designs, APIs and common building blocks, specifically developed for widely-used ERP and CRM systems and other business applications. The inter-connectivity with respective APIs is reinforced by the blockchain network. The SophiaTX Blockchain is fuelled by the SophiaTX Token SPHTX which is used to cover mining and transaction fees, allowing access and subscription to the development plat, marketplace, and in-app purchases. It is designed for trading assets or micro-assets and services, know how, process maps and blueprints, integration, and professional consulting services to enable acceler-ated adoption and use. 1 https// nbsp;5 nbsp;SophiaTX will hold a Token Generation Event TGE later this year where the general public can be the first to obtain the SPHTX before its release on any major exchanges. It is a chance for supporters of the project to be directly involved. The token will be used in the marketplace for a wide range of engagements. The funding accrued from the TGE will go directly to the development, marketing and ongoing management of the project and overall plat. Token owners can feel confident in knowing that behind this project is an excellent team backed by stellar experience and know-how in blockchain and business application integration “SophiaTX Team”. As technology veterans and pioneers in the area of blockchain, the SophiaTX Team is well posi-tioned to lead in this space. It is the SophiaTX Team’s ambition to become the principal plat for blockchain adoption by nbsp;businesses of all sizes. nbsp;6 nbsp;Introduction Businesses today face a number of challenges. Amongst them is the issue of trust in ination exchange with other parties’ and their respective agreements. nbsp;The blockchain provides new ca-pabilities with transparent, peer to peer ination exchange and establishes a common ground in disputable areas. Such ination exchanges are of a limited scope, fulfilled by complex and expensive middleware interfacing products and not yet open to true peer to peer transparency and trust. The SophiaTX Blockchain, aimed at such peer to peer ination exchanges, provides a compre-hensive set of tools allowing developers to build and publish applications which utilise the power of the blockchain and distributed data integrated with ERP and CRM solutions. Developers publish apps in the marketplace, which are accessible to both businesses and the end user community who purchase applications that integrate with their systems. Developers earn revenue from apps which are downloaded and deployed. About SophiaTX and Equidato Technologies AG SophiaTX is a civil association aiming to expand the possibilities of enterprise applications with the trust and security that comes with blockchain technology and launch the world39;s first open source blockchain plat to primarily integrate blockchain technology with enterprise applica-tions. In order to secure the development of respective software, SophiaTX will engage Equidato Technologies AG, any of its affiliates or other developers. Equidato Technologies AG is a company focused on the integration of blockchain with enterprise applications, such as SAP, IoT sensors, smart printing, and other advanced technologies ing the 39;industries of the future39; eco-system. nbsp;7 nbsp;Blockchain Overview Blockchain2 is a continuous list of transactions which are being recorded into blocks. They are linked and secured using cryptography. Blockchain serves as a distributed ledger that can effi-ciently record transactions between two parties and store them in an immutable manner. This means that a given block cannot be altered retroactively without the alteration of all blocks that have followed. This creates a chain of blocks which are secure by design and all transactions written inside of them are irreversible. By storing data across its network, blockchain eliminates risks that come with data being held centrally. Every node or miner has a copy of the blockchain which ensures data quality by massive database replication and computational trust. Since the time of publication3, many variations and improvements have been developed. A num-ber of existing blockchains proves that this technology has great potential. Nowadays, blockchain technology can be found in a wide range of applications across many industries. nbsp;Blockchain Types ● Public ⁃ Anonymous, public ‘open’ access to info, trust on mutual transparency ⁃ Decentralized - distributed peer to peer network system ● Private ⁃ Permissioned - knowing identity of participants ⁃ No requirement for quot;proof of workquot; ⁃ Business networks - smaller / closed systems ⁃ Lower costs and faster speeds nbsp;● Consortium ⁃ Hybrid between the ‘open access’ provided by public blockchains and the ‘cen-tralised-trusted entity’ model of private blockchains 2 https//en.wikipedia.org/wiki/Blockchain 3 https//bitcoin.org/bitcoin.pdf nbsp;8 nbsp;Blockchain for Business and B2B Space Enterprise Applications and Blockchain nbsp;Many ERP vendors and technology companies are investigating the usage of blockchain in a mul-titude of different areas. The approach offered often takes them to either private or consortium based approaches which do not cater to open holistic collaboration across industries and value chains. The approach by SophiaTX offers a true and open public blockchain, which is significantly more advantageous in addressing the entire value chain allowing businesses of all sizes to partic-ipate and collaborate. SophiaTX Blochchain provides flexibility and allows accelerated adoption by end users via standardized building blocks, process flows and use case designs. The overall adoption is enabled by establishing a well-managed ecosystem of players including technology partners, ERP consultants, and blockchain engineers as well as internal company IT leaders who are responsible for adoption of innovative technologies. nbsp;The SophiaTX Blockchain provides various learning, development, and deployment tools for the entire community including ● Use case design, process flows, business scenarios ● Integrated development environment SDK and API ● Advanced encryption capabilities for protecting ination held by 3rd party ● End-to-end solution builder for business with no requirement to understand the inner workings of blockchain The SophiaTX Blockchain and suite of tools combined with meets-ups, trainings, and learning pro-grams are designed to bring the blockchain community closer to the business / B2B space and vice versa. The SophiaTX Team has been established with an overarching objective of having the right mixture of competencies in technology enabled business transation, enterprise applications and blockchain technology. nbsp;Challenges To benefit from blockchain innovations across various industries, it is our belief that the end cus-tomer must recognize and address the following challenges of blockchain technology for their business ● Applicability and use cases for blockchain technology ● Data privacy, security and resilience ● Impact and benefits on business processes and operations ● Compliance and regulations nbsp;● Processing speed nbsp;● System availability ● Data archival and retention nbsp;● Compatibility and connectivity to enterprise applications nbsp;9 nbsp;SAP, as a leading ERP software, is fully compliant with regulations and business use, and thus any blockchain integration and extensions which connect to it must also provide the same compliance and features. The main challenge in integrating enterprise applications with blockchain is ensuring the privacy and encryption of private ination in such a way that it is only available to the parties intended to see it. nbsp;The next challenge is to provide a plat and its respective building blocks so that the system integrators and developers are able to build and deploy their own applications without extensive programming, leading to a reduction of time to market and eventual faster adoption of SophiaTX Blockchain. We believe that current blockchains such as Ethereum, Bitcoin and others do not provide suffi-cient privacy, speed, and features that are required for a mainstream adoption by businesses. The blockchain market for businesses, focused on industrial use and not on fintech, is vast, and presents significant market opportunities as presented in the section Market and SAP Ecosystem. However, building a system which complies to business and legal regulations, is comprehensive in allowing different use cases, and is simple to use both from the developer and end-user perspec-tive, requires careful consideration. That is the main reason why SophiaTX has developed the tech-nology roadmap presented in later sections. nbsp; 10 nbsp;Market and SAP Ecosystem Trend and Market Opportunity4 Figure 1 Prior to describing SAP, it is important to highlight that SophiaTX Blochchain will allow integration of all ERPs and enterprise applications with SophiaTX Blockchain, however in initial stages we fo-cus on SAP as it is a major player in the segment and we wouldn’t consider being successful until integration with SAP is in place. In parallel integration to all other major applications will be ad-dressed as required. nbsp;Now back to SAP, the world’s largest provider and market leader5 of ERP / business application software serving more than 365.000 customers in 190 countries6. nbsp;SAP customers include nbsp;● 87 of the Forbes Global 2000 companies ● 98 of the 100 most valued brands ● 100 of Dow Jones top scoring sustainability companies ● 80 of its customers are SMEs SAP customers produce nbsp;● 78 of the world’s food ● 82 of the world’s medical devices ● 76 of the world’s transaction revenue touches an SAP system 4 https// nbsp;5 https// nbsp;6 https// nbsp;11 nbsp;SAP’s position on the market ● SAP is leading the market in ⁃ Applications ⁃ Analytics ⁃ Mobility solutions ⁃ Innovation in business applications ● Fastest growing database vendor SAP HANA in-memory database ● Br/p