 Hello, everyone. Welcome to our panel, Breaking the Blockchain Hype. My name is Laura Shin, and I am the host of a couple of podcasts on crypto and blockchain. One is called Unchained and the other is called Unconfirmed. I urge you to check them out. We're going to be discussing blockchain and the hype around it, and also when it makes sense to use a blockchain and when it doesn't. In recent years, you've probably heard all the hype around blockchain. People are very excited about it. It's being talked about as a way to solve problems ranging from financial inequality to tracking goods in the supply chain. And yet, here we are. We haven't seen a ton of actual products that are alive using blockchain technology. So we're going to be talking about when it is appropriate to use a blockchain and enterprise and how you figure that out. And to discuss this issue, we have a spectacular set of panelists. To my left here is Shweta Shetty, who is the senior director at SAP. To her left is Adam Ludwin, CEO of Chain. And we've got Brian Bellendorf, the executive director of the Hyperledger Foundation. And finally at the end is Sheila Warren, who's the project head of Blockchain and Distributed Ledger Technology at the World Economic Forum. So a couple of quick notes. First of all, we're going to be releasing a recording of this on my longer podcast, Unchained. So for that reason, I urge all the panelists to do as I'm doing and speak directly into the mic. And I also would urge you all, when you ask your questions, to make sure to speak into the mic so my podcast listeners can hear your questions. Without further ado, let's start with an overview of the way blockchains can be used. What are your guys's most, or what are you most excited about when it comes to different applications of blockchain? I think I'll go first, because I let this model people tackle the use cases once I've run through my list. But I think as SAP, the use cases that we see early benefits from the low hanging fruit, if you may say, for blockchain would be use cases around supply chain, either track and trace, ensuring the provenance of your goods. Trade finance is another area which I think is ripe for disruption using blockchain. And personally, I'm super excited about what governments in the developing world are doing with blockchain. For example, a land registry, where all of a sudden a lot of developing countries can potentially put the ownership of land onto the blockchain and make transactions a lot easier that way. I'll go next. I mean, I think it's helpful to start by understanding having a kind of common understanding of what the blockchain technology is, because I'm sure many of us see headlines about ICOs or coins. And for us, for some of us that might characterize this term blockchain, but it's really this underlying technology that is this novel break from what was possible before, which is a technology that's a little bit of a database. It's a little bit of a network. But what it's really for is bringing together a consortium of participants. Sometimes a consortium as large as the whole wide internet, sometimes as small as simply four or five organizations that need a common system. And what it does is establishes a common ground truth without needing somebody at the center to play God. And that's useful in almost any scenario where you have multiple parties who don't necessarily, you know, distrust each other entirely. They trust each other enough to do business with each other, but they need some way of being able to verify the things that they trust, right? Some way to agree. Here's a transaction two parties did. And that becomes now a part of a long term record, right? Here's a statement that was made by one party about another. And now everyone remembers that. So it gives us this history of what happened, this kind of immutable ledger. Obviously, it's more immutable, the more participants are on it, and Metcalf's law still applies, which is the value of these networks is still greater, the more participants are on it. And so it turns out there's a bunch of use cases that today signify for us low trust environments where we need to have that history of transactions in supply chain. That's a pretty obvious thing, whether we're tracking food and where that's entered the system to try to make sure that if lettuce goes bad, that we can try to isolate where it went bad and do a recall on just those products rather than all lettuce in the entire food chain as has happened recently and cost that industry billions of dollars, whether it's diamonds and where they've come out of the ground to make sure you're not buying diamonds mined by slave labor or used in gun purchases, weapons purchases, that sort of thing, or fish bought caught by fish quotas. But it turns out there's lots of other transaction types as well, settlements between financial organizations, those sorts of things, or even just the establishment of common directories. In healthcare, for example, there are applications of this to keeping track of who's credentialed to serve as a surgeon or as any type of medical profession. And when they move from one state to another, today it often can take weeks for a doctor properly credentialed to earn the right to be able to practice weeks or months when really that should be a simple lookup into a common shared directory. So there are live projects now in all of those sectors, live meaning either late stage pilot or production. And these are all kind of a world away from the cryptocurrency use cases we all know about, but are starting to provide some value and hinting at potentially applicability to every sector out there. And I'll briefly add, I think that there's room for engagement with blockchain deployment where we're already seeing movement from a sector itself towards decentralization and digitization. So there are power grids, for example. We're seeing movement towards decentralized power grids in places where either there is no grid or even places where there is a grid, the micro grids becoming something of great interest as more and more consumers have in their homes, solar panels, et cetera. So there are new economic models being created in that industry already and blockchain can support those models in some cases. Similarly, digitization where you have a big paper trail, so in shipping logistics, for example, where there's already a movement for digitization in certain parts of the supply chain, blockchain can help accelerate and amplify that, too. So I don't know, I mean, we can keep talking about some of the different use cases that we're excited about, but I'd actually like to shift it to different applications that you guys are actually working on. And I actually think, Adam, you might be the perfect person to take that, Vitan. Sure. I'll start by briefly answering the prior question around use cases of blockchain technology. Our point of view is that a blockchain is primarily a mechanism for creating digital bearer instruments. Our work at Chain has primarily been focused around the new asset classes emerging around crypto assets as well as tokenizing existing assets like securities and currencies so that they can also be in this internet native digital medium of a token. And we haven't seen much traction outside of that scope of financial assets. We haven't seen much traction in industry around data supply chain identity and beyond initial explorations yet. So so far, we skew a little more closely to the origins of the technology which relate to new financial instruments, new financial mediums, pioneered, of course, by Bitcoin. So where Chain has been working is with customers in the financial industry like Visa and NASDAQ and looking at projects where they want to stand up new networks or new services, but instead of using traditional market structure where you have an organization in the center with a database that's tracking balances and tracking histories for everyone participating with that service instead to have more of an open architecture where different partners can participate and view access read and write to that ledger and thereby sort of distributing more of the trust to the edges to the participants, then you would see with a more traditional architecture. So to be even more explicit about it, payments, securities issuance and transfer, new types of mobile banking, that's where we've found the most kind of fit between the technology which is really a database for value in our minds and industry. And who else wants to jump in with how their company is using blockchain now? I can talk about something that we are doing and it's in the pharmaceutical space and our serialization is something that is mandated by the FDA that is pretty much every skew needs to have a unique number and this should help drug companies theoretically recall drugs at the right point in time and ensure that you can verify the authenticity of any medicine that anywhere in the value chain. Now, that's great in theory, but if you actually think of and practice the number of hands that medicines change over the entire value chain is a lot and to have all of these people enter their data into a central system is challenging and it's challenging because all of them use different databases in the back end. Some of them don't even use databases, right? Depending on which part of the world you are dispensing drugs in. So what we have done is we've done, we started and we tackled a very small use case, which is ability to sell drugs that have been returned. Now, if you look at the economics of it, one to two percent of the drugs that are returned can be resold. They are all within the right length of time from the expiration rate, et cetera, but you cannot sell it at, it's more challenging to sell them at this point in time because you cannot prove the authenticity of this drug actually being what you manufactured. So we said, let's tackle this use case. We did a pilot with Merck and a Merisose Bergen, the pilot went well, and at this point in time, we have 15 other pharmaceutical companies that are doing a more advanced proof of concept of pilot around this. So, but it's still at the pilot stage. I will not say it's production and to take it from pilot to production is going to be not a technological question. In my opinion, it's going to be more of a governance. You know, are these competitors ready to work with each other sort of a question? Yeah, so let's talk about kinds of the, or kind of the questions that you ask yourself when you're deciding what use cases to tackle. Here we've laid out kind of a whole bunch of different ones, and I'm sure, you know, even in my intro, I also named some additional ones, but Adam mentioned that, you know, payments, securities issuance, those are kinds of ones that they realized might work for them. And Shweta is talking about pharmaceuticals and combat encounter fitting in that area. So amongst all the other things that everybody is claiming blockchain will sell, how did you come up with those as the areas that you wanted to tackle in, Brian? And Sheila, I'm sure also have, if Sheila, I definitely know she's got this whole like little flowchart that she created that was pretty awesome. But why don't we just discuss this? Because I think this is like where a lot of people get stuck. Sure. And I can go a little bit more into that. So we did develop a toolkit. We call it blockchain beyond the hype and it came out at the end of April and it's designed to give a quick initial assessment of whether or not blockchain is appropriate to the problem at hand. Blockchain is a technology and it is not a solution to everything and we think it's very important to recognize that it is more applicable to certain kinds of problem spaces than to others. So to answer your question more directly, you know, we tend to focus on the removal of an intermediary or a broker. So is that something that you're trying to accomplish? Is there a reason that you want to decentralize or just intermediate what you're doing? We also look at things like, is there a benefit to having an immutable record, a transaction record? Or it was actually something you don't want. I think it's interesting to just briefly note with the challenges of GDPR and the right to be forgotten that GDPR is intended to provide to citizens of the EU. What does that mean for the creation of an immutable record in terms of data? Since there are interesting kinds of policy regulation questions that come into play and you have to be very mindful of your regulatory environment when you think about the creation of an immutable record and what that means, who should have access to that record? Is it important that multiple parties have a single source of truth? It may be that that's not the case. And in many cases, we find that when you really push on a particular potential use case, you wind up realizing that the permanence is really immutability, but the permanence is not desirable for some reason or another, or that you really wind up with a benefit to having centralization, that there is such an obvious authority figure on the transaction record that you're trying to create as an example, that it might be worthwhile to explore other options that already exist rather than moving immediately or directly to blockchain. That being said, we're certainly quite optimistic about the use of blockchain, particularly as a technology evolves. It's still quite an early stage technology, but as it evolves, these are all known problems and there are, I will say, brilliant minds and many of them working on the protocol layer to solve some of these problems, to increase speed, to increase throughput. Now, all these kinds of things are things that are being focused on by the technologists in this space. But I think it's important to add, there's no use case for blockchain technology for which somebody couldn't come back and say, well, couldn't you just do that as a centralized system? Wouldn't it, and I don't think anybody credibly could argue that it wouldn't be faster, it wouldn't be cheaper, it wouldn't be more flexible even because we know how to build big centralized systems, we know how to build an AWS or a Twitter or a Google search engine. And we have them, and we have them already, right? It's a technology that solves not a technical problem, but a political problem, which is there's a reason why there's not a bitcoin.com keeping everybody's balances straight, because then the question of who runs that site, how corruptible would it be, et cetera, becomes a big challenge. And it might be okay to do that in a social networking site, right? It's definitely not okay when we're talking about international balances or areas where parties don't have that all degree of trust in one central entity. It's very similar to, as the internet launched, we didn't have secure email, we didn't have secure web transactions, because we thought, well, the people carrying our packets for us, they're not going to sniff and look at what's inside those packets, right? Well, it turned out they do. So now we need encryption between endpoints, and it's one reason why markets now realize they need to avoid centralizing their systems on and the trust that they have in one entity. Can we talk a bit about elections? Because this is something Ryan and I actually talk about a lot, and we both are a little skeptical of the election use case, but I think, and I'm speaking for you at this moment, but we both acknowledge that there are certain aspects of elections to which blockchain is quite suited, and others where it probably isn't suited. I'm just going to tee you up, because I know you're talking about this. So, and I don't want to distill too much of your action or thunder. But there is a lot of perhaps a rational exuberance around the idea of, well, if elections could just be digital, if we could vote by phone, maybe we wouldn't have what we had here in California two days ago, which is only 20% of the population actually bothering to participate in a fairly major election, right? And it's well intended, and it's, you know, driven by this idea we're always on our phones, shouldn't we just be able to vote from that? But for lots of good reasons, we know that there are challenges to actually getting digital voting to work. And blockchain is not magic pixie dust that suddenly makes that a trustworthy process. But the two parts of the election system that would benefit from having a distributed ledger involved, a mostly public distributed ledger, would be in voter registration, making sure everyone's registered to vote in where they are and the status of that registration, if it's been withdrawn or whatever. And that's that's the same database that you could see at home, as you would see when you show up to the polling place. And then at the tail end of the election, when you're adding up the results from each polling place, being able to do that quickly, but also verifiably, both those steps, I think would help ensure the integrity and auditability of elections to a degree we even don't have today and would give us a it'll allow us to actually get to answers more quickly as to who won the mayoral race in San Francisco, those sorts of things. But it would help I think ensure that public confidence in the in the voting system, which today people proxy through their governments, you know, here in California, we trust the state to run a competent election in Oregon. They trust them so much. They do all mail in ballots, which is remarkable, right? But you don't you can't take that degree of trust in central institutions for granted in many other countries of the world. And hopefully that never happens here. Yeah, I actually have had this topic come up a couple of times in some of my recent podcasts, and you see this kind of polarized view of blockchain for election purposes in the two podcasts I'll mention to you. So the first one was and these are both on my shorter podcast called Unconfirmed, but one of them was with Tamika Tilleman of the Blockchain Trust Accelerator and the New America Foundation, and he worked with a group of different organizations to do a pilot of election of blockchain based voting in I guess it was I think normally it's like it's something like military personnel in less Virginia that don't typically have access to voting at all because of the way they're deployed or something like that. I don't I don't remember the circumstances, but it was something where this was a population that when they're you know deployed in this particular way, then they can cannot vote at all. And he talked about, you know, the promise of of what they saw with using this pilot and how they also I think had like a paper component as well. And on Twitter, just in the last couple of days, I saw that somebody had caught wind of this and had just written like, you know, blockchain based voting. No, just no, like don't do dangerous things with this technology, something like that. And Vitalik Buterin of Ethereum even weighed in and so what's interesting is, you know, you have kind of that one side that feels like this can be used for that. And then you have this other side that is concerned about it. And someone who expounded on that concern in my podcast unconfirmed was Alex Gladstein of the Human Rights Foundation. I happen to be at the Oslo Freedom Forum last week. And he has been thinking a lot of really interesting thoughts around how blockchain technology can be used, both for good and for evil when it comes to human rights. And so he talked about how if you develop a blockchain based election system, but it's like you know, in a place like Russia or something where there is a dictator, then, you know, this idea that blockchain kind of creates an element of trust for you just goes out the window because then it's obviously very easily manipulated. So yeah, and I actually I like the distinction in the two cases, because I actually am a fan of the West Virginia military case. I think what you're doing there is providing access to a group of voters who are legitimate voters. It's very easy to ascertain that they are legitimate voters who don't otherwise have access to the voting system. So you're basically enhancing democracy in that sense. I think it's a legitimate claim to be made. But I think that as a general proposition, you have to be very careful at a time with this technology when any successful use case runs the risk of being scaled to situations where it's not appropriate. And what blockchain cannot solve or any technology really is the coercion problem. So you may be able to prove that I, using my biometrics, voted. It was me and I did vote for a certain candidate. That's all verifiable and true, right? You could do that. But what you don't see is the context around me in which there is the risk of the soldiers running through my village or all these kinds of coercive elements that happen not just in dictatorships but actually happen to ordinary people and happen even in the United States. Photo coercion is a real thing. It's documented. So if you can't get around that, how do you trust what you're actually seeing? And I think that these are the policy kinds of questions we're focusing on at the center. How do you ensure that blockchain is not just cementing a preexisting problem, providing accountability or providing a sort of new form of trust where you really shouldn't have trust? So that's something that we think about a lot in our work. And so just to bring this back to enterprise, let's kind of shift a little bit more back in that direction. Adam, did you want to answer this question around how you determine whether or not to apply a blockchain or a regular database? Yeah. So I think it's like really important to, if you're sitting in a company thinking about this technology to be just like incredibly honest with the analysis and start by asking, are we really saying we just want modern software? And we want to do more of a traditional transformation project. And whether it's voting or supply chain or any of the cases that we've discussed so far, things in health care, feels like oftentimes what the leadership of a company is actually asking for is for the thing to just work well and to function like a modern piece of technology with like a good mobile experience and a good online experience. And I think sometimes that gets conflated with blockchain unnecessarily. And I think in most of the cases that we've seen a traditional solution is called for because, as Brian pointed out, there isn't a market politics trust problem. There's a we need a better modern solution problem. So I think most of the time you should be ruling blockchain out and it's a very unique tool when there's a market failure and you need a different trust model between participants. And even then it's still very early days for the technology. It's still very much a grand experiment and sort of an experiment in a new type of infrastructure and a new type of architecture. And it's good to just keep that in mind so that you don't sit in the audience and have FOMO that if you're a CIO you're not like doing enough in blockchain. So I say that's how that that would be my frame for folks. I don't know if this gets into kind of too proprietary or private information, but I'm sure you must have so many companies that come to you saying, hey, chain, can you create some solution for us? So how do you choose like which customers you're going to work with or rather really on the flip side? How do you decide which ones you're not going to? Yeah, there's a very easy test. If in the first meeting, the customer says, we want to do something with blockchain, then I don't work with them. OK, so let's go to a more gray area. What are some ones that you kind of really struggled with a little bit where you thought, oh, this might work. And then ultimately decided that's just on the other side of the line. Just to be clear about why I said that, I think that the kinds of customers, the types of projects we want to take on are ones in which it's an unachievable outcome without a blockchain versus somebody thinks this technology is hot and they want to like make sure their company is like, you know, like Long Island blockchain or something. Yeah. Right. Yeah, it's like, you know, the other thing that we see a lot, I hope this doesn't cut too close to home here, but is there are a lot of what I call Silicon Valley safaris that happen where management team from another country or another part of the U.S. comes out to Silicon Valley in a very nice air conditioned luxury bus and they create a schedule and they go to all of the companies that are like being written about in the economist over the last three months, basically. The blockchain companies, the AI companies, you know, whatever, and they show up and then they say like, we want to do something with blockchain. So we take a lot of those because part of being on the vanguard of new technology is educating the industry about what it is and why it's interesting. And so we like to do those meetings, but they don't tend to become customers because their frame of mind is not, oh, we have a specific thing we're trying to solve. It's more interest in learning about is there something here? So that's why I said, if the opening statement is we want to do something with blockchain, it's usually downhill from there. So if any of you are gonna do one of these bus tours, let me join as a reporter in hell. I'll make something fun out of it, I promise. Yeah, and feel free to come to chain. So what we found to be most effective is because we're closest to the technology, we have a set of hypotheses about where it's gonna apply and then we're much more outbound. So our relationships with NASDAQ, with Visa, with Citi, we're all outbound. We went to them and said, we think there's a massive opportunity around international payments because of the trust model required in correspondent banking. And you're the best positioned as Visa to do something about it. Let's have a conversation. And that has led to the most productive outcome. So I would say be open-minded about hearing from startups that approach you because oftentimes they're closest to the state of the art and they might have something of value to propose. So that's been the most productive path for us. You know, I find that interesting because those companies have pretty entrenched processes. So what was your pitch and how did you convince them to, especially at the time that you did it, it was 2015, which definitely was a different era from 2018 where we are now, where everybody is experimenting and this 2015 definitely was kind of the Bitcoin is criminal money days and it was long before even this blockchain, not Bitcoin mantra became part of the blockchain hype that we're discussing. So how did you make that pitch and convince them? It wasn't easy. It actually tended to start with me educating or our team educating a set of executives about Bitcoin. In fact, the curiosity around Bitcoin was very real in 2015, 2014 even and still today. So that tended to be the way the doors were opened and then it became a conversation about now that you understand the model that is Bitcoin, let's think about sort of a similar architecture, but instead of around a new currency, around existing currencies, around existing assets and that tended to be the way the conversations became meaningful and interesting. And since you brought up blockchain, not Bitcoin, that was also the kind of dominant narrative at Davos this year, was as someone that works in the space, like usually that was the nature of the dialogue with folks that I met at the event. And I encouraged people there and I'll encourage people here to not be trapped by that dichotomy, to not get into the one is better than the other, blockchain is better than Bitcoin, Bitcoin is better than blockchain. There are two incredibly different arenas still. When I think blockchain, quote unquote, I think primarily about a context where you have existing financial assets and you're trying to put them into a new type of market infrastructure. And that's not really competitive with Bitcoin or other crypto assets. Those other crypto assets are creating an alternative system, an alternative set of software services that have a totally different arc and possible future to them. And I think it actually behooves folks not to view them as one threatens the other, but to understand them on their own terms because there are going to be contexts where the enterprise, especially financial institutions, will want to participate in the crypto asset world. And you see this increasingly at NASDAQ, at ICE, which is also New York Stock Exchange, at Fidelity and other asset managers where their clients are now showing up and saying, we want exposure to this new asset class, can you help us? Because we don't want to use a startup to manage your trade. And so now the issue is sort of being forced. And for the folks that were not dismissive of crypto currencies, but were investigating them alongside other blockchain solutions, they've been best positioned to build those next generation of services to sort of ride the wave around that asset class. So I wouldn't, again, rule out Bitcoin or rule out crypto assets if you're in a more of a traditional enterprise role because I think they're here to stay. Yeah, let's actually also shift a little bit toward more questions that are a little bit more detailed around when you use a blockchain. And I was just wondering if there's a difference about when you use a blockchain in a B2B context versus B2C, or if there's a different way to think about it or if it's the same. Yeah, I think predominantly the value that's going to be realized in the next five years will be in a B2B setting rather than B2C. I mean, with crypto currencies aside, because I think that is very much a consumer-driven kind of thing, even with the institutional interest in it now is predominantly about serving their clients. So I consider it's more C rather than B. A lot of the stories will be about, here's a set of banks that now have a settlement network between them. Here's a set of participants in a supply chain that now have a provenance tracking system between them. And in many cases, ROI will be very elusive. It won't be easy to measure cost savings. You'll have flashes of this if Merisk is able to say, hey, we've cut the cost of the paperwork and delay in getting a container from Shanghai to Los Angeles by 30%. That's great. There'll be little bits of that, but it'll be hard to systematically, I think, that the GDP generated by or cost savings by net this usage is a number of billions in the same way that was hard to make that case for the web, for the internet, when so much of that impact was implicit or kind of ephemeral in a way. But I think a lot of it will be there. Where I think the next wave will be the C space, though, thanks to blockchain technology will be around identity. I think with distributed ledgers, with some of these underlying tools, we now have the ability to get closer to what there's a second whole big world called self-sovereign identity that builds upon blockchain technology in some meaningful ways. And this is a way to get out of the trap of logging with Facebook, logging with Twitter, and get closer to something that acts a little bit more like the IDs in your wallet, like the diploma you have on your wall, like the medical records that in theory, you should be able to take around from institution to institution. And blockchain technology, there's a bunch of projects out there that are focused on using that to invert the relationship between consumer and identity provider, and put much more power and agency kind of very much following along the GDPR kind of view of how the world should work. And that gets a lot of us really excited in this space. Yeah, and I think in enterprise, you're definitely gonna, I agree with that completely, you're gonna see primarily B2B for at least the short to medium term. But I do think there's an interesting government use cases that really are B2C in the sense of government working with citizens. So everything around travel and passports and identity is one of the things in digital identity space, but also government records, land titling, some of the things Shwetha mentioned earlier, I think are interesting use cases as well that we're starting to see more engagement with on the part of governments. And I actually also wanted to ask about, when you put data into a blockchain, it's immutable as they like to say. And I just wondered, how do you ensure the integrity of that data? You mean entering data into the blockchain integrity at that point in time? Like I just wanna frame this actually a little bit more, which is that obviously as a journalist, I get pitched a ton of startups and projects. And one time somebody pitched me their new startup, which was going to be some kind of like time stamping, sort of like a notary. And I think they were, I don't know if they use the word notary, but it was something like, we're gonna put this data in the blockchain. And I said, oh, how do you prevent false data from entering the blockchain? The guy literally did not have an answer for me. And I was just amazed that they hadn't thought of this. It was my first question for him. And it was something, and I said, well, you could put like a spam email in there. And he was like, well, yes. Then we would prove that the existence of, that that spam email existed at that moment in time. And I was like, okay, this is not useful to, well, I didn't think it was. So yeah, so how do you ensure the integrity of the data? I mean, I think you've hit the nail on the head. This is like the perennial, one of the perennial problems, you know? So I often joke that we talk about garbage in, garbage out, problems in technology. And this is really garbage in, garbage in forever, you know, kind of problem. So if you haven't sanitized and done data hygiene on your database, it's a big issue. We're looking at a policy project on anti-corruption work. And one of the challenges and tensions in the blockchain is how do you preserve some measure of, it's the pseudonymous systems. How do you preserve some measure of privacy and security to an individual, for example, who's logging a complaint of some kind, right? Against a system, whether that's logging a harassment complaint against a manager or whatever at a company, or whether it's logging a corruption complaint against a public official, for example. How do you balance that with this troll that bought spam problem? Where if you do enable someone to anonymously, we see this on the internet all the time, you enable people to anonymously comment on something, what they say, you know, there's a lot of latitude in how accurate that really is. And the ability for others to glom onto that, even in an automated fashion, and kind of just fill your database with junk data. So it's a, I don't have a great answer to it. I think it is a perennial problem. And I think it's one of the reasons that we remain cautious about the use of blockchains. If you aren't confident that you have an authoritative source of truth, that the record you're creating is an accurate record, not to mention a meaningful record, right? Which I think is also important, something we gloss over, in my opinion, too much. If you can't do that, then this is perhaps, it can even be a dangerous technology, frankly. If that's not a solved problem. So I do believe, just to add to that, I do believe that with blockchain, it's a little easier for you to ensure data integrity. For example, if my identity is on the blockchain, and I'm not sharing every piece of information with every single person around, it's a little less easy for someone to steal my identity. And if you link data that's entered to a valid user, at that point in time, you can be more, the probability of data being entered by the right individual is higher than it would be, since you cannot steal identity that easily. On top of that, what we do a lot of times in the supply chain use cases is you use IoT, right? At any point in time to link the actual physical with the digital. So that's another way we are trying to make sure that data in the blockchain is more accurate. Of course, you can go and tamper each single piece of IoT device, but that would be challenging given, you can set other things around it. An example of that would be, so a boat shows up at port with a load of tuna that it claims that it caught in this one region at this one time that would put it within the quotas for a certain country, right? And yet you have data from sensors, tamper proof sensors on the boat, even on the nets. There are companies that sell tamper proof GPS sensing and video sensing sensors for nets, as well as satellite data, data from sensors on buoys out in the water. All of that data could be writing to the ledger signed by the entities that built these sensors, right? And used to either enhance the integrity of the claim that this boat is making, that it caught this fish at this place at this time or to refute it, right? And this is data that could feed, auditing processes could feed other types of checks and balances, perhaps even feed a whistleblowing or investigative journalist kind of a framework that would give us a greater sense of integrity to claims that are being made about these types of things. So in a minute, we're gonna turn to questions. So if you have a question, feel free to get it ready. But we're gonna ask one last question before we get to your questions, which is I wanted to go back to digital identity and what we talked about, you know, putting them on a blockchain and giving power back to people over their data, but how do you make it secure? And then also, how does this square with businesses need to comply with regulations? So I'll chime in. I don't really understand what is meant by identity on a blockchain, candidly. I'll talk about what identity means in the context of Bitcoin as a simple example. So if you don't use a third-party service like a wallet provider or an exchange and you wanna interact directly with the Bitcoin network, it operates a lot like a safe deposit box system in a bank where there's a box with a number on it and you have a key that corresponds to that box. And to say you own Bitcoin or have Bitcoin is very similar to saying you own or have whatever is in the box in your safe deposit box. So the thing you actually control is that key. So on your laptop would be a private digital cryptographic key that allows you and gives you the sole right to access a digital address or a box on the network and move those funds to someone else. And so the question of identity is like, is your identity that number on the box kind of but only if you explicitly make that link and publish that link somewhere and say, my name is Adam and my address on the Bitcoin network is X, Y, Z. But even then, who's to say that that's true? You would need to have some third-party validate or verify that you made that claim and then you in fact did move some Bitcoin out of that address and they saw that happen. And so in a way there's a piece of the identity or there's an authentication mechanism inherent in how a blockchain operates. But when we think about identity in a general sense of like your driver's license, your passport, your real human state and its relation to some service, it's not quite there. And I don't think it's a great idea to put like your name, social security number, driver's license number, address, phone, mother's made a name into a blockchain record because most of the time that data is transparent, shared, distributed and immutable. So it's not a great fit in my mind for like identity data per se. And as a slight tangent, GDPR is also interesting with respect to these issues because the requirement to be able to remove data, delete, move, transfer, et cetera, doesn't really square with how a blockchain functionally operates. So you actually can't comply with GDPR on traditional public blockchain networks. I read a great opinion piece saying that basically the legislation was created before blockchains existed and it was predicated on this model that a lot of people are saying is probably gonna get outdated a little bit. So privacy identity, GDPR, all this, it's not at all clear how it all makes sense at the end of the day, how it shakes out. And I'm sure there are like technical solutions where like, oh, our blockchain technology allows you to remove records or change things, et cetera. But then you start to get into like, well, then why are you using a blockchain? And so it's all, I guess what I would say with respect to identity is it seems all very early days and it's not really clear yet if it's a good solution to solving this perennial problem of how we pair our real identities in a digital context. Okay, one last comment from Brian and then we'll take questions. And we should get together for lunch tonight because I'll walk you through it and happy to do that for anyone else as well because it is much longer than a quick comment can suffice but the system of self-sovereign identity says and the use of that with blockchain say, don't use the ledger to store any PII, right? You may use it to store encrypted, you probably don't even use it to store encrypted personal information, by the way. You might use it to store metadata and you probably use it to store public keys, right? And probably as well signatures on relevant documents and finally use it as a way to record who have I granted consent to to be able to access information about me and this is why you wanna use a ledger for this, the ability to withdraw that consent in the future, right? So as an auditing tool, as a tracking tool to keep track of where that data might lie, off chain, right? And ways to manage that permissioning, that's where there's some unique properties to it and happy to walk through that. Actually, since we have plenty of time, just one more thing to build on that, if you don't mind. Go ahead. Okay. I don't see any burning questions yet, so. When we've done identity projects and specifically around voting, where we tend to end up is creating an account for someone that is verified in a more traditional way. It could be in person, it could be through another auth system and then essentially loading tokens into that account that are almost like tickets. So before a vote would happen, you would put a bunch of tickets into that user account that are like Lourishing tickets, right? So we know who you are and we've generated these tickets and they're now in your account, we've issued them into your account and then when you go vote, what you're actually doing is just like moving a Lourishing ticket into an account for a candidate. And so that's the way to think about kind of identity as it relates to sort of a blockchain or a token model. And we, at our office at Chain, next time you come by, you should check it out. We have this heirloom from the World's Fair in San Francisco 100 odd years ago that is exactly that, the paper version. So it's a booklet where they took your photo and they imprinted it into this booklet and they put all your identity into like the first page and then behind the first page when you flip it open are like 100 tickets. And so every day they assumed you would want to come to the World's Fair like 100 times because it's the only thing to do back then. So you would show up and you would show them the booklet with your face attached to this book and then they would open it and tear off a ticket and then you'd go in. So in a lot of ways, these old bearer instruments are the best analogs to think about how a digital bearer instrument would function. And so anyway, that's how we think about identity. I love that. I think that's such a great analogy and such an interesting story. So let's turn to questions. We've got a couple of mics floating around. Just raise your hand. I guess we've got one there. Hi there. This might be a not Bitcoin blockchain question but I was just wondering about power consumption. If there's, a lot of people have made a lot about comparing the amount of energy Bitcoin is using to Denmark. I was just looking it up. It looks closer to Pakistan now. I was wondering if that's a problem inherent to Bitcoin or if that's something that we're gonna have to worry about as blockchain is used more and more. So I can take that one. So I think it's more for let's say a public blockchain where pretty much anybody can be on the blockchain and in order to, for one party to not manipulate, be able to game the system, each person needs to do a very complex computational, solve a computational problem and only then can they, do they get the right to then order things on the blockchain and I don't think private networks suffer from this, this particular inefficiency. There is the question of data, the same data being replicated across multiple different nodes. That is an inefficiency that a lot of private networks have but not the one that you're talking about in terms of power consumption. To add to that, proof of work was scientifically and algorithmically really fascinating kind of innovation. Something that predated Bitcoin by a little bit, it's something that had been floating around in cryptography circles for a while as a way, initially proposed as a way to fight email spam but I think we're going to recognize that this is a temporary blip, the many of the public cryptocurrency communities are already looking past it to things that are much more energy efficient like proof of stake or other types of delegated authority, mainly to try to ensure that there's a way to have this system publicly operate without attempts at DDoS or spam. And so I've started to use the metaphor, it'll be kind of like a mercury mining of gold in the middle of the 19th century where if you were a scientist, the idea of using elemental gold, well, I'm sorry, mercury, quicksilver to separate out elemental gold from gold ore was nothing short of alchemy and yet now we're still paying the price in superfund sites in the Sierras for the use of that to extract gold from those mountains. And it was a terrible legacy that was left behind. I am highly confident most of the cryptocurrency communities will move away from it and I think those who don't will probably see assets and interest in those currencies move away from those currencies. Okay, great. We've got another question up front. Talking about the uses of blockchain, you've talked about different things, election is a very interesting one. Have people thought about moving the passports and taking the stuff in terms of fake passports, duplicate passports, moving the visa regime completely on blockchain? Yes, people here in US probably don't have that problem, but people coming from some other emerging third world countries who have to give their passports for a week, 10 days, 15 days to get visa, make their travel pieces around it, but passport as an identity proof on blockchain which the government's across the world. I know it's a pretty difficult thing, but is that something, any talk around that or is that something people have thought about? Yeah, I can take that one. So I will start by saying, I'm not convinced there is a problem or use space that someone has not talked about. So the answer is always yes. If the question is, has anyone talked about or engaged in this? Yes, yes, they absolutely have and are at the moment. But in this particular one I think it's a really interesting use case. There is a project out of our Geneva, out of our headquarters that the forum is looking at called known traveler where they're working with Canada thinking about exactly this problem. Like how can you more efficiently and more authentically authenticate people's identity using in this kind of system of travel? So I think there are, well, just one thing is I wanted to comment before and then I kind of moved to questions, but I think it's an important distinction to draw between identity and credentialing. I actually think that there is a really strong use case for credentialing on the blockchain. So a credential is when you basically, as a person, I can prove I have a medical license. I can prove that I have a passport. I can prove I'm a citizen of the country. I can prove various things about my identity that are really more on the lines of credentialing. So with credentialing, you do have that central authority that is providing the veracity of the claim. So my alma mater, Harvard is gonna be able to verify that I have a Harvard degree, for example. And if you can do that, there are efficiencies to be realized there. It's not my favorite use case for a variety of reasons, most of which is because I feel like the social impact isn't necessarily high in a lot of the pilots that are we're seeing, but I do feel like there's promise there. And it's important to distinguish, I think those two things. Yeah, but yes. If you have more questions on this, I actually have a few podcasts that went into this. One of them was with Catherine Hahn, formerly of the Department of Justice. And she and I did an event much like this, actually at the Commonwealth Club. And because she worked in government for so long, she has pretty strong opinions about how blockchain technology can be used to combat fraud, waste, and abuse, she just described it as. So I'm pretty sure it was in that episode. And if it wasn't in that, and that was on my podcast called Unchained. I did two other podcasts with her. She's just such a fond of knowledge that she's been on my podcast multiple times. But what I'll do is when I release this on my podcast, I'll link in the show notes to these episodes so you can listen to me because she went into detail. And then the other project I would have you check out is Civic by Vinnie Lingham. And he also was on my show and talked a little bit about his blockchain based identity system for, oh, right there. I have to say I'm a little hesitant to ask the question because I don't really understand all of this yet. But here's my question. Who enforces bad actors if there is someone who, or some entity that is able to, the example that you gave with the tuna, the bad, you know, the tuna shows up. And maybe, so two questions. Who enforces bad actors if somebody put in information? You know, is this, is it self enforced? And in that case, could it like get rid of all government regulations? That'd be great. And then the second thing is, say that tuna arrived and there was salmonella in it and later somebody ate it and got sick. What's, how do you handle liability things? So I think for every one of these applications and in some cases that will be baked into the structure of the network itself, governance still matters, right? Governance, as we know it is about how do we as participants in any sort of activity come to an agreement about how we talk to each other and then what happens if things go wrong, right? And so in some cases this will be, you know, algorithmically enforced. One thing that blockchain technology gives us is the ability to enforce certain things that sometimes we might require auditors to have to catch after the fact. One of the biggest examples of this is what's called prevention of double spend. I can't spend the same Bitcoin twice, right? And in the use and supply chains, I can't send the same diamond to two different parties. When I try to send that same diamond a second time, the network rejects it, doesn't let me actually record it as a valid transaction, right? Now, there are some behaviors that we'll be able to implement like that and be able to either prevent from happening or catch very quickly. There are other behaviors that may be much harder to enforce. So for example, if we're using this as a way to point to and attest to the integrity of medical records, and it turns out a node took that data contrary to the agreed upon convention or legal context of that and was selling that to a data broker. Well, we don't have a technical way to claw that back. What we need are either regulatory, government imposed, or simply self-regulatory mechanisms that introduce penalties. Hey, now you can, if you're on this network and you are found to be a bad actor, pay a fine and you can stay in or you can leave, or if you're a really bad actor, you don't get to come back, right? These are heavyweight hammer blows, of course. You want finer grain things. And I think the design of these consortia will be a really interesting topic for every industry to go through over the next five, 10 years. It won't look that much different than the EDI integration that a lot of organizations or industries went through as they started to tie their ordinary IT systems together. But it'll be this mix of algorithmic and human governance. And typically the more that you can put in the algorithmic governance, the more predictable, the more objective it'll be, the less subject to politics and wrangling and who owns who and that sort of thing. But you'll never do away entirely, I believe in almost every scenario without having some human governance layer that probably acts as a fail-safe in the case of the technical stuff breaking down or simply encountering new conditions that hadn't anticipated. So yeah, and I'll just add to that quickly. When I was talking about the pharmaceutical network and I said to take this from a pilot to production, it's not going to be a technical challenge, it's actually going to be defining the governance, right? And for us, the question is who is going to define the governance? We are a technical company, we make products, do we want to get into this business? Or will we have a consulting firm as a partner who will come help us define this? How will we make 15 competitors work with each other and agree on who is more equal amongst the equal, right? In a way. So I think that to me is actually a bigger challenge in terms of B2B implementation of blockchain than the actual technology is. It's a lot simpler for private blockchain networks than it is for the public ones. Yeah, but just the way I heard your question was I think slightly different, which is what do we do if somebody deliberately puts bad tuna into on the blockchain as an example, right? And so I actually think in this case, the liability is it's made more straightforward by the existence of distributed ledger or blockchain in the sense that as Brian noted earlier in the lettuce example, you can actually almost micro trace, let's call it what was the source of the tuna? What other tuna was in that lot? You can more quickly identify where that went, where it was distributed. You can instead of having a wholesale recall on tuna, you can say this particular lot or batch or boat of tuna is contaminated and it went to these places, therefore don't buy at these super. You can really kind of trace that very efficiently in a way you can't really do effectively now. In terms of liability, I think you'd launch a similar investigation to the one you would now, which would be to say what controls were in place at the point at the boat of refrigeration and shipping. You wouldn't, that wouldn't be different in many ways. You'd be able to go about an exam, but what would happen is you would save a lot of time because you wouldn't have to examine every point to point for every tuna that wound up in some state, for example. You'd be able to track where it came from and what supply chain it came through. Yeah, sure. Yeah, and I think sometimes the legal liability questions are really just, it's traditional law applies. It's like just because you're using this technology doesn't necessarily mean that there's anything different about the legal framework. So we're nearing the end of our Q&A time, but I know that Sheila wants to wrap up with a few comments. So anyway. Yeah, we could take one more question if there is one, I think. All right, then I'll do a quick wrap. Yeah, so thank you all for attending today. I wanted to give a couple of comments on the work we're up to at the center. So our office, we have a San Francisco office called the Center for the Fourth Industrial Revolution, and we focus on policy and governance. And I think a lot of what you heard today and the questions reflect that some of the real challenges here in this policy and governance space, how do we build protocols, particularly in an early technology that don't preclude or cut off certain kinds of use cases that may not be, we don't be quite ready for them from a business standpoint, but down the line we could have a lot of opportunity. We also focus a lot on impact and inclusion. So what we're trying to do is create policies that will facilitate the adoption of technologies like blockchain. We also look at AI, digital trade, precision medicine, IoT, facilitate adoption of these technologies in smart, strategic ways to ensure that we're not leaving behind sectors of society that are traditionally left behind because we run the risk of just recreating similar power structures in new places and calling that a win. It might be, it's certainly different, but different isn't always significantly better. And finally, we're looking at cross-pollination of these technologies. So I think one of the things that makes us unique as a center is we're really examining technologies, not in isolation, but how they operate with each other. So how do we think about data policy, GDPR, digital trade, cross-border data flows, healthcare data, medicine, AI, blockchain? How do all of these technologies interoperate? And what are broad policies, whether regulation or whether business practices and protocol or even technology protocol layer decisions that can actually ensure that again, we can really envision the transformation that these technologies of the Fourth National Vision promise and better society as a result. So we welcome your engagement with the center and with any of these projects that we have running at the center. Great, well, thank you so much for joining us today. That's a wrap for our session.