Sep 25, 2017

Blockchain basics: Glossary and use cases ( from IBM)

"Get to know this game-changing technology and how to start using it."

Blocks and blockchain networks

A blockchain is a type of distributed ledger that is shared across a business network. Business transactions are permanently recorded in sequential, append-only, tamper-evident blocks to the ledger. All the confirmed and validated transaction blocks are hash-linked from the genesis block to the most current block, hence the name blockchain.

A blockchain is thus a historical record of all the transactions that have taken place since the beginning of the blockchain in the network. The blockchain serves as a single source of truth for the network.

A blockchain network can be either permissioned or permissionless. Permissionless networks are open to any participant, and transactions are verified against the pre-existing rules of the network. Any participant can view transactions on the ledger, even if participants are anonymous. Bitcoin is the most familiar example of a blockchain network that is permissionless and public.

Permissioned networks, on the other hand, are usually private and are limited to participants within a given business network. On permissioned blockchains, participants are allowed to view only the transactions relevant to them. Hyperledger is a collaborative effort, hosted by the Linux Foundation, to support the development of permissioned blockchains for business.

Distributed ledgers

A distributed ledger is a type of database, or system of record, that is shared, replicated, and synchronized among the members of a network. The distributed ledger records the transactions, such as the exchange of assets or data, among the participants in the network. This shared ledger eliminates the time and expense of reconciling disparate ledgers.

Participants in the network govern and agree by consensus on the updates to the records in the ledger. No central, third-party mediator, such as a bank or government, is involved. Every record in the distributed ledger has a timestamp and unique cryptographic signature, thus making the ledger an auditable history of all transactions in the network.

One implementation of distributed ledger technology is the open source Hyperledger Fabric blockchain, which is one of several open source projects hosted by The Linux Foundation.

Participants

A blockchain network for business is a collectively owned peer-to-peer network that is operated by a group of identifiable and verifiable participants. Participants may be individuals or institutions, such as a business, university, or hospital, for example.

Assets, transactions, and channels

Anything that can be owned or controlled to produce value is an asset. Assets can be tangible (such as a car or farm-fresh peaches) or intangible (such as a mortgage or patent). A transaction is an asset transfer onto or off of the ledger. In a Hyperledger Fabric blockchain, assets are represented as a collection of key-value pairs (for example, vehicleOwner=Daisy) in binary or JSON form, or both.
In a Hyperledger Fabric blockchain, a channel is a private "subnet" of communication between two or more specific network members, for the purpose of conducting private and confidential transactions. If two participants form a channel, then those participants — and no others — must be authenticated and authorized to transact on that channel and share copies of the ledger for that channel. Thanks to channels, the network members who need private and confidential transactions can coexist on the same blockchain network with their business competitors and other restricted members.

Consensus

Consensus is the collaborative process that the members of a blockchain business network use to agree that a transaction is valid and to keep the ledger consistently synchronized. Consensus mechanisms lower the risk of fraudulent transactions, because tampering with transactions added to the ledger would have to occur across many places at the same time.

To reach consensus, participants agree to the transaction and validate it before it is permanently recorded in the ledger. Participants can also establish rules to verify transactions. No one, not even a system administrator, can delete a transaction that has been added to the ledger. A trusted network of participants reduces the costs of establishing consensus, relative to the higher costs present in permissionless blockchains.

In a business blockchain, a wide variety of consensus mechanisms are available to choose from. Where trust is high, a simple majority voting may suffice, or the network may choose to use a more sophisticated method.

Smart contracts and chaincode

Smart contracts govern interactions with the ledger, and they can allow network participants to execute certain aspects of transactions automatically. For example, a smart contract could stipulate the cost of shipping an item that changes depending on when it arrives. With the terms agreed to by both parties and written to the ledger, the appropriate funds change hands automatically when the item is received.

In the context of Hyperledger Fabric, smart contracts are written into chaincode, and the terms are considered essentially synonymous.

in Hyperledger Fabric, chaincode is a piece of code, written in Go, that defines the network assets and the transaction instructions (business logic) for modifying the assets. Chaincode is installed and instantiated onto a channel by an appropriately authorized member. When a transaction is invoked in that channel, a function in chaincode reads and writes values to the ledger.

Blockchain applications

A blockchain application requires three interdependent components: the user-facing application, the smart contract, and the ledger.
The top layer is the user-facing application that meets the needs of the network participants. The application lets users invoke smart contracts that trigger transactions in the business network. The smart contract encapsulates the business logic of the network: assets, ownership, and transfers. Each invocation of a smart contract creates a transaction in the network and updates the ledger. The ledger holds the current value of smart contract data (for example, vehicleOwner=Daisy), and is distributed across the network.

Blockchain use cases

To determine whether your use case is a good fit for blockchain, ask yourself these questions:
  • Is a business network involved?
  • Is consensus used to validate transactions?
  • Is an audit trail, or provenance, required?
  • Must the record of transactions be immutable, or tamper proof?
  • Should dispute resolution be final?
If you answered yes to the first question and to at least one other, then your use case would benefit from blockchain technology. A network always needs to be involved for blockchain to be the right solution, but the network can take many forms. The network can be between organizations, such as a supply chain, or the network can be within an organization. Within an organization, a blockchain network could be used to share reference data between divisions or to create an audit or compliance network, for example. The network can also exist between individuals, who might need to store data, digital assets, or contracts on the blockchain, for example.

Here's just a sampling of its infinite possibilities:

Internet of Things

  • Freight transportation: Move freight with multiple transportation companies, ensuring transparency and timely delivery
  • Component tracking and compliance: Store provenance records for original and replacement parts for fleet maintenance
  • Log operational maintenance data: Store operational and maintenance records for sharing among business partners or for regulatory purposes

Identity management

  • Build a trusted digital identity
  • Supply chain
  • Improve traceability, transparency, and efficiency in the food safety network

Financial services

  • Know Your Customer: Access to trusted up-to-date information on customers improves the accuracy of customer services in financial institutions
  • Clearing and settlement: Real-time point-to-point transfer of funds between financial institutions accelerates settlement
  • More examples: Letters of credit, Corporate debts and bonds, Trading platforms, Payment remittance, Repurchase agreements, and Foreign exchange

Healthcare

  • Electronic medical records
  • Virus banks
  • Doctor-vendor RFP services and assurance contracts
  • Blockchain health research commons
  • Blockchain health notaries

Insurance

  • Claims processing
  • P2P insurance
  • Ownership titles
  • Sales and underwriting

Government

  • Government tender processes
  • Voting
  • Taxes

Gaming

Music

(Source: https://www.ibm.com)

Sep 24, 2017

BLOCKCHAIN, EXPLAINED

WHY IT MATTERS

Like the internet in its early years, blockchain technology is hard to understand and predict, but could become ubiquitous in the exchange of digital and physical goods, information, and online platforms. Figure it out now.

What is a blockchain?
Blockchain is a term widely used to represent an entire new suite of technologies. There is substantial confusion around its definition because the technology is early-stage, and can be implemented in many ways depending on the objective.
“At a high level, blockchain technology allows a network of computers to agree at regular intervals on the true state of a distributed ledger,” says MIT Sloan Assistant Professor Christian Catalini, an expert in blockchain technologies and cryptocurrency. “Such ledgers can contain different types of shared data, such as transaction records, attributes of transactions, credentials, or other pieces of information. The ledger is often secured through a clever mix of cryptography and game theory, and does not require trusted nodes like traditional networks. This is what allows bitcoin to transfer value across the globe without resorting to traditional intermediaries such as banks.”
On a blockchain, transactions are recorded chronologically, forming an immutable chain, and can be more or less private or anonymous depending on how the technology is implemented. The ledger is distributed across many participants in the network — it doesn’t exist in one place. Instead, copies exist and are simultaneously updated with every fully participating node in the ecosystem. A block could represent transactions and data of many types — currency, digital rights, intellectual property, identity, or property titles, to name a few.
“The technology is particularly useful when you combine a distributed ledger together with a cryptotoken,” Catalini says. “Suddenly you can bootstrap an entire network that can achieve internet-level consensus about the state and authenticity of a block’s contents in a decentralized way. Every node that participates in the network can verify the true state of the ledger and transact on it at a very low cost. This is one step away from a distributed marketplace, and will enable new types of digital platforms.”
How is blockchain related to bitcoin?
Bitcoin, with a market cap of more than $40 billion, is the largest implementation of blockchain technology to date. While a lot of media attention has shifted from bitcoin to blockchain, the two are intertwined.
“When The Economist put blockchain on the cover in 2015, it wasn’t really about its use to support a digital currency anymore. It was all about the other applications this technology will unleash within the next 5 to 10 years,” Catalini says. “For example, in finance and accounting there is excitement about the ability to settle and reconcile global transactions at a lower cost using the technology. In logistics the attention is all on how you can use the immutable audit trail generated by a blockchain to improve the tracking of goods through the economy. Others are fascinated by the possibility to use this as a better identity and authentication system.”
There are two types of costs blockchain could reduce for you: the cost of verification and the cost of networking. 
So what’s the big deal? In a recent paper, Catalini explains why business leaders should be excited about blockchain — it can save them money and could upend how business is conducted.
Every business and organization engages in many types of transactions every day. Each of those transactions requires verification. In many cases, that verification is easy. You know your customers, your clients, your colleagues, and your business partners. Having worked with them and their products, data, or information, you have a pretty good idea of their value and trustworthiness.
“But every so often, there’s a problem, and when a problem arises, we often have to perform some sort of audit,” Catalini says. “It could be actual auditors coming into a firm. But in many other cases, you’re running some sort of process to make sure the person claiming to have those credentials did have those credentials, or the firm selling you the goods did have the certification. When we do that, it’s a costly, labor-intensive process for society. The marketplace slows down and you have to incur additional costs to match demand and supply.”
“The reason distributed ledgers become so useful in these cases is because if you recorded those attributes you now need to verify securely on a blockchain, you can always go back and refer back to them at no cost,” he says. “It’s costless verification. So when you think about why bitcoin works, it’s because it can cheaply verify that the funds are actually there. You can transfer value from here to anywhere on the globe at almost zero transaction cost. Sending secure messages that carry value does not require a bank or PayPal in the middle anymore.”
In short: Because the blockchain verifies trustworthiness, you don’t have to. And the friction of the transaction is reduced, resulting in cost and time savings.
Using a blockchain can also reduce the cost of running a secure network. This will happen over a longer timeline, Catalini says, perhaps a decade. The internet has already allowed for a faster, less stilted exchange of goods and services. But it still needs intermediaries, however efficient they may be — think eBay, Airbnb, and Uber.
“Those intermediaries are costly and earn rents for processing payments, maintaining a reputation system, matching demand and supply,” Catalini says. “This is where blockchain technology, combined with a cryptotoken, allows you to rethink an entire value chain from the ground up. That’s where incumbents should be slightly worried, because in the long run the way you may be delivering value to your customers and competing against other companies could be fundamentally different.”
Blockchain technology could mean greater privacy and security for you and your customers.
Catalini calls it data leakage. When you give a bartender your driver’s license, all that person needs to know is your age. But you’re revealing so much more — your address, your height, whether you’re an organ donor, etc.
The same thing happens in commercial transactions.
“As your business partner, I need to know that you’re trustworthy and reliable, but for simple transactions I don’t really need to know many other things about you,” Catalini says. “Information disclosure is increasingly becoming a cost because of data breaches. We can’t keep our data private and it’s becoming increasingly complex to do so within large organizations. So imagine a model where you can verify certain attributes are true or false, potentially using a decentralized infrastructure, but you don’t have to reveal all these attributes all the time.”
In a business transaction context, Catalini says, a blockchain could be used to build a reputation score for a party, who could then be verified as trustworthy or solvent without having to open its books for a full audit.
“Reputation scores both for businesses and individuals are today siloed into different platforms, and there is very little portability across platforms. Blockchain can improve on this,” he says.
Which industries could blockchain disrupt?
“All of them,” Catalini says. “The technology is what economists call a general purpose technology, and we will see many applications across different verticals.”
Here are a few to keep an eye on.
Central banks: Many central banks — including those in Canada, Singapore, andEngland — are studying and experimenting with blockchain technology and cryptocurrencies. The potential applications include lower settlement risk, more efficient taxation, faster cross-border payments, inter-bank payments, and novel approaches to quantitative easing. Imagine a central bank stimulating the economy by delivering digital currency automatically to citizens. Don’t expect big moves from big countries soon. The risk is too high, Catalini says. But expect to see smaller, developed countries with a high tolerance for technology experimentation lead the way and possibly experiment with a fiat-backed, digital currency for some of their needs.
Finance: The busiest area of application so far, blockchain is being used by companies seeking to offer low cost, secure, verifiable international payments and settlement. Ripple is  one of the leaders in this space on the banking side. Meanwhile, companies like Digital Asset and Chain seek to create a faster, more efficient financial infrastructure for tracking and exchanging financial assets of any type.
Money transfer: In 2014, two MIT students raised and distributed $100 worth of bitcoin to every MIT undergraduate. They wanted to see what would happen and generate interest on campus. Catalini, together with Professor Catherine Tucker, designed the experiment and studied the results. While 11 percent immediately cashed out their bitcoin, 49 percent were still holding on to some bitcoin. Some students used the funds to make purchases at local merchants, some of whom accepted bitcoin. Others traded with each other. Meanwhile, startups around the world competed to become the consumer trading application for bitcoin. Then PayPal bought Venmo, a payment platform that trades cash. PayPal’s own mobile app allows for peer-to-peer transactions, as well. The bitcoin-based consumer payment industry cooled down. But the application of blockchain remains attractive because of the lower costs it could offer parties in global, peer-to-peer transactions. Rapid payment company Circle, which advertises itself as “Like a text filled with cash,” stopped allowing users to exchange bitcoin last year, but is building a protocol that allows digital wallets to exchange value using a blockchain.
Web browser company Brave uses a blockchain to verify when users have viewed ads and, in turn, pays publishers when those same users consume content.
Micropayments: What if, instead of subscribing to a news site online, you paid only for the articles you read? As you click through the web, your browser would track the pages and record them for payment. Or what if you could get small payments for doing work — completing surveys, working as a freelance copy editor — for a variety of clients. By reducing the cost of the transaction and verifying the legitimacy of parties on either end, blockchain could make these micropayments, new types of cross-platform subscriptions, and forms of crowdsourcing possible and practical. A company called Brave is already attempting this, with potential ramifications for the digital advertising industry.
Identity and privacy: In October 2013, the arrest of the founder of Silk Road, adeep web marketplace where users paid for illegal goods with bitcoin, showed just how anonymous bitcoin really wasn’t. Nor was it ever intended to be — bitcoin addresses function much as a pseudonym does for a writer, Catalini says. Users can never completely mask their transactions. But others are trying. Zcash promises to be a fully private cryptocurrency. There are significant downsides to the anonymity a blockchain could offer, such as the ability to fund terrorism or facilitate money laundering. But there are many virtuous applications too — Google’s DeepMind is attempting to use blockchain to layer privacy and security in electronic health care records.
Smart contracts: This application is still in the early stages, Catalini says, but by recording information on a blockchain, contracts could use that information to make themselves self-executing if certain conditions are met. This idea backfired last year when code was exploited to steal $60 million from The DAO, a blockchain-based venture capital firm.
Provenance and ownership: A blockchain could be used to record details about physical products, helping to verify authenticity and prevent fraud and counterfeiting. London-based EverLedger is tracking diamonds and envisions doing the same for fine wines. At the same time, for all these applications, a blockchain is only as useful as the quality of the information recorded on it in the first place.
Internet of things, robotics, and artificial intelligence: Your appliances are already talking to each other — think smart home technologies like Nest thermostats and security systems. What if they could barter or acquire resources? What if a highway could verify the identity of and accept payment from a self-driving car, opening up a pay-per-use fast lane to commuters in a rush? At the outer edge of application, but not outside the realm of possibility, Catalini says.
When will this disruption happen?
Over a period of more than ten years. Catalini is convinced blockchain has internet-level disruption potential, but like the internet it will come over a multi-decade timeline with fits and starts, and occasional setbacks. Some industries, especially finance, will see drastic change soon. Others will take longer.
“A lot of the work in this space is experimental,” Catalini says. “We are at the infrastructure building stage. Bitcoin has a market capitalization of $42 billion, which is nothing compared to the mainstream financial platforms and exchanges that move trillions of dollars every day. But the technology is maturing and growing. At some point, one of the startups in this space may reveal itself to be the Netscape of cryptocurrencies. What would follow is something we have seen play out many times before in history.”
Ready to go deeper?
New research, writing, and videos from Catalini and other MIT Sloan faculty members is available at blockchain.mit.edu. Sign up there to receive updates with the latest and most important MIT work about blockchain.
The expert
 Christian Catalini is the Fred Kayne (1960) Career Development Professor of Entrepreneurship, and Assistant Professor of Technological Innovation, Entrepreneurship, and Strategic Management at MIT Sloan. He is an expert in blockchain technology and cryptocurrencies, equity crowdfunding, the adoption of technology standards, and science and technology interactions. He is one of the principal investigators of the MIT Digital Currency Study, which gave all MIT undergraduate students access to bitcoin in Fall 2014. He is also part of the MIT Initiative on the Digital Economy. His work has been featured in Nature, the New York Times, the Wall Street Journal, the Economist, WIRED, NPR, Forbes, Bloomberg, the Chicago Tribune, the Boston Globe, and VICE News, among others.
(Source: http://mitsloan.mit.edu)

Jan 7, 2015

UML basics: The class diagram

The basics

The purpose of the class diagram is to show the types being modeled within the system. In most UML models these types include:
  • a class
  • an interface
  • a data type
  • a component.
UML uses a special name for these types: "classifiers." Generally, you can think of a classifier as a class, but technically a classifier is a more general term that refers to the other three types above as well.

Class name

The UML representation of a class is a rectangle containing three compartments stacked vertically, as shown in Figure 1. The top compartment shows the class's name. The middle compartment lists the class's attributes. The bottom compartment lists the class's operations. When drawing a class element on a class diagram, you must use the top compartment, and the bottom two compartments are optional. (The bottom two would be unnecessary on a diagram depicting a higher level of detail in which the purpose is to show only the relationship between the classifiers.) Figure 1 shows an airline flight modeled as a UML class. As we can see, the name is Flight, and in the middle compartment we see that the Flight class has three attributes: flightNumber, departureTime, and flightDuration. In the bottom compartment we see that the Flight class has two operations: delayFlight and getArrivalTime.
Figure 1: Class diagram for the class Flight
Class diagram for the class Flight

Class attribute list

The attribute section of a class (the middle compartment) lists each of the class's attributes on a separate line. The attribute section is optional, but when used it contains each attribute of the class displayed in a list format. The line uses the following format:
name : attribute type
flightNumber : Integer
Continuing with our Flight class example, we can describe the class's attributes with the attribute type information, as shown in Table 1.
Table 1: The Flight class's attribute names with their associated types
Attribute NameAttribute Type
flightNumberInteger
departureTimeDate
flightDurationMinutes
In business class diagrams, the attribute types usually correspond to units that make sense to the likely readers of the diagram (i.e., minutes, dollars, etc.). However, a class diagram that will be used to generate code needs classes whose attribute types are limited to the types provided by the programming language, or types included in the model that will also be implemented in the system.
Sometimes it is useful to show on a class diagram that a particular attribute has a default value. (For example, in a banking account application a new bank account would start off with a zero balance.) The UML specification allows for the identification of default values in the attribute list section by using the following notation:
name : attribute type = default value
For example:
balance : Dollars = 0
Showing a default value for attributes is optional; Figure 2 shows a Bank Account class with an attribute called balance, which has a default value of 0.
Figure 2: A Bank Account class diagram showing the balance attribute's value defaulted to zero dollars
A Bank Account class diagram showing the balance attribute's value defaulted to zero dollars

Class operations list

The class's operations are documented in the third (lowest) compartment of the class diagram's rectangle, which again is optional. Like the attributes, the operations of a class are displayed in a list format, with each operation on its own line. Operations are documented using the following notation:
name(parameter list) : type of value returned
The Flight class's operations are mapped in Table 2 below.
Table 2: Flight class's operations mapped from Figure 3
Operation Name Parameters ReturnValue Type
delayFlight
NameType
numberOfMinutes Minutes
N/A
getArrivalTime N/A Date
Figure 3 shows that the delayFlight operation has one input parameter — numberOfMinutes — of the type Minutes. However, the delayFlight operation does not have a return value. [Note: The delayFlight does not have a return value because I made a design decision not to have one. One could argue that the delay operation should return the new arrival time, and if this were the case, the operation signature would appear as delayFlight(numberOfMinutes : Minutes) : Date.] When an operation has parameters, they are put inside the operation's parentheses; each parameter uses the format "parameter name : parameter type".
Figure 3: The Flight class operations parameters include the optional "in" marking
The Flight class operations parameters include the optional 'in' marking
When documenting an operation's parameters, you may use an optional indicator to show whether or not the parameter is input to, or output from, the operation. This optional indicator appears as an "in" or "out" as shown in the operations compartment in Figure 3. Typically, these indicators are unnecessary unless an older programming language such as Fortran will be used, in which case this information can be helpful. However, in C++ and Java, all parameters are "in" parameters and since "in" is the parameter's default type according to the UML specification, most people will leave out the input/output indicators.

Inheritance

A very important concept in object-oriented design, inheritance, refers to the ability of one class (child class) to inherit the identical functionality of another class (super class), and then add new functionality of its own. (In a very non-technical sense, imagine that I inherited my mother's general musical abilities, but in my family I'm the only one who plays electric guitar.) To model inheritance on a class diagram, a solid line is drawn from the child class (the class inheriting the behavior) with a closed, unfilled arrowhead (or triangle) pointing to the super class. Consider types of bank accounts: Figure 4 shows how both CheckingAccount and SavingsAccount classes inherit from the BankAccount class.
Figure 4: Inheritance is indicated by a solid line with a closed, unfilled arrowhead pointing at the super class
Inheritance indicated by a solid line with a closed, unfilled arrowhead pointing at the super class
In Figure 4, the inheritance relationship is drawn with separate lines for each subclass, which is the method used in IBM Rational Rose and IBM Rational XDE. However, there is an alternative way to draw inheritance called tree notation. You can use tree notation when there are two or more child classes, as in Figure 4, except that the inheritance lines merge together like a tree branch. Figure 5 is a redrawing of the same inheritance shown in Figure 4, but this time using tree notation.
Figure 5: An example of inheritance using tree notation
Example of inheritance using tree notation

Abstract classes and operations

The observant reader will notice that the diagrams in Figures 4 and 5 use italicized text for the BankAccount class name and withdrawal operation. This indicates that the BankAccount class is an abstract class and the withdrawal method is an abstract operation. In other words, the BankAccount class provides the abstract operation signature of withdrawal and the two child classes of CheckingAccount and SavingsAccount each implement their own version of that operation.
However, super classes (parent classes) do not have to be abstract classes. It is normal for a standard class to be a super class.

Associations

When you model a system, certain objects will be related to each other, and these relationships themselves need to be modeled for clarity. There are five types of associations. I will discuss two of them — bi-directional and uni-directional associations — in this section, and I will discuss the remaining three association types in the Beyond the basics section. Please note that a detailed discussion of when to use each type of association is beyond the scope of this article. Instead, I will focus on the purpose of each association type and show how the association is drawn on a class diagram.

Bi-directional (standard) association

An association is a linkage between two classes. Associations are always assumed to be bi-directional; this means that both classes are aware of each other and their relationship, unless you qualify the association as some other type. Going back to our Flight example, Figure 6 shows a standard kind of association between the Flight class and the Plane class.
Figure 6: An example of a bi-directional association between a Flight class and a Plane class
An example of a bi-directional association between a Flight class and a Plane class
A bi-directional association is indicated by a solid line between the two classes. At either end of the line, you place a role name and a multiplicity value. Figure 6 shows that the Flight is associated with a specific Plane, and the Flight class knows about this association. The Plane takes on the role of "assignedPlane" in this association because the role name next to the Plane class says so. The multiplicity value next to the Plane class of 0..1 means that when an instance of a Flight exists, it can either have one instance of a Plane associated with it or no Planes associated with it (i.e., maybe a plane has not yet been assigned). Figure 6 also shows that a Plane knows about its association with the Flight class. In this association, the Flight takes on the role of "assignedFlights"; the diagram in Figure 6 tells us that the Plane instance can be associated either with no flights (e.g., it's a brand new plane) or with up to an infinite number of flights (e.g., the plane has been in commission for the last five years).
For those wondering what the potential multiplicity values are for the ends of associations, Table 3 below lists some example multiplicity values along with their meanings.
Table 3: Multiplicity values and their indicators
Potential Multiplicity Values
IndicatorMeaning
0..1 Zero or one
1One only
0..*Zero or more
* Zero or more
1..*One or more
3Three only
0..5Zero to Five
5..15 Five to Fifteen

Uni-directional association

In a uni-directional association, two classes are related, but only one class knows that the relationship exists. Figure 7 shows an example of an overdrawn accounts report with a uni-directional association.
Figure 7: An example of a uni-directional association: The OverdrawnAccountsReport class knows about the BankAccount class, but the BankAccount class does not know about the association
An example of a uni-directional association
A uni-directional association is drawn as a solid line with an open arrowhead (not the closed arrowhead, or triangle, used to indicate inheritance) pointing to the known class. Like standard associations, the uni-directional association includes a role name and a multiplicity value, but unlike the standard bi-directional association, the uni-directional association only contains the role name and multiplicity value for the known class. In our example in Figure 7, the OverdrawnAccountsReport knows about the BankAccount class, and the BankAccount class plays the role of "overdrawnAccounts." However, unlike a standard association, the BankAccount class has no idea that it is associated with the OverdrawnAccountsReport. [Note: It may seem strange that the BankAccount class does not know about the OverdrawnAccountsReport class. This modeling allows report classes to know about the business class they report, but the business classes do not know they are being reported on. This loosens the coupling of the objects and therefore makes the system more adaptive to changes.]

Packages

Inevitably, if you are modeling a large system or a large area of a business, there will be many different classifiers in your model. Managing all the classes can be a daunting task; therefore, UML provides an organizing element called a package. Packages enable modelers to organize the model's classifiers into namespaces, which is sort of like folders in a filing system. Dividing a system into multiple packages makes the system easier to understand, especially if each package represents a specific part of the system. [Note: Packages are great for organizing your model's classes, but it's important to remember that your class diagrams are supposed to easily communicate information about the system being modeled. In cases where your packages have lots of classes, it is better to use multiple topic-specific class diagrams instead of just producing one large class diagram.]
There are two ways of drawing packages on diagrams. There is no rule for determining which notation to use, except to use your personal judgement regarding which is easiest to read for the class diagram you are drawing. Both ways begin with a large rectangle with a smaller rectangle (tab) above its upper left corner, as seen in Figure 8. But the modeler must decide how the package's membership is to be shown, as follows:
  • If the modeler decides to show the package's members within the large rectangle, then all those members need to be placed within the rectangle. [Note: It's important to understand that when I say "all those members," I mean only the classes that the current diagram is going to show. A diagram showing a package with contents does not need to show all its contents; it can show a subset of the contained elements according to some criterion, which is not necessarily all the package's classifiers.] Also the package's name needs to be placed in the package's smaller rectangle (as show n in Figure 8).
  • If the modeler decides to show the package's members outside the large rectangle then all the members that will be shown on the diagram need to be placed outside the rectangle. To show what classifiers belong to the package, a line is drawn from each classifier to a circle that has a plus sign inside the circle attached to the package (Figure 9).
Figure 8: An example package element that shows its members inside the package's rectangle boundaries
An example package element that shows its members inside the package's rectangle boundaries
Figure 9: An example package element showing its membership via connected lines
Figure 9 caption describes image

Importance of understanding the basics

It is more important than ever in UML 2 to understand the basics of the class diagram. This is because the class diagram provides the basic building blocks for all other structure diagrams, such as the component or object diagrams (just to name a few).

Beyond the basics

At this point, I have covered the basics of the class diagram, but do not stop reading yet! In the following sections, I will address more important aspects of the class diagram that you can put to good use. These include interfaces, the three remaining types of associations, visibility, and other additions in the UML 2 specification.

Interfaces

Earlier in this article, I suggested that you think of classifiers simply as classes. In fact, a classifier is a more general concept, which includes data types and interfaces.
A complete discussion of when and how to use data types and interfaces effectively in a system's structure diagrams is beyond the scope of this article. So why do I mention data types and interfaces here? There are times when you might want to model these classifier types on a structure diagram, and it is important to use the proper notation in doing so, or at least be aware of these classifier types. Drawing these classifiers incorrectly will likely confuse readers of your structure diagram, and the ensuing system will probably not meet requirements.
A class and an interface differ: A class can have an actual instance of its type, whereas an interface must have at least one class to implement it. In UML 2, an interface is considered to be a specialization of a class modeling element. Therefore, an interface is drawn just like a class, but the top compartment of the rectangle also has the text "«interface»", as shown in Figure 10. [Note: When drawing a class diagram it is completely within UML specification to put «class» in the top compartment of the rectangle, as you would with «interface»; however, the UML specification says that placing the "class" text in this compartment is optional, and it should be assumed if «class» is not displayed.]
Figure 10: Example of a class diagram in which the Professor and Student classes implement the Person interface
Example of a class diagram in which the Professor and Student classes implement the Person interface
In the diagram shown in Figure 10, both the Professor and Student classes implement the Person interface and do not inherit from it. We know this for two reasons: 1) The Person object is defined as an interface — it has the "«interface»" text in the object's name area, and we see that the Professor and Student objects are class objects because they are labeled according to the rules for drawing a class object (there is no additional classification text in their name area). 2) We know inheritance is not being shown here, because the line with the arrow is dotted and not solid. As shown in Figure 10, a dotted line with a closed, unfilled arrow means realization (or implementation); as we saw in Figure 4, a solid arrow line with a closed, unfilled arrow means inheritance.

More associations

Above, I discussed bi-directional and uni-directional associations. Now I will address the three remaining types of associations.

Association class

In modeling an association, there are times when you need to include another class because it includes valuable information about the relationship. For this you would use an association class that you tie to the primary association. An association class is represented like a normal class. The difference is that the association line between the primary classes intersects a dotted line connected to the association class. Figure 11 shows an association class for our airline industry example.
Figure 11: Adding the association class MileageCredit
Adding the association class MileageCredit
In the class diagram shown in Figure 11, the association between the Flight class and the FrequentFlyer class results in an association class called MileageCredit. This means that when an instance of a Flight class is associated with an instance of a FrequentFlyer class, there will also be an instance of a MileageCredit class.

Aggregation

Aggregation is a special type of association used to model a "whole to its parts" relationship. In basic aggregation relationships, the lifecycle of a part class is independent from the whole class's lifecycle.
For example, we can think of Car as a whole entity and Car Wheel as part of the overall Car. The wheel can be created weeks ahead of time, and it can sit in a warehouse before being placed on a car during assembly. In this example, the Wheel class's instance clearly lives independently of the Car class's instance. However, there are times when the part class's lifecycle is not independent from that of the whole class — this is called composition aggregation. Consider, for example, the relationship of a company to its departments. Both Company and Departments are modeled as classes, and a department cannot exist before a company exists. Here the Department class's instance is dependent upon the existence of the Company class's instance.
Let's explore basic aggregation and composition aggregation further.
Basic aggregation
An association with an aggregation relationship indicates that one class is a part of another class. In an aggregation relationship, the child class instance can outlive its parent class. To represent an aggregation relationship, you draw a solid line from the parent class to the part class, and draw an unfilled diamond shape on the parent class's association end. Figure 12 shows an example of an aggregation relationship between a Car and a Wheel.
Figure 12: Example of an aggregation association
Example of an aggregation association
Composition aggregation
The composition aggregation relationship is just another form of the aggregation relationship, but the child class's instance lifecycle is dependent on the parent class's instance lifecycle. In Figure 13, which shows a composition relationship between a Company class and a Department class, notice that the composition relationship is drawn like the aggregation relationship, but this time the diamond shape is filled.
Figure 13: Example of a composition relationship
Example of a composition relationship
In the relationship modeled in Figure 13, a Company class instance will always have at least one Department class instance. Because the relationship is a composition relationship, when the Company instance is removed/destroyed, the Department instance is automatically removed/destroyed as well. Another important feature of composition aggregation is that the part class can only be related to one instance of the parent class (e.g. the Company class in our example).

Reflexive associations

We have now discussed all the association types. As you may have noticed, all our examples have shown a relationship between two different classes. However, a class can also be associated with itself, using a reflexive association. This may not make sense at first, but remember that classes are abstractions. Figure 14 shows how an Employee class could be related to itself through the manager/manages role. When a class is associated to itself, this does not mean that a class's instance is related to itself, but that an instance of the class is related to another instance of the class.
Figure 14: Example of a reflexive association relationship
Example of a reflexive association relationship
The relationship drawn in Figure 14 means that an instance of Employee can be the manager of another Employee instance. However, because the relationship role of "manages" has a multiplicity of 0..*; an Employee might not have any other Employees to manage.

Visibility

In object-oriented design, there is a notation of visibility for attributes and operations. UML identifies four types of visibility: public, protected, private, and package.
The UML specification does not require attributes and operations visibility to be displayed on the class diagram, but it does require that it be defined for each attribute or operation. To display visibility on the class diagram, you place the visibility mark in front of the attribute's or operation's name. Though UML specifies four visibility types, an actual programming language may add additional visibilities, or it may not support the UML-defined visibilities. Table 4 displays the different marks for the UML-supported visibility types.
Table 4: Marks for UML-supported visibility types
MarkVisibility type
+Public
# Protected
- Private
~Package
Now, let's look at a class that shows the visibility types indicated for its attributes and operations. In Figure 15, all the attributes and operations are public, with the exception of the updateBalance operation. The updateBalance operation is protected.
Figure 15: A BankAccount class that shows the visibility of its attributes and operations
A BankAccount class showing visibility of attributes and operations

UML 2 additions

Now that we have covered the basics and the advanced topics, we will cover some of the new notations added to the class diagram from UML 1.x.

Instances

When modeling a system's structure it is sometimes useful to show example instances of the classes. To model this, UML 2 provides the instance specification element, which shows interesting information using example (or real) instances in the system.
The notation of an instance is the same as a class, but instead of the top compartment merely having the class's name, the name is an underlined concatenation of:
Instance Name : Class Name
For example:
Donald : Person
Because the purpose of showing instances is to show interesting or relevant information, it is not necessary to include in your model the entire instance's attributes and operations. Instead it is completely appropriate to show only the attributes and their values that are interesting as depicted in Figure 16.
Figure 16: An example instance of a Plane class (only the interesting attribute values are shown)
An example instance of a Plane class
However, merely showing some instances without their relationship is not very useful; therefore, UML 2 allows for the modeling of the relationships/associations at the instance level as well. The rules for drawing associations are the same as for normal class relationships, although there is one additional requirement when modeling the associations. The additional restriction is that association relationships must match the class diagram's relationships and therefore the association's role names must also match the class diagram. An example of this is shown in Figure 17. In this example the instances are example instances of the class diagram found in Figure 6.
Figure 17: An example of Figure 6 using instances instead of classes
An example of Figure 6 using instances instead of classes
Figure 17 has two instances of the Flight class because the class diagram indicated that the relationship between the Plane class and the Flight class is zero-to-many. Therefore, our example shows the two Flight instances that the NX0337 Plane instance is related to.

Roles

Modeling the instances of classes is sometimes more detailed than one might wish. Sometimes, you may simply want to model a class's relationship at a more generic level. In such cases, you should use the role notation. The role notation is very similar to the instances notation. To model a class's role, you draw a box and place the class's role name and class name inside as with the instances notation, but in this case you do not underline the words. Figure 18 shows an example of the roles played by the Employee class described by the diagram at Figure 14. In Figure 18, we can tell, even though the Employee class is related to itself, that the relationship is really between an Employee playing the role of manager and an Employee playing the role of team member.
Figure 18: A class diagram showing the class in Figure 14 in its different roles
A class diagram showing the class in Figure 14 in its different roles
Note that you cannot model a class's role on a plain class diagram, even though Figure 18 makes it appear that you can. In order to use the role notation you will need to use the Internal Structure notation, discussed next.

Internal Structures

One of the more useful features of UML 2 structure diagrams is the new internal structure notation. It allows you to show how a class or another classifier is internally composed. This was not possible in UML 1.x, because the notation set limited you to showing only the aggregation relationships that a class had. Now, in UML 2, the internal structure notation lets you more clearly show how that class's parts relate to each other.
Let's look at an example. In Figure 18 we have a class diagram showing how a Plane class is composed of four engines and two control software objects. What is missing from this diagram is any information about how airplane parts are assembled. From the diagram in Figure 18, you cannot tell if the control software objects control two engines each, or if one control software object controls three engines and the other controls one engine.
Figure 19: A class diagram that only shows relationships between the objects
A class diagram showing relationship between objects
Drawing a class's internal structure will improve this situation. You start by drawing a box with two compartments. The top compartment contains the class name, and the lower compartment contains the class's internal structure, showing the parent class's part classes in their respective roles, as well as how each particular class relates to others in that role. Figure 19 shows the internal structure of Plane class; notice how the internal structure clears up the confusion.
Figure 20: An example internal structure of a Plane class
An example internal structure of a Plane class
In Figure 20 the Plane has two ControlSoftware objects and each one controls two engines. The ControlSoftware on the left side of the diagram (control1) controls engines 1 and 2. The ControlSoftware on the right side of the diagram (control2) controls engines 3 and 4.

(Source: Wikipedia)