This week, I had the pleasure of attending #CityChain17 (blockchain conference) at IBM’s SouthBank offices.
Chaired by Paul Forrest (chairman of MBN Solutions), this was an opportunity to learn about Blockchain and how it is being applied.
In the past, I viewed the hype about Blockchain (following excitement about Bitcoin its most famous user) as just another fad that might pass.
However, as more businesses have got involved in piloting potential applications, it’s become obvious that there really is something in this – even if its’ manifestations are now much more commercial than the hacking by Bitcoin fans.
CityChain17 brought together a number of suppliers & those helping shape the industry. It was a great opportunity to hear, at times contradictory, voices and see what progress has been made toward ‘mainstream adoption’. There was so much useful content that I made copious notes & will share a series of two blog posts on this topic.
So, without further ado, as a new topic for our blog, here is part 1 of my recollections from this blockchain conference.
Introducing Blockchain & why it matters
The first speaker was John McLean from IBM. He reviewed the need businesses have for a solution to the problem of increasingly complex business & market networks, with the need to securely exchange assets, payments or approvals between multiple parties. He explained that, at core, blockchain is just a distributed ledger across such a network.
In such a scenario, all participants have a regulated local copy of the ledger, with bespoke permissions to approve blocks of information.
However, he also highlighted that today’s commercial applications of blockchain differ from the famous Bitcoin implementation:
- Such applications can be internal or external.
- Business Blockchain has identity rather than anonymity, selective endorsement versus proof of work, and wider range of assets verses a cryptocurrency.
- Block chain for businesses is interesting because of the existing problems it solves:
- Broader participation in shared ledger reduces cost & reconciliation workload;
- Smart contracts offer embedded business rules with the data ‘blocks’ on the ledger;
- Privacy (transactions are secure, authenticated & verifiable);
- Trust (all parties able to trust a shared ledger – all bought in).
- Several sectors are currently testing blockchain implementations, including FS, Retail, Insurance, Manufacturing & Public Sector.
Comparing Blockchain to databases, anything new?
As someone whose was involved in the early days of data warehouses & data mining, I was delighted to hear the next speaker (Dr Gideon Greenspan from Coin Sciences) talk about databases. Acknowledging the fact that there a number of the so-called ‘unique’ benefits of blockchain can already be delivered by databases.
Gideon began by suggesting there had been 3 phases of solutions to the business challenges of exchanging & coordinating data:
- Peer-to-peer Messaging
- Central shared Database
- Peer-to-peer databases (c.f. blockchain)
He had some great examples of how the ‘unique benefits’ of blockchain could be achieved with databases already:
- Ensuring consensus in data (B-trees in relational databases)
- Smart contracts (the logic in these = stored procedures)
- Append-only inserts (database that only allows inserts)
- Safe asset exchanges (the ACID model of database transactions)
- Robustness (distributed & massively parallel databases)
Even more entertaining, in a room that was mainly full of blockchain advocates, developers or consultants, was that Gideon then went on to list what was worse about blockchain verses databases:
- Transaction immediacy (ACID approach is durable, but blockchains need to wait for consensus)
- Scalability (because of checks, blockchain nodes need to work harder)
- Confidentiality (blockchains share more data)
After such honesty & frankly geeky database technology knowledge, Gideon was well placed to be an honest adviser on sensible use of blockchain. He pointed out the need to consider the trade-offs between blockchain & database solutions. For instance, what is more important for your business application:
- Dis-intermediation verses Confidentiality?
- Multi-party robustness verses Performance?
Moving to more encouraging examples, he shared a few that have promising blockchain pilots underway:
- An instant payment network (using tokens to represent money, it’s faster, with realtime reconciliation & regulatory transparency)
- Shared metadata solution (as all data added to the blockchain is signed, time-stamped & immutable – interesting for GDPR requirements, even if ‘right to be forgotten’ sounds challenging)
- Multi-jurisdiction processes (regulators are interested)
- Lightweight financial systems (e.g. loyalty schemes)
- Internal clearing & settlements (e.g. multinationals)
But, a final warning from Gideon was to be on the watch-out for what he termed ‘half-baked blockchains’. He pointed out the foolishness of:
- Blockchains with one central validator
- Shared state blockchains (same trust model as a distributed database)
- Centrally ‘hosted’ blockchain (why not a centralised database?)
Gideon referenced his work providing the Multichain open platform, as another source for advice & resources.
Blockchain is more complex, hence the need for technical expertise
A useful complement (or contradictory voice, depending on your perspective) was offered next. Simon Taylor (founder of 11:FS and ex-Barclays innovation leader), shared more on the diversity of technology solutions.
Simon is also the founder of yet another influential & useful group working on developing/promoting blockchain, the R3 Consortium. He credits much of what he has learnt to a blogger called Richard Brown, who offers plenty of advice & resources on his blog:
Corda is a revolutionary new Distributed Ledger Platform, the only DLT specifically designed for the needs of financial services. This article introduces the “Corda Way of Thinking”: understand this article and you’ll be well on your way to being a Corda Expert Solution Designer…! What problem are we trying to solve with Distributed Ledgers?
One idea from Richard that Simon shared is the idea that different technology implementations of blockchain, or platforms for developing, are best understood as being on a continuum. From more centralised applications for FS (like Hyperledger & Corda) being at one end and the radically decentralised ‘wild west’ comprising the other end (Bitcoin, z-Cash & Ethereum). He suggests the interesting opportunities lie in the middle ground between these poles (currently occupied by approaches like Stellar & Ripple).
Simon went on to suggest a number of principles that are important to understand:
- Shared ledger concept (thus offering better automated reconciliation across markets)
- But recognise that as a result, confidentiality is a challenge (apparently Corda et al are solving this, but at the expense of more centralisation)
- No one vendor (or code-base/platform) has yet ‘won‘
- It is more complicated than the advertising suggests, so look past the ‘proof of concept’ work to see what has been delivered (he suggests looking at interesting work in Tel Aviv & what Northern Trust are doing)
To close, Simon echoed a few suggestions that will sound familiar to Data Science leaders. There continues to be an education & skills gap. C-Suite executives recognise there is a lot of hype in this area & so are seeking people they can trust as advisers. Pilot a few options & see what approach works best for your organisation.
He also mentioned the recruitment challenge and suggested not overlooking hidden gems in your own organisation. Who is coding in their spare time anyway?
In his Q&A, GDPR also got mentioned, with a suggestion that auditors will value blockchain implementations as reference points with clear provenance.
Time for a blockchain panel
After 3 talks, we had the opportunity to enjoy a panel debate. Paul Forrest facilitated and we heard answers on a number of topics from experts across the industry. Those I agreed with (and thus remembered) were Tomasz Mloduchowski, Isabel Cooke and Parrish Pryor-Williams.
I took the opportunity to ask about the opportunity for more cooperation between the Data Science & Blockchain communities, citing that both technology innovations needing to prove their worth to C-Suite and with some overlapping data needs. All speakers agreed that more cooperation between these communities would be helpful.
Isabel’s team at Barclays apparently benefits from being co-located with Data Science team & Parrish reinforced the need to focus on customer insights to guide application of both technologies. What panelists appear to be missing is that in most large organisations, blockchain is being tested within IT or Digital teams, with Data Science left to Marketing or Finance/Actuarial teams. This could mean a continued risk of silo’d thinking rather than the cooperation needed.
Another, entertaining, question concerned what to do with all the ‘fakes’ now rapidly adding blockchain as a buzzword to their CVs and LinkedIn profiles. Surprisingly, panelists were largely positive about this development. They viewed it as an encouraging ‘tipping point‘ of demand & a case that some will need to ‘fake it till they make it‘. There was also an encouragement to use meetups to get up-to-speed more quickly (for candidates & those asking the questions).
The panel also agreed that there was still a lack of agreement on terms & language, which sometimes got in the way. Like the earlier days of internet & Data Science, there are still blockchain ‘purists’ railing against the more commercial variants. But the consensus was that standards would emerge & most businesses were remaining agnostic on technologies whilst they learned through pilots.
The future for blockchain was seen as being achieved via collaborations, like R3 & Hyperledger. A couple of panelists also saw FinTech startups as the ideal contenders to innovate in this space, having the owner/innovator mindset as well as the financial requirements.
It will be interesting to see which their predictions turns out to be right
What next for Blockchain and you?
How do you think Blockchain develop & do you care? Will it matter for your business? Have you piloted to test that theory?
Hopefully the above reflections also act as a useful contact list of those with expertise to share in this area. Let us know if this topic is something you would like covered more, here on Customer Insight Leader blog.
That’s it for now, more diverse voices on blockchain in Part 2…