I'm a researcher of transformative technologies and co founder of Animal Ventures.

Today, I've been challenged to explain one concept at five levels of increasing complexity.

My topic is?

Blockchain technology.

Blockchain is a new network and it's going to help us decentralized trade, allowing us to do a lot of our transactions much more peer to peer directly and lower our use of intermediaries like companies or banks, maybe I think today everyone can leave understanding something about Blockchain at some level.

Do you know what we're gonna talk about today?

It's called Blockchain.

Blockchain.

That's a really good question.

It's actually a way that we can trade.

Do you know what trade is?

It's when you take turns, that's when you give up most of what you want, right?

When you give up most of what you want.

Well, sometimes that definitely happens for sure.

What if I told you that there's a kind of technology that I work on that means you could trade with any kid all over the world.

Really?

Yeah, if I could trade with any kid, I would trade, I would trade something I don't like so much.

That's probably a good idea.

Maybe somebody else likes it more than you do.

So normally when people trade, they have to go to the store or they have to know the person so that they can get what they asked for with Blockchain.

You can make that exact same trade, but you don't need the store and you don't even necessarily need to know the other person.

So Ian, do you know what Blockchain is?

No have you ever traded or sold anything?

Actually I'm selling my computer on Ebay right now.

That's amazing what made you decide to trade on Ebay.

Um Well I mean I've heard of it and I trusted a lot because there's they have like all of their guarantees so I know that I'm going to get money and the person is going to get what they want.

So what if I told you that Blockchain technology is basically a tool where you can do the exact same thing but it goes to you and I directly you wouldn't need an Ebay or a brand in between.

And there's a lot of those kinds of middlemen in our society.

Today we have a lot of banks, we have a lot of companies that sort of help us make sure that our trades happen.

But if we could guarantee the same trade using technology, it's sort of like a technological trust then we wouldn't really need all those middlemen in between.

So how does it work?

It's basically a network of computers that all have the same history of transactions.

And so instead of there being one company with one database that holds all the information, the same sort of list is held by all these different people.

Like you could have it on your computer and then it gets validated by everyone and basically that turns into the next part of the list.

So it's sort of constantly updating itself.

So like how do you make sure that it's secure.

So it uses cryptography and that helps it basically encode all all of the transactions so you can't really see exactly what happened.

But you know it happened because it's like a marker so you could kind of like, I don't know you trade apples but you would just see like random letters so you wouldn't be able to track it.

Exactly.

That's cool.

So it's kind of this like really big ledger or accounting system for all sorts of things that get traded.

But instead of being owned by one company it's owned by everybody.

That's cool.

Yeah, we're gonna talk about Blockchain technology.

Have you heard of Blockchain?

I've heard of the words Blockchain but I'm not sure I know what it is.

So when we were much smaller societies, you and I could trade in our community pretty easily.

But as the distance in our trade grew we ended up inventing institutions right?

If you use Uber or you use Airbnb or use amazon even these are just digital marketplaces and platforms that help us facilitate an exchange of value.

But today we actually have a technology that allows us to trade 1 to 1 but at scale and it's called Blockchain technology.

There is some kind of interface for it.

You could have an app or you could use your computer to do it.

But instead of there being a company in the middle or what's helping you make that transaction is a bunch of soft and so it's being run by all of these different computers that have like a node.

So they're all running the same software and guaranteeing your transactions as they happen.

I mean I would assume this technology is taking away business or activity from these middlemen in some cases.

Yeah it is.

And a lot of people in the financial industry in particular are looking at it from the banking side of how do we use this technology to trade things like Bitcoin or other tokens that are easier to use instead of today's currency.

A lot of people think about Blockchain as Bitcoin because it's sort of in the news a lot and it's this new Cryptocurrency and it's kind of exciting but we're we're actually seeing a lot more use cases for Blockchain that aren't around the currency side, they're more around how do you take any asset and be able to trade that using the same technology.

Is there a mechanism for verifying that person a is a legitimate seller or producer of the item.

So today a lot of people are working on how to create identity structures that leverage block chains.

And one of the tools for doing that is being able to cryptographically sign um for a given attribute.

So your government could sign that you have a U.

S.

Passport or a university could sign that you are currently enrolled student.

And you could then dole out that information and control it yourself and be able to show people those certifications on an as needed basis.

So today we're gonna talk about Blockchain technology.

Have you ever heard of Blockchain?

I have whenever we have a transaction and let's say I buy something from you.

This information gets logged and it gets verified by a third person or third party and then um if like all this information verified and it all matches right.

The transaction goes through without any intermediary basically.

Right.

And it gets stored and when we make further transactions this information is already embedded.

It's in the in the ledger.

Yeah that's exactly right and you can append it you can sort of add new information that's more current but you can't actually go erase anything.

Absolutely right the way the technology is changing nothing is gonna be like it used to be and there's no like firm and then the buyer and the seller and it's basically we'll have to rewrite a lot of rules and economics as well.

For sure.

A lot of the assumptions won't hold true.

Same with who are the who are the actors.

It's not just people anymore.

It's machines.

Absolutely.

We're going to have to create entire new concepts of how they do trade and how they work with us to what kind of barriers or roadblocks would you imagine are going to happen in the Blockchain space.

So at least when we talk about Bitcoin, there are some pressed issues have been some hacks.

And so there's obviously a need to work on trust and feeling that it's a safe technology.

Yeah.

One of the problems that Bitcoin is faced is Bitcoins getting stolen or lost.

But a lot of that actually comes from people trying to re centralize Bitcoin in different ways, making themselves actually a pretty easy target.

Absolutely.

So education will be a big part before we actually can use the technology in a wide sense.

Yeah.

Actually transition into the mainstream and make it useful for average people to use.

We're going to need to make sure we have a lot more education, a lot more standards and probably work with a lot of enterprises to create sort of the user experience around this being a technology that is safe and usable and understandable.

What is the current state of Blockchain and your understanding what's going to have to happen next.

The current state is in the research state and it's being developed to be applied in many, many areas.

It might be used almost everywhere to where like we won't even imagine how we live without it, but I'm not sure where it's gonna go.

I mean, no one really knows right, well, we have a lot of public block chains, like we have Bitcoin, we have the ethereum network, N X.

T.

But a lot of companies and consortiums are getting together to build private block chains so ones that are more closed off at first and then may evolve into a public network when people feel comfortable using it.

And some are also proof of concept out in the real world projects in energy and in pharmaceuticals and in retail and lots of different fields are starting experiments and we'll see in the next few years how all of those interact and what we learn about the best use cases for Blockchain and what it means for trade.

So tell me your version of a technical definition of Blockchain.

A technical definition of Blockchain is that it is a persistent transparent public append only ledger.

Um So it is a system that you can add data to and not change previous data within it.

Um It does this through a mechanism for creating consensus between scattered or distributed parties that do not need to trust each other but just need to trust the mechanism by which their consensus has arrived at.

Um In the case of Blockchain it relies on some form of challenge such that no one actor on the network is able to solve this challenge consistently more than everyone else on the network.

So it randomizes yes.

Yeah it randomizes the process and in theory ensures that no one can force the Blockchain to accept a particular entry onto the ledger that others disagree with, one that that relies on a mechanism for a peer to peer network that can maintain updates to the ledger and then verify those updates in such a way that it is impossible to defraud and impossible to alter after the fact.

And do you see it as defining a new discipline of kinds or where, where are we going to see Blockchain emerge in the real world first?

I mean just so like as an example, one thing that I think about a lot in terms of possible Blockchain applications is electricity, right?

The next generation of distributed smart grid technology effectively because Yeah, exactly.

And it's a very fruitful area of research and you can find yourself looking like 20 years out right where you have an enormous number like of electric cars, you have all of these batteries, like that's essentially um, a distributed peak load power grid.

Right?

Like the cars are getting plugged in and unplugged at different times.

If you have a mechanism that is able to automatically and autonomously be distributing power based on batteries that are scattered throughout the grid, um, that are being used for other purposes, the owners don't even necessarily need to be aware.

You begin to have something that looks like a much more viable society that still has a lot of electricity needs but is able to base that much more on renewables is able to make up the difference during peak load periods or during differences in whether that is able to have power much closer to where it's needed rather than having to be distributed over great distances.

Like that's something that would be an enormously hard problem to solve.

And it's not that the Blockchain makes it easy but it makes it possible.

A lot of people are seeing Blockchain in the news and maybe seeing a lot of sort of initial coin offerings, this sort of monetization opportunity around Blockchain and are getting very excited about it and some of that excitement is real and should be encouraged.

But some of it is also hype.

How do you feel about the hype cycle around Blockchain today?

I'm glad you mentioned initial coin offerings because for me, those really exemplify the sort of the problem that we're having at this exact moment.

They are a an idea with enormous potential significance down the road.

However, the promise of the initial coin offering has been kind of hijacked into this string of like basically pump and dump scams or sort of desperate gold rush schemes the faster that we can, we can shift from this this fantasy that it is going to make you rich in a sort of you know, 19 twenties tulip bubble kind of way.

Um is is is the sooner that we can get into people honestly and I mean this like with all the hope in the world, people being disappointed in block chains like oh I didn't get rich.

It's just being used now to make it easier to transact goods and services safely across borders.

This isn't exciting at all.

And then we'll see that like become part of the everyday infrastructure of the world in a way that I think will be very significant.

But I think it is now, almost every aspect of it that's connected with the concept of money is wildly overhyped.

Um and it also creates a problem, which is people get a lot of excitement around it and they're waiting for The world changed.

Right?

Where, where is this technology?

Why haven't I seen change yet?

Because we've had a lot of pr a lot of proof of concept.

But truthfully this is more like a science.

It will develop, it will take five years, it will take 10 years.

That kind of time is necessary.

One of the areas that brought supply chain research is the fact that we're not just going to see Blockchain emerge, We're going to see artificial intelligence continue to evolve.

We're gonna see connected devices and this sort of growing internet of things, machinery that can do a lot more and have a wallet and transact on their own.

And so I actually think a lot of where Blockchain and other technologies are headed is this interesting synergy that will help us elevate the kinds of institutions we've used in the past and cobbled together to create that identifiable verifiable trust.

Yes.

And one of the most interesting ideas to me that came out of the currency side of the Blockchain project was the notion around like coloring coins, right, assigned properties to a particular coin.

Um, and in particular to assign those properties in ways that would allow you to do things like bring in the graph of previous transactions.

You know, there's there's sort of an obvious application for this, which is something that would look a little bit like an extreme version of like a boycott divestment and sanctions kind of approach, right?

A model where it's sort of like I will not touch money, my wallet will automatically not touch money that has been exchanged with the following as a sort of very extreme way of cutting those things out.

But there's also ways in which I think that could be applied to, to clearing out the entire logistics process of many kinds of bad actors.

But trying to make a supply chain better in some ways, relies a lot on whose version of better that is and exactly kind of what gets qualified but also how that is quantified within, say, some kind of like smart contract system.

There's multiple ways that I can see this backfiring and one is the ways in which that is implemented, for example, leaving certain kinds of bad behavior untouched or un analyzed or one that feels even more dire to me and in some ways is creating an extremely inflexible because human contracts, legal contracts are actually very flexible, like there's a lot of kind of room to move and renegotiate.