 Aloha, and good morning, ladies and gentlemen. I'm Pauline Schachmachin, your host, for We Like the 1%. We Like the 1% is about individuals and entrepreneurs, and today we're continuing our discussion with Professor Michael Minnelli, Executive Chairman of the ZN Group. Aloha, and good evening to you, Michael. There you are. Good evening. Good morning, and Aloha, Hawaii. Thank you so much. Such a much more civilized time for you in London, but still equally thank you for joining us today. Now, Michael, we're continuing our discussion on blockchain, and on yesterday's Outside In Show, we were focusing more on the history of ledgers, of how it became from a bookkeeping process by hand, all the way up to electronic ledgers. So what I want to do, because the name of this show is We Like the 1% and you are an entrepreneur in this area, we want to focus on your work at ZN. This is the commercial think tank you have founded, and I've always considered think tanks one of these kind of places where you put fundamentally useless people. But in your case, this is a commercial think tank, so it has a corporate element, which I find very fascinating. So could you tell us why you've made it a commercial think tank? That's sort of how you market ZN, isn't it? Yes, that is how we market it, and I think commercial means that we probably put a lot of ads on, but seriously, what happened was that back in 1994, I was running a very large chunk of a global consultancy, the BDO today, and we were acquired by Arthur Anderson and a group of my associates decided they liked the methodology. I had developed a problem-solving methodology, and they wanted to set up in business, and I agreed to chair them in a couple of hours a week, and they went out. And the idea really that made us look at this in a different way was we began to realize we didn't like consulting to people and selling the bodies, we really liked solving problems, and we wanted people to bring us really difficult problems. And we've had a few over the years, pulmonary cancer detection, for example, long-distance low-loss cables, how to set up a health insurer in an awful way, so lots of interesting problems have come our way. We also realized that the best thing to do is to say that we were think-tank, because people would come and say, you haven't done research in this space. So it was very much a lightning rod. We did a few other things. The first was, again, if you cast your mind back to 94, we were fervent adherents of having the paperless and the remote offices. I must say that didn't work out quite as well as we wanted, but we were poster children over here in the U.K. as one of the very first virtual firms. We also set up a venture arm that was pretty successful. And over the years, we tend to spin out one or two businesses. I guess my view is having managed some very large organizations in my time at one point, sort of 14,000 people, I realized I didn't like it. I was a son who hadn't listened to his father. My father said to me when I was a kid, hey, when you manage a big business, and my father had been a director of several in America, it's all the same. You don't meet the movie stars. You don't get out to see the oil rigs. You don't get to fly the aircraft. You just sit in an office and push paper around and sort out arguments about who got the corner office or who's got the faster car or whatever. So I decided that one of the things we wanted to do was to stay small. So every time we get a sort of sizable business running, we wrap it up and we sell it off. As I said, that happens about every two years. And we sell some crazy things, a portion of Ministry of Defense facilities management, a children's multilingual publishing firm, some bank benchmarking and all these came to us because people said, here's an area you ought to do some research in. These days, we're a bit more organized. We run a large pro bono area called Long Finance, which really is a very proper out and out think tank. We get funding for various research projects. All the research is published freely. There's some 700 reports that you can see over the last 24 years. So it's been a big effort. And Michael, if anybody wants to take a look at the various projects you're working on at ZN, could you please tell them the website that they can go on? There are really two websites to check out. ZN.com, that's Z-Y-E-N over there, or Z-Y-E-N as we say here.com. Projects are all there. The more interesting area for those of your listeners or readers who are interested in really getting into grips with things, Longfinance.net, so L-O-N-G-F-I-N-A-N-C-E.net, is where we put everything that is free. And they're welcome to look at it, copy it, send it to people. We're very, very open, even promiscuous with that. And on your website, the ZN one, I noticed that you're partnered with something, an entity called the Cardano Foundation. Can you tell us a little bit about that and how you work with them? Well, we're actually partnered with quite a few organizations. Cardano is one of the cryptocurrency systems. Another one out there is DOScoin. They've been very generous, both of them, Cardano in particular, at funding our long finance research into what we call smart ledgers. So they're looking at an entire area of how will these ledgers affect society in the long term. We're also teamed in some of our other programs with sponsors, such as the China Development Institute, China Development Institute, and about 13 other cities around the world fund our research into global financial centers where we examine how people will live and work in financial services in the future. So we have a number of different partners who are funding pieces of research. And it's been really very, very good. One of the other things we've been trying to do, again, as a think tank, is we don't know it all. We're pretty good at managing projects directed at solving problems, but the answer to the problem will frequently come from friends, partners, or almost random people you meet. And so a lot of our work is done in conjunction with people such as the Association of Chartered Certified Accountants, the Chartered Institute of Securities and Investment, universities like Cambridge, Oxford, LSE, UCL, MIT, University of Cork. So we're very, very, very open to collaboration, cooperation. And I noticed, Michael, in one of several of your reports on ZN, you sometimes touch upon this eternal coin concept. And I'm very lucky. I have a couple of your eternal coins. So do you want to tell people a little bit about the eternal coin? Yes. Well, in fact, if I could, the origins of the eternal coin are really wrapped up in the origins of long finance itself. Long finance began in 2005 when a group of us here in the city of London began to wonder why it was that people were rating financial services for effectively making the wrong decisions on things like environmental issues. And we began an enormous project, a cooperative project, amongst 24 financial services firms, particularly investment research houses. Many of them names that your viewers and listeners would know. So Morgan Stanley, Bank of America, Merrill Lynch, et cetera. And we got them all together to do an enormous cooperative piece of research saying, how could people invest in climate change? Interestingly, this was long before some of the more famous reviews. The Stern review was two years later. So we were well ahead of the curve there. Poverty started this freely. We began to realize there was a real need out there to address how would we know when our financial system is working? Well, two years later, we began to see the liquidity crisis. Three years later in 2008, we saw the banks coming down. And we began to realize that this was quite a large program. So we divided it up into four and now six areas. The first was what should financial centers be doing? The second was going to be called the London Accord, publishing research more freely. The third was Metacommerce. And in Metacommerce, we were looking at a longer story, but it was usually trying to get to what I might call the root kernel problems in finance and layout. How should researchers go about solving them in what order? But the internal coin really just popped in my head one day. I was trying to think, people are struggling with, how do they get enduring value? And so we created this coin. Its symbol is sort of the infinity symbol. And it's really just a thought experiment. An opinion can be very divided on it. The thought experiment is, could you build a coin that would never lose value? What does that mean? Now, this is long before cryptocurrencies were the rage. This is easily some four or five years before that. And I'll be frank. I don't believe you can do it. But there are many people in our movement. There are about 30,000 people in the long finance movement who disagree with me. And they think, no, it is possible. And so we're having a lot of debates about what is long-term value? What does money mean to communities? How would you create a basket that was balanced? And it's really a fascinating thought experiment. So as we're talking about blockchain, blockchain is sort of mentioned in the context of cryptocurrencies and fintech, just generally by the overall population. And what most people don't seem to realize is that there are many other applications for blockchain technology. So can we list some of them, especially some of the projects you're working on at ZN? Because my understanding is you've created over 200 blockchains to date. Yes. We've created about 200. In reality, about 40 of them have actually been deployed. These are very long-term databases. And so to get them right, you have to experiment quite a bit and throw away models that aren't there. But yes, so some of the applications. Well, the first and most basic thing is that a blockchain or distributed ledger, as we prefer to call it, or a smart ledger, is a really good way of recording that something has happened. People are unable to change the records. The records are distributed across multiple machines. So it's very, very hard to hide something. Once you've decided, I would like to write that out. So we call this time stamping. And we have time stamping in a number of areas in the world. You go into a government department and try and put a document down and say, I'd like to have my tender there. They stamp it right at the time the document was received. Any ledger has a time stamp in it. When was this entry recorded? So we began with a whole bunch of time stamping applications. For example, another island, the government of Olderney, a little island in the Channel, so slightly smaller than Hawaii, about 2,000 people, decided to create a government time stamping engine. And it's called Metronomo. It's got such capacity that it's free online. And they're very happy for other people to use it. That's been running for about three and a half years. Another application area is health records. So as you can imagine in the health sector, people are doing clinical assessments all the time. And they began to realize that to increase confidence in these assessments, it would be a good idea to timestamp them and report them out independently. Why is that? Well, by the way, our clients are very, very honest, but we've been doing a little bit with, for example, the Norwegian, sorry, our clients have been doing work with the Norwegian regulators and the FDA. And what they're doing is they're saying, well, we're writing these clinical assessments out as we do them. When we make our submission about the efficacy of the procedures that we're recommending, we'll be able to prove to you that these were accreted. So the data has not been altered. And that's the data that we'll be submitting to you in 2021 or something when we put our submission in. The timestamping sounds boring. It is boring, but it's a really, really fundamental thing. And people have cheated in the past. They've gone back and altered records to suit circumstances. And is the NHS making use of blockchain technology or smart ledger technology? I heard they're trying to update their databases. Or is that something they're only looking into at the moment? So the NHS, the NHS, are they interested in this sort of technology? This is looking at it, but we're doing it. We did about 15 million clinical assessments last year outside of the UK. We have a couple of small UK projects. So the University of Middlesex is an example, but 15 million assessments were mostly done around the world with some very large, American-based organizations. So very forward-thinking there. In fact, the NHS leads us on to another area. I personally think whatever happens with cryptocurrencies, these distributed ledgers have got an immense application in handling personal data. And so personal data along the lines of your academic qualifications, your training, your driver's license. Second area is your health records. The NHS is looking at it, but probably not going to do it soon. And the third area is just general identity documentation for things like anti-modernity laundering and know your customer in the financial services sector. But more widely, we've built systems like this. These are a little bit harder to deploy. The only one that we've actually deployed is in Southeast Asia. But we're hoping that this is going to become an enormous sector because these ledgers give the individual an immense amount of control over their own data. I can give you access. I don't actually give you the data. I give you access to a piece of data of mine. For example, my driver's license online. And I can put all sorts of restrictions on it. You can, of course, negotiate with me. So it's almost kind of a libertarian data dream. This allows us to grab back control of our data. In fact, I had two articles in the Harvard Business Review last year on just this subject. Over here in Europe, the General Data Protection Regulation that's coming into force in May is making people think long and hard about why do I keep copies of your data? Why don't you have your data and give me access when I need it? And then I suddenly get rid of all sorts of difficulties I have, both with security structures. So you avoid things like many of the major cyber scandals in America where people have lost data. So that's one big thing. Experience what have you. The second big thing, of course, is that you're able to prove that you're being a responsible data handler. And the third is, if there's money to be made out of it, you're going to have to negotiate with me to ensure that I get my fair share. Okay, brilliant. Michael, we're just going to take a quick break. And then when we come back, we'll go over some of the other applications of smart ledger technology. So we'll be right back, everyone. Hey, Aloha, Stanley Energyman here on Think Tech Hawaii where community matters. This is the place to come to think about all things energy. We talk about energy for the grid, energy for vehicles, energy and transportation, energy and maritime, energy and aviation. We have all kinds of things on our show, but we always focus on hydrogen here in Hawaii. Because it's my favorite thing. That's what I like to do. But we talk about things that make a difference here in Hawaii, things that should be a big changer for Hawaii. And we hope that you'll join us every Friday at noon on Stanley Energyman. And take a look with us at new technologies and new thoughts on how we can get clean and green in Hawaii. Aloha. Hi, I'm Ethan Allen, host of Likeable Science on Think Tech Hawaii. Every Friday afternoon at 2 p.m., I hope you'll join me for Likeable Science, where we'll dig into science, dig into the meat of science, dig into the joy and delight of science. We'll discover why science is indeed fun, why science is interesting, why people should care about science. They care about the research that's being done out there. It's all great. It's all entertaining. It's all educational. So I hope to join me for Likeable Science. Aloha, everyone, and welcome back. We're speaking with Professor Michael Minnelli of ZN Group. So Michael, just before the break, we were talking about the various applications of blockchain besides fintech, and you mentioned the health sector. So I just want to get into a little bit of the governmental sector, because certain governments are very keen on implementing smart ledger or blockchain technology into their systems. A good example of this is Estonia. They seem to be the first in a lot of these sort of electronically inclined things. So do you want to talk about the Estonian government for a little bit? Yes, I think the Estonian government's a great example of why we almost often called it blockchain. The Estonian government was faced with some very serious threats allegedly from the Russians in 2007, and decided that they needed to do several things to make their country secure. So they started to distribute data to the various embassies. They put up a lot of cyber defenses, etc. But one of the interesting things they did was to move into these highly protective distributed ledgers, and that got them going. And so now in Estonia, there are a lot of amazing things. Firstly, it begins really with their identity cards. They're not identity cards. These are two-factor key signature authentication systems, and they're open to non-Estonians. You can go to the Estonian embassy, and I think it's about $50, $60. You can become an Estonian E-resident. Why would you want to do that? Well, funnily enough, that card gives you immediate access to an Estonian bank. Now you're in the EU. You can set up an Estonian business and trade throughout the EU, and not even be there. There's an experiment going on at the moment with 30 Indian women who want to export. These are poor peasants in India. Who'd like to export to the EU, and the Estonians are using, this is an experiment to show how you set up a virtual business. So Estonia is really gone to town. When blockchain became more popular about four years ago, roughly, sort of 2014, some neighbors were like, oh, you idiot, it's not the cryptocurrency. It's the blockchain underneath it. The Estonian renamed their system, which was called Guard Time, a blockchain-based system. And that just shows you a lot of ways of implementing these, but they do have a highly secure distributed data system, and it's open to non-nationals. They're doing some amazing things there. A number of other governments have made declarations. Most recently, Gibraltar claimed that it was a good place for regulation. I think in America, was it the state of Utah that said it was the first place to recognize blockchain contracts? So there's a lot of people making a lot of PR fusses out there. Yes, I went to a presentation that Dubai is very keen on becoming entirely blockchain by 2020. You think that's possible in that period of time, or what do you think of the Dubai? Is it a marketing tactic or? Well, I technically sit on the Dubai Blockchain Council, they asked me to join, and I'm on it. They certainly have been assiduously thinking about it and making announcements, for example, about their land registry and things. But there certainly are other governments that are much further ahead. I mean, a good example of this would be Sweden, where Dubai made an announcement that it's going to put its land registry onto a blockchain at some point. Sweden's already had a very advanced pilot showing exactly how this would be done. So a lot of governments are out there posturing. There's a whole group of other governments are actually quite quiet about it, not because they're quiet, it's just like, okay, it's a database. We're doing some work, for example, with the government of Singapore, and they're not crowing about the fact that we've built a trade system on a distributed ledger. It's like, well, of course you weren't these days. So different speeds out there. I think what I'd really like to see, though, is rather than marketing and PR, I'd like to see some of the more major governments begin to look at how this could truly increase the efficiency of government. Yes, that's the last thing governments are, is efficient. They're not very good with the concept of efficiency. So this would improve things. So maybe that's why they're kind of hesitant on it. Perhaps, I mean, to take a simple example, I mean, one of the most interesting things I find is that governments, as we all know, produce tons of documents and ship them to us, typically via the post. And then what do we do when we need to have the document authenticated to send to somebody? I take a driver's license or a passport. I photocopy it. I take it to a notary or another professional. I get them to emboss it or stamp it and scan it. Maybe they'll digitally sign it, some of the more advanced ones. And then I email it to somebody. This is just crazy. Why doesn't the government give me a digitally signed copy, electronic copy of my driver's license? It's just the digital analog to my physical driver's license. It's amazing. I don't see why these things don't happen. It's amazing. It makes so much sense. It's just one way ahead on that. Yeah, so Michael, now we discussed time stamping briefly. Now there's something that you work on called geo stamping. Yes. And how is that different from time stamping? What is it? What is this geo stamping project that you're working on? Well, I'm glad you're focused on that because when people are sort of thinking I'm getting a little bit confused about terminology. At the end of the day, time stamping is probably 80% of the benefit of these things. An independent authoritative record of a transaction or a piece of paper electronically or whatever. And geo stamping is almost the opposite of that. If I have to record in a ledger when something happened, why don't I record where it happened? And so we've been doing a lot of research into how to make the recording of where very, very simple. We've returned really some very old principles from the 60s and 70s in America where people have been looking at ways of doing geo coding. And these are basically global postal addresses so that I can specify in seven or eight characters my location here in London or your location there in Hawaii. So I would say to you, for example, hey Pauline, I'm going to timestamp this and then your mobile phone would provide your location and the location would be ABQXC59 or something like that. We've now got an indelible record of both when and where but the important bit is that it's easily searchable. And is this geo stamping relevant for the deployment of autonomous vehicles? Would it help with CAVs connected and autonomous vehicles? Very much so. I mean, what you're going to want to be asking all sorts of questions as we move into autonomous vehicles and drones for that matter, huge amounts of data traffic. So in an autonomous car, I've got, I think it's nine radar. I've got a LiDAR system. I'm talking to the road surface, the matter of weather service. I'm talking to the GPS. I'm talking to the highways agency, talking to the cars around me and then bang, I hit something. What was the record of all of that? We're going to want to know where it was and when it was millisecond by millisecond. So geo stamping is kind of the, if you want to say, well, what happened when, think about geo stamping as almost the opposite of what happened where. So over this spot on the earth, I'd like to know what's occurred. Well, 47 aircraft flew over it. These 83 mobile phones went through this space. A burglary was reported, it's that ability to record both ways, when and where. Okay, and so that's a very exciting field. You think it's going to be huge, this geo stamping concept. Now, the other thing that you're kind of been releasing from ZN is also this business about digital ledger encryption. So do you want to talk about the encryption aspect of it? Because that's kind of the trend in cryptocurrencies, but it also has the other applications in other areas of smart ledger technology. Yeah, a lot of the talk surrounding bitcoins is it's completely transparent. And actually it's too large to read bitcoin is, but that doesn't mean all distributors just have to be built that way. So I can build a ledger where you can see all the entries, but they're just gobbledygook to you, they've all been encrypted and you don't have the key to decrypt it. And we can do things in between. So I like to talk about opaque, I can't see it transparent, but also translucent systems. And so a lot of the exploration here is how do I put things into ledgers which are partially encrypted, partially encrypted, but I might be able to interrogate them. So I might be able to say interrogate your age, not actually know your age, but know that you're of legal drinking age. I can say to the database, please tell me issue of legal drinking age. And that might vary state by state, but it won't tell me what your exact age is. So we're looking at a lot of things in that field. The difficulty that by the way is something called homomorphic encryption. One of the problems with encryption though today is it's all based on, well, most of it is based on two fields, elliptical algorithms or factorization algorithms. And both of these are susceptible to quantum computers. Now quantum computers so far are largely theoretical, but progress has been made fairly rapidly. People in the field believe in something like another and it depends on who you chat to, five years to 35 years and a few fringe folks say never. But at this point, quantum computers would be able to break current factorization. That wouldn't really be a scare story no matter very much. You say, well, hang on, that means all of our financial transactions would be vulnerable. Yes, but your financial transactions are the things that you do today. So don't worry about it and there'll be plenty of time in advance to move to and there are some quantum resistant systems. What's different about the ledgers though is we're writing permanent ledgers out using today's encryption techniques so we really ought to be using tomorrow's. And so we're exploring their number of approaches for example, lattice encryption. We're trying to encourage people to realize if you're going to build a permanent database in one of these ledgers, please act responsibly and think hard. Is it going to be the case that 20 years from now some of the information there might be embarrassing? If so, make better efforts to encrypt it. Brilliant, Michael. And just finally before we close if anybody needs a blockchain can they contact you directly? If any of your readers or listeners or viewers need a blockchain please do contact us. Yes, Sam, we're very open to ZYEN.com and on the contact section, I'm not shy. My email's right up there. Hang me an email if you want to chat to me we'd be delighted and it's very kind of you to offer. Great, thank you so much for joining us for this two-parter, Michael and we'll see everybody next Thursday at 11 a.m. for We Like the 1%. And we do Aloha. Congratulations, Pauline. Thank you.