 Live from Toronto, Canada, it's theCUBE. Covering Global Cloud in Blockchain Summit 2018. Brought to you by theCUBE. Hello everyone, welcome back to theCUBE. Live coverage of Toronto for the Blockchain Cloud Convergence shows, the Global Cloud Blockchain Summit part of the futurist event that's going on the next two days after this. Our next guest is Kesson Frank, Aion Co-Founder and CEO of MavenNet doing a lot of work in the enterprise and also Blockchain space around the infrastructure, making it really interoperable. Of course, Jenna Pilgrim Co-Founder and CEO of a new opportunity called NetworkFX. Welcome to theCUBE, thanks for joining us. Thanks, John. So you guys are just on the panel, the real world applications of Blockchain, IBM was on, which has been doing a lot of work there. So this is real world, there's low hanging fruit, Blockchain, everyone's pretty excited about it, but a lot of people get it and some don't, some are learning. So you got the believers, the I want to believe and then the non-believers. Let's talk about the I want to believe and the believers in Blockchain, some real world applications going on as it's evolving. So there's evolution of the standards, technology, but people are putting into use what's going on in the sector around some of the real world cases you guys talked about. I think we're seeing a lot of collaboration as far as real world applications go because I think people are sort of starting to understand that if a distributed network is going to work or is going to be secure, it needs diversity and it needs mass scale. So if lots of different parties can work together, then they can actually form a community that's really working. So as far as real world applications, there's some really interesting ones. As far as supply chain, Catherine Harrison at IBM talked about their pilot about shipping, like bringing together the global supply chain of distribution. There's a bunch of interesting ones about food provenance and bringing together different parties just to make sure that people know what they're eating and that they are able to keep themselves safe. So I think those are two definitely interesting ones. Catherine, blockchain, supply chain, value chains, these are kind of key words that kind of mean something together. Making things work in a new way, making things more efficient seems to be a trend. You're kind of in that world. Is it efficient? How's the tech working? What are some of the core threshold issues that people have to kind of get over? So you know, John, that's exactly the question to ask. A lot of folks out there are looking at blockchain and the promise it kind of represents. And the one big question that keeps echoing over and over and over and is when is this going mainstream? When are we going to see something, a domain, a use case that is actually natively on a blockchain? I think that essentially we kind of owe to ourselves and to everyone that cares about this stuff to kind of ask what's working today, August 2018 and what is still kind of pending. I co-founded a project called Aeon. For us, interoperability is really one of the key facets that you need to be able to solve for to make blockchains real. And again, here's the 60 second kind of argument. If you're going to grow all these solutions that are centric around the use case, they solve for different pain points and different stakeholders kind of care about them. They don't really create a cohesive kind of ecosystem until they could all talk to each other. And then you have to ask yourself, is the original hypothesis where, it's going to be one mainnet, one chain that's going to rule them all and everybody gets to play on it and everybody deploys their dApps on stuff like fabric or R3 or Ethereum or whatever it might be. And that is absolutely not the way we're seeing enterprise actually kind of shaping into this domain of blockchain. What we're seeing is big consortiums that already have value, tangible today out of doing stuff on chain. And the biggest thing to solve is how do I take, to Jenna's point around supply chain or food providence, whatever it is, how do I actually open it so I can now start writing insurance events, payment domains, banking, underwriting, auditing, regulation, there is this gigantic ecosystem that needs to be enabled. And again, we are actively saying, it's not going to be by an organic model where you and I do everything on top of a single solution. There will be a multitude of solutions. And what we need to solve for is, how do we convert them from disparate islands that don't talk to each other into a cohesive ecosystem? This is a great point. We were talking on our intro and we talked last night on our panel about standards. If you look at all the major inflection points where wealth was created and value was created around innovation and entrepreneurship and just industry inflection points, there was always some sort of standard thing that happened, whether it's the OSI model during the early days of the internet to certain protocols that made things happen with the internet. Here it's interesting because if you have one chain to rule the wall, it's going to be up and running. It's not, there's no one thing yet. So I see that trend the cloud has. Private cloud, public cloud, but public cloud was first but people had data centers, right? So both not compatible. Now the trend is multi-cloud. So you can almost connect the dots of saying multi-chain might be a big trend. This is kind of what you're kind of teasing out here. That's exactly what we're about. And I think it's very interesting the point you're making about the similarities between the two domains. We are in a cloud convention and to me, it means two things. One, we absolutely see the mainstream people, the mainstream players and industry starting to take this seriously. It used to be a completely disparate world where you guys are a bunch of crazies with your Bitcoin and ether and whatnot. They're definitely taking this seriously now. The second thing, when you kind of think of cloud as a model, how cloud evolved, we used to have these conversations around, are you crazy? You're telling me that my data is not going to be on-premise? It's not secure. That was the most secure. Oh my God, it's in the cloud? What's a cloud? So you kind of think of the progression model that was applicable back then, right? 10 years, 15 years back where we started privately and we kind of tell them, okay, we'll take this sidestep of hybrid and then fully public. Took them a while. Took them almost 20 years to get their heads around this. And there's no one trajectory. What's interesting about blockchain and crypto with token economics, there's no one trend you can map an analog to. You can't say this is going to be like this trend of the past. It's almost developing its own kind of trajectory, a lot of organic community involvement, different tech involvement, different engineering mindsets coming together. So you're seeing an engineering led culture big time going on. That's propelling it up to the kind of conversations of let's lay down the pipes, let's start running af, but all do it within a two year window. Well, and I think the big thing to understand about that is that, yes, you need a whole host of developer talent to build distributed systems. But at the end of the day, those systems still have to be used by people. They still have to be used by society. They still, you still have to understand how to talk to your chief executives about what's happening within your company or what your tech teams are doing. So there's a growing need for marketers, for PR people, for people who speak, I don't want to say plain English, but people who understand how, yeah, they need to translate it and how to bridge the gap between legacy systems and how do you take what you were doing before and transform it to a distributed ledger system? How do you do that without just paving the cow path? It's interesting, it's almost intoxicating because you've got two elements that get people excited. You've got the token economics, which gets people, whoa, the economics and the liquidity of money and or value creation capture equations is completely changing. Some of the business model stuff, which can be translated to software and Dapps and software in general, software SaaS, et cetera. Then you've got the plumbing or the networking side of it where things like latency, interoperability, absolutely matter. So with all that going on in real time, it's kind of like happening at 30,000 feet and trying to change the airplane engine out. People are failing and so there's some false promises. There's also false hopes that have not been achieved. So this kind of clouds up the real big picture, which is this is an innovative environment. And so we're seeing that trend. But when you get to the end of the day, what are people working on to me as a tele-sign? So, Kesson, what's your project? Talk about Aeon and the work you're doing, specifically give some examples of some of the things that you're doing in the trenches. What are you trying to solve? What are some examples you're running into and how does that relate to how things might evolve going forward? So there is a multitude of different problems that we work on, but if you want to stick just to the fundamentals, let's take one gigantic issue that everyone's kind of tackling from different perspectives. Let's talk about scale. And scale is especially in blockchains, especially challenging just because of how the technology works. How decentralized could you get before your face with gigantic latencies and before transaction costs are kind of through the roof? And when you think about it, that is all a result of how we kind of contemplate these early stage networks. It was always the one network that is going to scale to infinity, absolutely not the way it's going to work out. So from my perspective, again, sticking to this one issue, if you could actually give me a decentralized rail that maintains consensus throughout two networks, I can now actually have two trusted kind of go-tos instead of always putting the full burn of the throughput on one single network. For us, that's kind of a no-brainer application to interoperability. If you could actually give me all these trusted networks that work in tandem, I could now start splicing throughputs across many different parallel kind of arrays. Not too similar than how do we solve for super computing. We understood there is a limit on how fast can a single CPU go and we started going wide. And that's an interesting point. I want to just double click on that for a second because if you think about it, why would I have multiple rails and multiple systems? Maybe the use cases are different for them. So you don't want to have to pick one cloud or one chain to rule them all because it's not optimized. We saw that with monolithic systems and cloud is all about levels of granularity and microservices and micro everything, right? Correct. Well, and I would also say that gets into a security issue as well, right? Like so you're talking about multiple layers, but you also will have multiple layers of permission. You'll have multiple layers of how much information someone can see. And what I think is emerging, if data is the new oil, then what's emerging is for the first time we're now able to trust data that we do not own. And for corporations who say, well, I don't know how to market to you if I don't know everything about you. But at the end of the day, they want to be able to leverage your data, but they don't need to secure it. And I think that cyber security issue is a huge thing that's definitely coming. I want to give you both your thoughts on this because we were talking about this last night, we were riffing on the notion that with cloud compute and data really drove scale. So Amazon is a great example. And their value now is things like Kinesis and Aurora, some of their fastest growing services, you've got SageMaker, probably will be announced in re-invent coming up as the fastest growing service. Right now it's Aurora, all data concepts. So the dataization really made cloud. It's okay, what's the analog for crypto and blockchain? Tokenization is an interesting concept. So there's almost an extension of cloud where you're saying, hey, with tokenization, tokenization phase, how do you explain that to a common person? You say, is token going to be the token and the money aspect of it in the economics, the killer app? How does it traverse the infrastructures, plural? Yeah, or is the wallet going to be the browser? Or how are all of these things happening? How do you make sense of this? What's your reaction to that trend? So I actually get excited when I think about what token on the most profound level actually means. When you kind of think of where value happens in the context of these gigantic enterprises, when you think of Apple, Amazon, Google, Facebook, any of them, and you kind of think of what the product is, it's all about the data. And it's all about how do you convince people to give up data so they can monetize on it. And then you have two distinct, like literally gigantic groups of stakeholders at play. You have the users that essentially get something free, right, so I get the post on Facebook or I get to, I don't know, write an email on Gmail, but then you have the stakeholders that actually extract all that value from my activities. The token, I think most profoundly, represents how do we actually get to a unified group where the user himself is the stakeholder that gets to extract the data. And again, the proposition is pretty straightforward. The more you use the network and the more the network becomes valuable and grows, the more valuable the token that drives it. So it changes the value capture equation. Different model, all together. The value creators get to capture the value and now the network effects plays a big part. Which is your wheel up. Yeah, definitely. I think it really comes down to core principles. So now you're able to really get down to what Kessim was talking about about when you're designing a token or if you're designing an incentive mechanism, you're really going down to the sort of deep game theory of why people do specific things. And if we can financially incentivize people to do good, rather than punish them or find them for doing bad, then we can actually create value for everyone. We're designing a new economy that now has the ability to propel itself in a fair and prosperous way, if done correctly. Obviously that's the disclaimer after. I love what you're saying there because if you look at collective intelligence, did a lot of the AI concepts came around from collective intelligence, predictive analytics, descriptive analytics, all came around using data to create value. You feel that, I always talk about fake news because we have a cloud, a media business that's kind of tokenized now, but fake news is two things. Payload, fake news, the fake content, and then the infrastructure dynamics that they arbitrage with network effects. They targeted specific people with fake payload, but the distribution was a network effect. Again, this was the perverse incentive that no one was monitoring, there was no, and this was- Well and I think in that case, yes, there is news that is inherently false information, but then there's also a whole spectrum of trueness, if you want to call it that. So now we have this technology that allows us to overlay on top of that and say, well what is the provenance of my information? And with different layers of blockchain systems, you're actually able to prove the provenance of your information without exposing the user's privacy and without exposing the whole supply chain of the media because there's like, you know, media buyers that we all fancy, yes. And we believe the answer to fake news, frankly, is data access, collective intelligence, and something like a blockchain where you have incentive systems to filter out the fake news. Reputation systems, these things are not new concepts. It's all about stake at the end of the day, right? How do you keep a stakeholder accountable for their action? You need backing. So I think we're definitely on the same page. I love, we can talk about fake news all day long because we think we're going to solve that with our Cubecoin token coming out soon. I want to shift gears and talk about some of the examples we've seen with cloud and try to map that to some navigation for people in how to get through the blockchain token world. One of the key things about the cloud was something they called shadow IT. Shadow IT was people who said, hey, you know what? I can just put my credit card down and actually move this non-core thing out into the cloud and prove to my boss, show them, not pitch them on the PowerPoint deck to say, look, I just did this for that cost in this timeframe. And that started around 2009, 10 timeframe, the early digerati or the clouderati kind of do that. But around 2012 it became, wow, the shadow IT is actually an R&D practice, right? You start to see that now. So the question that we see for people evaluating in the enterprise is how do you judge what's a good project? So certainly people are kicking the tires and doing a little bit, I will call shadow IT, but they're taking on some projects as you were talking about in the panel. How should they, and the enterprises in general, large companies, start thinking about how to enable shadow IT like dynamic? And how should they evaluate the kind of projects? I think that's an area people just don't know what to look for, your thoughts. So I want to add the premise to that because I think that's absolutely the right question to ask. We also need to add the why. Why should we, as people that do native cryptocurrencies should even care about enterprises? A lot of people kind of theorized when Bitcoin was created was, to say it was anti-institutional is an understatement, right? Aren't we meant to kill enterprise? The thing is, I don't think it's going to be a big bank. I don't think it's going to be, we wake up and nobody's using banking anymore and nobody's using the traditional healthcare government and whatever insurance policies. We care about blockchain in the context of enterprise because we think blockchain is a fundamentally better model of doing things. It kind of does away with the black box where I need to be in business with you, I need to blindly trust you, and it introduces a much more transparent and democratic model of doing things. So we absolutely want to introduce and make blockchain mainstream because that's important for us. When you think of how we do it to your question, Aeon is all about interoperability, right? We create a solution that helps scale and helps different networks, decentralized networks communicate to each other. What we also do with Mavenint, the company I run is essentially make that enterprise friendly. It's extremely hard to do a adoption and implementation within an enterprise. They're very immune to change. So going back to- The anti-bodies as they say. The anti-bodies, the innovation, they kill innovation. Totally, so going back to your original question, it all starts with a PNL. If somebody is going to authorize an actual production system in an enterprise for blockchain, it needs to create a tangible value, a tangible return quickly. And that's the key. So the model that actually scales is you start by flushing out an efficiency plate. You show the enterprise how you could actually achieve, I don't know, 20%, 30%. That's the order of magnitude that they care about. Efficiency by moving some part of your value chain on top of the blockchain. And it has to have an order of magnitude, total. Difference, so it's really, I mean, cloud is was a great example too. It changes the operating model. They achieve what they wanted to achieve faster and more efficiently and operated it differently. And people were staring at it like a three-headed monster, like, what is this thing, right, the cloud thing? And throwing all kinds of fud out there. But ultimately in the day, it's a new operating model for the same thing that they're trying to do with the old stuff. I mean, it's almost that simple. Yeah, I think in some cases, it's, you need to really, in my previous life at the Blockchain Research Institute, we encouraged a lot of our clients to really take a step back and say, well, will I actually, A, will I have this problem in eight years or seven years or 20 years or 50 years? If we're really fundamentally building a new financial system or a new way of doing things that is fundamentally different, are we building it on old technology? We need to make sure that, and that's why you've seen banks were the first in the door to say, yeah, payments. That sounds great, that sounds great. But the real applications that we're seeing from banks are in loyalty. They're in AML and KYC. They're in the sort of fringe operations and something like payments is going to take a really long time to push through because of that, those legacy systems, because that payments is the fundamentals of what banks do. This is an interesting point, and I want to get your thoughts to end the segment because I think one of the things that we've certainly seen with cloud, over the generational shifts that have happened, the timeframe for innovation is getting shorter and shorter. So timeframe is critical. So if the communities are fumbling around hitting that time to value, it's got to be, it seems to be trending to faster and we don't want to hear slower because the systems are inadequate, they're antiquated, these are the systems that are disrupted. So the timing of whether it's standards or interoperability or business models, operating models, they got to be faster. That's the table stakes. I think it all comes down to collaborative governance. People have to figure out blockchain faster. What's holding us back? Or what's accelerating us? What's the key for the community at large, from the engineering community and the business community, to make it go faster? Your thoughts. So I think we're still searching for the next killer app. If Bitcoin is the reason we're all sitting here today, and I profoundly believe that, what is the next thing that drives change on a global scale? And that's kind of what we're trying collectively as an industry to figure out. In short, many kind of roadblocks on the way, some of them educational, perceptional regulation, technology, but the next big wave that's going to accelerate us to the next 10 years of blockchain is that next killer app. And you know, organizations such as myself, Jenna, that's our day job. We wake up and that's what we do. Yeah, I mean, I've always said, and Dr. Wong, who's the founder of Alibaba Cloud, agreed with me. I've been saying that the TCPIP protocol, that standard really enabled a lot of interoperability and created lots of diverse value up the stacks of the OSI model, Open Systems Interconnect, seven layer model, actually never got standardized. It's kind of stopped at TCPIP and that was good. Everyone snapped into line, that created massive value. Right, massive value. But that's a collaborative governance thing. That's people coming together and saying that these are the standards that we wish to adhere to. We need that moment right now. Yeah, so you see organizations like the Enterprise Ethereum Alliance coming out with a prospective list of standards that they think the community should adhere to. You know, you have the ERC20 standard, you have all these different organizations, the World Economic Forum is playing a role in that and the UN is playing a role, especially when it comes to identity and those kind of really big societal issues. But I think it comes down to that everyone plays a role, that I'm doing my best. I think it's going to be somewhere in the realm of data. So that's where I've chosen to sort of make my course. I think this is a good conversation to have and I think we can continue with it. I mean, I read on Medium, everyone's reading these fat protocols, thin protocols. But at the end of the day, what does that matter if there's no scale? You can have all the fat protocols you want, more of a land grab, I would say, but certainly models, but is that subordinate or is that the cart before the horse? This is the conversation that I think is in the hallways. Totally agreed, totally agreed. Guys, thanks so much for coming on theCUBE, really appreciate it. Breaking down real world applications of blockchain where the global cloud and blockchain summit is an inaugural event. I think this is going to be the kind of format we're going to see more of, cloud and blockchain coming together. Collision course, or is it going to come in nicely and land together and work together with C? Of course theCUBE's covering it. Thanks for watching. Stay with us for more all day coverage. Part of the Futurist Conference coming up in the next two days. We're in Toronto. We'll be back with more of this short break.