Blockchain Breakfast Summary

Wednesday 6 April marked the first ‘Blockchain Breakfast’ from Irish consultancy startup Chainsmiths, led by Managing Director Kevin Loaec. The event brought together senior executives and academics from some of Ireland’s most notable organisations, including Bank of Ireland and Citi Bank.

While fintech applications for Blockchain were certainly the hot topic at the event, applications outside of the financial services industry were also discussed, with Laoec dismissing the perception that Blockchain use cases are limited to payment and trade processing, via crypto-currencies such as Bitcoin.

The event kicked off (following an introductory video) with a keynote from Loaec, providing a solid definition of Blockchain which everyone could understand. Too often, Blockchain events have been over-focused on the technology itself. In contrast, Loaec’s presentation provided a structure of information which was easily digestible for generalists and business strategists alike, with a focus on the value Blockchain can provide towards improving existing solutions and processes. The presentation began with a demystification of what exactly Blockchain is . When people talk about Blockchain, they are generally referring to one of three things: i) the database behind bitcoin technology; ii) the company ‘Blockchain’ (http://www.blockchain.com); and iii) ‘Blockchain proper’ i.e. the distributed transfer protocol. To help provide context for this technology, Loaec made comparisons to the internet itself. The web, based off of HTTP (hypertext transfer protocol), was conceived to facilitate distributed information and data exchange. Similarly, Blockchain protocols are capable of facilitating what he calls distributed ‘value exchange’.

Loaec then went on to describe some of the main benefits of Blockchain networks:

The Removal Of Third Party Risk: A key focal point of Loaec’s presentation was the removal of what he calls ‘third party risk’, from multi-party transactions. Traditionally, transactions must go through several gatekeepers to ensure (or at least maximize chances of) compliance and authenticity. This would leave the parties engaging in the transaction in the hands of the middle man agent, who would handle the various ‘checks’ needed to ensure the transaction was legitimately handled. With Blockchain, the middle man agents are removed from the equation, allowing multi-party transactions to take place over p2p networks. The trust then is removed from the third party, and placed instead in the network.

Trust By Default: When undergoing any sort of transaction, whether it’s financial or contractual in nature, there is always a degree of uncertainty for participants engaging in that transaction. This is due to the fact that trust is placed in the third party handling the transaction. When a transaction is processed through a Blockchain network, this uncertainty dissipates, as all transactions must conform to the rules set by the network, with any discrepancies resulting in a transaction failure. This results in, as Loaec defined it, ‘trust by default’, as participants no longer need to worry about clerical errors, mishandling, or fraudulent behaviours

Permanent Uptime: Traditional processing tools are based off of standard centralised database/application frameworks. While most larger institutions offer near perfect uptime for these systems, the centralised nature of this kind of setup means that 100% uptime can never be guaranteed. On Blockchain, the ‘process’ is owned by every stakeholder who belongs to that network, which means, barring a complete network shutdown, 100% uptime of services is virtually guaranteed.

In his closing statements, Loaec expressed the viewpoint that while initial attempts to commercialize Blockchain are focused on improving existing solutions, like the internet, the full scope of value potential for the technology will take years to fully understand. Just like the advent of applications such as YouTube on the internet, he believes the most interesting Blockchain applications will be those that have no current alternative, and are instead based off of paradigm shifts . He also stressed, that although the potential for Blockchain could fundamentally disrupt almost every single industry, there are significant hurdles to overcome, especially surrounding regulation and standardisation.

Next, Loaec’s colleague, Paul Williams, took to the stage, to demonstrate potential use cases for Blockchain technology. The five use cases he focused on were:

Value Transfer: Reiterating on Loaec’s points and well as giving a brief overview on the major players in the space – specifically Bitcoin and Ripple (the preferred choice for financial institutions)

Provenance: In this use case, Williams focused on the company Everledger, who after measuring the attributes of diamonds, convert this data to a security key who can be transferred across the Blockchain. Everledger currently process over 800,000 diamonds through this system

Settlement: Williams focused on Nasdaq’s use of Blockchain to facilitate transactions in private securities during 2015

Identity: A use case which really highlighted the potential for Blockchain applications outside of the financial services. Companies such as Namecoin, Onename, Uport and Keybase.io are in the early stages of applying Blockchain technologies to distributed ‘self-sovereign’ identity creation. Millions of humans exist without official identities, especially refugees and the homeless, which can make things like travel and setting up bank accounts very difficult. Self-sovereign identity creation aims to solve these problems

Smart Contracts: Finally, Williams talked about the application of Blockchain across ‘smart contracts’, contracts which are available of self-executing and autonomously updating terms based on stakeholder actions. Examples included self-executing wills

Following on from the use cases, Kevin Loaec and Paul Williams were joined on stage by Garrett Cassidy (Former Managing Director of Circle Europe) and Prof. Tony O’Donnell (Head of Research at EdgeVerge/Infosys) for a 15-minute Q&A panel. Key insights from the panel segment included potential breakout sectors for Blockchain (settlement, securities and cross-border remittance); some of the technological challenges associated with Blockchain (integration with existing systems, and the danger of ‘isolated Blockchains’); and solution scaling (taking solutions which work in lap settings at a concept stage and applying to organisational or ecosystem level settings).

A very interesting potential use case for Blockchain also emerged during this discussion, merging together many of the different benefits which were seen in previous use cases: p2p autonomous insurance. By merging self-executing contacts with wearable devices and bitcoin ledgers, the possibility arises for an autonomous insurance network which can measure clients (eg health) in real time, and distribute settlements straight after an incident in real time.

The event then closed up with a recap from the IDA, highlighting some of the key points which had been discussed throughout the morning.