Consensus is one of the premier blockchain events of the year. In its third year, this three-day event was by far the largest and most energetic yet. Over 2700 attendees from over 96 countries attended the show, most paying nearly $2000 to attend. With bitcoin, ether, XRP, and other cryptocurrencies at all-time highs, that price did not seem to be an obstacle for many of the attendees who were clearly riding high on the latest crypto wave. The cool thing about Consensus that makes it different from other conferences is that the attendees are experts. There is no need for blockchain 101. For attendees who have been at it awhile, this makes for more productive conversations and panels. This newsletter serves as a high-level trip report for our readers.
2017 vs 1997
These are early and exciting days in the blockchain and crypto space. Think Atari. Think Pong. The general feeling is that there is even more innovating going on now than there was in the 90’s and early 00’s. At Consensus, you could not help but feel like you were a part of thousands of people (entrepreneurs, corporates) contributing to projects unlike anything the world has seen. The community at Consensus felt like a United Nations enclave of people trying to tackle and redefine how the world works to solve some of its biggest problems.
Healthcare at Consensus
Cryptocurrencies, ICOs (Initial Coin Offerings), and financial solutions were the biggest themes of the conference. Financially oriented blockchain companies and bankers made up most of the attendees. There was little healthcare representation. Healthcare experts at Consensus seemed like the new kids on the block.
The one healthcare panel was titled “Policies & Procedures in Healthcare Blockchain Implementations” and featured John Bass (CEO of Hashed Health), Mike Jacobs (Distinguished Blockchain Engineer at Optum), Chris Young (VP, New Virtual Market Development at Ascension), Brian Smith (Pokitdok), and Debbie Bucci (Office of the National Coordinator for Health IT). Perianne Boring from the Chamber of Digital Commerce was the moderator. The discussion was held in one of the largest rooms at the conference and held around 500 people. The conversation focused on a few common areas of refrain such as ONC’s initiatives, initial use cases, how blockchain can help control payment fraud, and how blockchain can improve consumer-centric medical records. The highlights included a short conversation around social determinants and holistic views of health. John made reference to Meharry Medical Center’s theme of “health is not the absence of disease” and pushed that we take this opportunity to reframe the national conversation around health. Mike Jacobs demonstrated how far Optum has traveled on their blockchain journey, citing three use cases they developed in 2016. A large part of the debate was around how, when and if we can empower consumers with their data.
One of the stand-out keynotes of the conference came from Fidelity CEO Abigail Johnson. For years Fidelity Labs has been stealthily working on internal efforts and developing partnerships with MIT, Harvard, and IC3 to progress their distributed ledger strategy. This is not just window dressing. They started by focusing on understanding Bitcoin, the oldest and most bulletproof blockchain in existence. Would it surprise you to know that Fidelity has been mining bitcoin? They also accept bitcoin in their cafeteria.
Fidelity Charitable allows individuals to contribute to charitable causes using the cryptocurrency. All of this from the CEO of one of the world’s largest asset management firms with $1.9 trillion in assets. “I am a believer,” said Johnson. She also announced that, by the end of the year, customers would be able to see cryptocurrency balances on Fidelity’s website, if they held an account with Coinable, a feature already available to Fidelity employees. Johnson said that Fidelity is leading these initiatives because Bitcoin and cryptocurrencies could “fundamentally change market structures and perhaps even the architecture of the internet itself.”
The scaling debate has been raging. Bitcoin’s price is on fire. The cost of operating nodes is at an all-time high. With transactional traffic growing, timeliness and finality of a Bitcoin transaction is coming with ever higher transaction fees. The community has been split on how to scale, arguing over scaling concepts such as segregated witness (“SegWit”), lightning network, emergent consensus, and larger block sizes. After years of debate, it was announced that the key players had agreed to activate SegWit, which will enable an increase in block size from 1MB to 2MB. This is considered a key enabler of making Bitcoin more mainstream. This so-called “compromise” solution is not uncontroversial. Its prospects are cloudy but it will make for an eventful summer, culminating in an August deadline. Stay tuned …
Tokens & ICOs
Consensus and the blockchain community clearly have token-fever. Many companies made announcements about new token offerings and crowd sales. The conference was full of onstage and off-stage discussions around the legality and structure of ICOs. Are they legal? Maybe. Will they affect VCs? Yes. How do we protect investors from getting scammed? We need to do that. Right after Consensus, the SEC released a statement encouraging investor protection. “Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors,” said Valerie Szczepanik, the head of the SEC’s distributed ledger group. “If you want this industry to flourish, protection of investors should be at the forefront.”
After amazing ICOs from Gnosis and Aragon, there is clearly a rush to ICO right now. Best practices are still unclear. There are many approaches to tokenization, including profit-rights tokens, governance tokens, contribution-rights tokens, payment-rights tokens, and access-rights tokens. Each has its advantages and disadvantages. Generally, the highest potential tokens are those that serve a purpose within the application and solve a business problem that is met by creating a new economy or incentive structure within the application.
A blockchain solution without a network is an academic exercise. That’s why blockchain and consortia go hand-in-hand. In addition to the R3 announcement that it had raised a $107M series A, there were several other consortia initiatives under way at Consensus.
Brian Behlendorf and the growing Hyperledger team had a significant presence at Consensus. Brian participated in a “State of Blockchain” main stage panel and there was a half day of Hyperledger project updates on Tuesday. Hashed Health’s Corey Todaro participated with David Treat of Accenture, Jesse Chenard of MonetaGo, Ashwin Kumar of Deutsche Boerse, and Ram Komarraju of the CLS Group in a brilliant discussion of current enterprise pilots and deployments. There are real projects starting up in a variety of industries including healthcare.
Enterprise Ethereum Alliance-
Enterprise Ethereum is coming on to the scene in a big way. The Enterprise Ethereum Alliance announced Hashed Health and 85 other new members at Consensus. There was a half-day discussion dedicated to the Alliance on the first afternoon of the conference, featuring leaders such as Yorke Rhodes of Microsoft, Matt Spoke of Nuco, Amber Baldet of JP Morgan, Alex Batlin of BNY Mellon, Kieren James-Lubin of BlockApps, Eric Piscini of Deloitte, and Julio Faura Enriquez of Santander.
“There is amazing potential for Ethereum and smart contracts in healthcare. Hashed Health is excited to work with the Enterprise Ethereum Alliance on defining and developing enterprise-grade solutions that can safely and securely handle the complexities of the evolving healthcare marketplace.”” —John Bass, Founder & CEO, Hashed Health
States & Countries in the Lead
Australia was everywhere at Consensus and is clearly accelerating their blockchain efforts. The governments of New South Wales, Victoria and Data61, a public-private entity, sponsored the AusTrade delegation and presence. With over 20 participating companies accompanying the delegation, Australia is positioning itself to provide global blockchain leadership. Over the past 12 months, the Australian Securities Exchange (ASX) has invested A$20 million examining the use of blockchain technologies with the goal of becoming the first exchange in the world to upgrade to post-trade services built using on the technology, among other exciting projects. The opportunity for healthcare blockchain innovations continue to grow.
The State of Illinois, led by Jennifer O’Rourke, is also clearly moving their distributed ledger applications beyond banking. O’Rourke has a reputation for taking a truly collaborative approach. For example, she advocates for including regulators early in the process. During a panel at Consensus, she commented on her experiences with open systems and indicated that Illinois was learning a lot and trending toward closed systems to protect information and drive adoption. She encourages others to learn from what has been accomplished and she sees consortia as a way to accelerate projects.
Of all the new companies, perhaps EOS made the biggest splash. They hosted multiple receptions and parties. Their marketing effort included a really cool two-story digital billboard in Times Square, visible from the windows of the conference bar. Born out of Steem, EOS seems to be providing an alternative to Ethereum, Corda, Hyperledger and others for DApp creation. Their argument goes something like this: Bitcoin is maxed out. Ethereum’s gas is too expensive. Corda and Hyperledger Fabric are for private networks and have only limited smart contract support. RChain and Rootstock are not in production. BitShares and Graphene (which Dan Larimer helped build) have good throughput and actually have more active users than Bitcoin and Ethereum, but are weak on supporting smart contracts. EOS attempts to use delegated Proof-of-Stake and Network Bandwidth Allocation to combine the scalability of Graphene and the power of Ethereum’s smart contracts. EOS provides an operating system they believe will scale DApps and drive ROI for real-world utilization. They also support parallel processing and asynchronous communication. They are taking the money that goes to the miners and attempting to redirect that money to the application layer. One to watch…
Consensus 2017 Hackathon
All proper blockchain conferences require associated hackathon competitions, in which ad-hoc teams battle it out, designing and implementing blockchain applications in a 24-hour time crunch. The Consensus Hackathon, hosted in the Rockefeller Plaza offices of Deloitte, attracted hundreds of competitors, including De’on Summers, Hashed Health blockchain developer. De’on’s team won the Hyperledger prize for the most innovative design utilizing a Hyperledger platform. De’on’s HyperMonopoly team successfully implemented a blockchain-powered, playable version of the classic board game Monopoly. Congrats to De’on and the team! We’re looking forward to future hackathon competitions!