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Nashville Blockchain Meetup – Ledger Wars with Corey Todaro

At the June Nashville Blockchain Meetup, we looked at Enterprise Blockchain and the proliferation of Distributed Ledger software, services, and offerings available to enterprises and corporate applications. In his presentation titled “Ledger Wars”, Corey Todaro from Hashed Heath examines the emerging commoditization of distributed ledger and blockchain protocols, and their impact on enterprise adoption. This is a topic of increasing significance as we move towards broader enterprise adoption of DLT and blockchain applications.

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2019-06 Nashville Blockchain Meetup – Ledger Wars | Convert audio-to-text with Sonix

But anyway thank you all for being here. As always thanks to our sponsors we have Hashed Health,

LBMC, Frost Brown Todd, BTC media and then of course we work for the venue and the beer.

I’m going to turn it over to Cory. I’m excited to hear this presentation.

I think a lot of blockchain world is bumping up against these problems but haven’t spent enough time with them to be able to articulate them or know of the problems that they’re hitting. So.

I don’t think anyone spent more time with it Corey. So, I am going to hande itover.

Thank you Giles.

All I really get as I see people here have to remember not a lot.

So good evening everyone I’m Corey Todaro. I haven’t been up here for over a year now. I’ve been hard at work upstairs for Hashed Health, I am the CTO of Hashed Health. If you don’t know Hashed Health we’re at local watching company has been around for three years now. We work primarily with health care health care industry and enterprise blockchain and distributed ledger technology. If you don’t know what Enterprise blockchain is that’s what we’re going to talk about exclusively today.

There is no crypto in talk at all.

So look let’s sort of get things head on. The title of tonight’s talk is Ledger Wars which is somewhat provocative and I hope it brought you here. But what we’re really talking about is the explosive or proliferation of distributed ledger software services and offerings for use by various enterprises in various industries to implement solutions utilizing block chain type architectures or distributed ledger technology. There are more logos in this presentation than I’ve ever used before and they’ll probably be companies and protocols that you’ve never heard of. They’re just all over the place now and so it’s really becoming a competition between a lot of different protocols and services and how enterprises choose. And while there are some time seismic shifts taking place in the enterprise Blockchain Market that I think a very interesting direction that you don’t see on the open source crypto side of the world that all that will have very distinct impact on the ability of the desire for enterprises to come to this technology and to start articulating solutions and building get into work around that. And so provocative title but the real topic is the comodification of block chain a DLT software and services that exploded across the market and how that fundamentally impacts adoption.

See you here. Giles. USB.

I was talking to.

Yeah.

Just like ever it happened.

But you saw the laser. Well that’s only part of half the battle.

All right.

Though for many people and I still hear today I’ve been hearing it for three and a half years now. Why on earth. We went walking using the Enterprise when the entire spirit of blockchain going back to its mythological founder is about decentralization and freedom and the ability to do the things that we want. For many people the notion of enterprise blockchain is literally heresy. I’ve written about this recently and I know what I what I see. I’m a religious historian by education and training. There are very deep theological debates going on about logic that have almost nothing to do with the interests of enterprise and business and the use of this technology. And so why an enterprise want to use logic and their use in moments to change the nature of the technology itself. It’s about the distribution of complex business workflows whether it’s financial services whether it’s health care insurance business logistics companies etc. and on and on and on. There are multi party workflows which are very difficult and inefficient to process which has a very distinct impact on the bottom lines of these companies. Tremendous amount of effort and treasure is being spent simply keeping records synchronized between partners. And so it’s a fundamentally a reconciliation problem. If you know anything about block chain the automatic synchronization distributed databases of the distributor record of actions that parties take is the core value that we can bring to launching a course in its original form and bitcoin that wasn’t much used because no one changed the rules of Bitcoin. It has one set of rules about utilization and the spending of a crypto currency but it’s another issue synchronization and the ability to compose workflows or enterprise to be used for what’s properly called smart contracts on on these machines.

Most these workflows we can build business rules that match the workflows that we’re engaged in and achieve higher levels of synchronization to avoid costly reconciliation things like chargeback. So all that great phrase very common business. I paid you but it was a mistake. I like some of that money back. right. Crazy kinds of workflows that take place but ultimately if we can bring a new transactional infrastructure to many different business verticals it’s about new value creation is about achieving new ways of doing business that are possible today with either are siloed with database structures and or our communication standards that we use to send data back and forth. One of the problems I think across businesses is that we often have standard communication protocols ECI norms or standards. So an idea for simply saying OK if you’re going to communicate about this business process here’s how you need to structure that communication and then we being that message off to the other party what they do with it though is completely out of your vision. Whether they’re using it correctly whether they’re applying the rules correctly all you know is that you successfully put together a sentence with a right Graham. But you don’t know if your counterparty understood it or understood it well enough to communicate back to something that you wouldn’t. So often we’ll send out messages and we get something back from our counterparty and it makes no sense whatsoever. They’re referring to each stage of the process that doesn’t match my own view of the world. And so the opportunity for blog changes to open up those black boxes and now we have a standard form of communication but a standard form of transparent processing of those business processes so that we can achieve more.

Now.

But what we’re not going to talk about today which is an enterprise which is a blog Jane but not here. That’s like. And you might think I’m crazy to talk about enterprise watching in the week that crypto explodes and Facebook rocks the world. You’re not going to talk about the past is prologue. How did enterprises come to biology. And we have to go all the way back to 2013 2014 to really get up the of it. And it’s really two primary factors that we need to look at. The first is the development and emergence of the theory and launching which is apparently the one with a very important characteristic. Here he was the very first blog Jane that allowed allowed us to compose smart contracts. The very inspiration for all of it is the frustration around the creators of theory and working in bitcoin and saying I’m really tired of trying to make this blog change do different things colored coins smart contracts. It wasn’t built to do those things and so rather than trying to shoehorn in new functions and features that top a coin let’s just start from scratch and build a composer while launching that allows the developer and the community to write business rules that govern transactions on the ledger. And so the ability to come home with smart contracts really open the door and as they can not only build contracts about the movement of crypto but I can build contracts that can model.

Various numbers of business process. The second important function is about permission launchings permission block changes to be the phrase back in 2015 2016. The very first one of permission block change is actually a very small company headquartered in China. OK. And actually there instance was called paper ledger. They were building the world’s first permission block chain using the DFT that’s designed to be fault tolerant consensus mechanism and their goal was to build an enterprise blocking. Another small company out in the world. Bits of proof out of Germany. Also had a protocol model. Both of those companies hyper ledger and gets approved for. Swept up into what became digital assets. You turned around and donated the name hydro ledger and a code base to the Linux Foundation. He said We’re convening a new organization a new project to study and to build enterprise grade watching protocols and applications. And so through that donation of the name and an original code base hydro ledger Project was born. I’m all over hyped liquor out of the Linux Foundation It now boasts multiple log chain protocols all of which are open source and which are designed for business use primarily. So we don’t have tokens but we do have composed of all smart contracts and we have the ability to commission the network. So unlike the public lodgings where anyone in the world can choose to run.

We have to do is download the software and connect to the network and I too can be a minor but I want you I can and anyone in the world can see the transactions on every public lodging. But the notion that we can make the network permission can say I can. No. Those other notes are. Are they my business counterparts. Company a company B company C etc.. In addition Karen. Hi. What’s on the ledger from people outside our business context. That is the origin of enterprise blocking because I don’t want the world to see my business transaction. I don’t want them to know the pricing terms I’ve negotiated. That’s confidential proprietary business information that’s fundamentally unsuited to public transparent lodgings. And so about four or five years ago this movement kicked off with a couple of different protocols permission to appearing on permission. These type of literal protocols. and where have we gotten that. So the real explosive youth of enterprise block chain comes to the top in which we have an explosion of protocols that have become available. The protocol is simply a software set that we can utilize to build a distributed ledger network to run applications a whole family of a theory and related enterprise protocols. We have a forum which is JP Morgan version of the theory essentially with some important differences and changes. One of the co-founders of the theory the Gavin Wood started his own company called Perry which just this year has released something called substrate which is a plausible theory and style protocol.

That blocks a company spun out of consensus which is built something called strata getting inspired and significantly built upon the Syrian code base. And we can see new styles of organizations consensus. Joseph Rubin’s organization is dedicated to expanding the theory of ecosystem as well as unfortunately my legs are overlapping here the enterprise theory of light is a standards body dedicated to specifying and developing specifications for enterprise grade versions of the theory. So this is Niger over the theory and these are commissioned at theory and networks but in theory it was not the only game in town of course you have the explosion on the hydroelectric side as well. Primarily what was most well known is hydroelectric power. Primary contributor to that open source project is IBM. Fabric is a global emissions ledger system with the ability to write smart contracts in a variety of different general purpose program which is go way C++. No. Yes. Java. Etc. They think that suited for the. But the enterprise also importantly hydroelectric solitude is made. Code contributor is on that is Intel. very well suited for supply chain text of use cases with some very interesting features around currency of transactions. But of course there are others as well. Triangle logo up top there is something called Tinder which plays in the crypto world as well as in the enterprise block chain space.

The really interesting architecture called application launching. and the C in the bottom there is Porta which has been developed by a banking consortium called are three really interesting letter model and that there is no global letter in Portland you don’t share the ledger. All transactions are peer to peer between counterparts and if you’re not a party to the transaction your notes sees nothing holds nothing retains. Nothing about that transaction you don’t even know it’s happening. in the script that you just don’t see it fundamentally. So it’s a very different paradigm that’s that that’s built upon although it is inspired ultimately by the cryptocurrency change. There are innumerable others that I do not have space to put up here. Things like hydro or. Hi etc.. Well we have a diversity of leisure architectures approaches to writing applications or smart contract generally for the term smart contracts. It creates magical thinking. The smart trap. Well what does that look like. It’s really just an application that we write and it operates on a budget smart contract languages as well as what we call consensus protocols so mining and good governance is a consensus protocol. There’s a method by which we know which note has a canonical version of the ledger in the next block of transactions that are connected to it. And so we need mechanisms in distributed databases to figure out how are all the replicants all the copies of the database come into agreement with each other and with enterprise watching.

We’ve had an explosion of different consensus protocols because we don’t want mining. It’s expensive and it’s costly. It’s still more open and transparent networks but for business networks we need something that is radically. faster and we need something that is radically cheaper and passion contests between clusters of computers which is what crypto currencies. And so you can achieve with some of these protocols transactional throughput at the scale suitable for financial and other kinds of business. You can see transactional volumes on the order of 10 to 20000 transactions per second. Whereas the average transaction perception of does it out. Well. Transactions again. Very different environments one is open and transparent. So we need very weighty consensus protocols. Make sure you in a business environment you’ve got the legal system. I’m going to know would cheat and I’ve got I’ve got lots of resources to make that right. And so we can use lighter weight protocols that allow us to achieve speed of business unlike the open ones. And so this has been going on since about 2015. This explosion was so enterprises were choosing to experiment and to work on blocking solutions have a wide variety of choices at their disposal and their criteria for choosing is all over the map. Some enterprises might say hey I like the safety of it.

Yeah something like that old that old adage about no one got fired for choosing IBM. So I don’t know anything about this space. I’m going to go with something that makes my bosses. Other people say hey I don’t want to feel trapped. I’m going to go to something like a theory of type protocol because at least I can carry my my application to other regions of Europe. Some people are actually philosophical about it so I really believe in the vision of some of these protocol things. And I believe this is the future. And so enterprises are now faced with lots of choices and lots of different decision criteria that expand not only to the characteristics of the protocols but even the young. And so as we move from the youthful stage of enterprise block Cheney we’ve now come to a level of maturity. I call it a.. Of course as business is looking at new technology who’s come into play. But the large providers and a whole host of other people. And so instead we categorize them as a service offerings for a long chain long chain. And so the cloud providers they go to you and I said Microsoft Azure I do of course Google cloud our offering theory is the service fabric service. And these are really just provisions. Managed services for you. Officials in nodes in containers or other types of orchestration arrangements quickly deploy test networks or other types of networks.

There is lots of application development tooling that’s also being brought to bear to them on the market as well as the rise of the consulting and design services not least of which has to help us with healthcare companies with the likes of deploying Accenture Of course why organizations are playing with enterprises working with them on developing an application and really learning what works what doesn’t work. What can we do with this protocol versus that protocol. There’s lots of benchmark testing going on but these as the services offerings are really becoming too dominating the market and in fact everywhere is has announced this year that they’re launching their own launching unique to them which will be a completely managed service on their platform. All in terms of node infrastructure storage compute costs and network for one price per year. It’s a really compelling package offering that speech to the enterprise. The Enterprise is like any other kind of user. They’re your early adopters your people who like to tinker. But as we reach the main the main part of that program of adoption users enterprise is want something called for. They don’t want a protocol or a software development kit they want tooling they want demo support they want support they want high availability architecture fallback disaster recovery they need these kinds of services in order to dedicate business to this new technology and it is still very new technology for the enterprise to trust and commit to.

And so the rise of these kinds of services dramatically lower the barriers to experimentation and to entry into the market a real production level law change a distributed ledger technological solutions. And so we have as a service we have consulting and design services. We have a management orchestration each ETP over there or they’re a really good example they are a product called sextant geological Orchestra a cougar. Any clusters of block chain nodes. And so you can orchestrate a network with a single interface on it on multiple different operators at once it’s that kind of tooling that the enterprise is going to need if they’re going to actually rely on this infrastructure for for their daily business. And they’re really kind of business drivers. And so this is what you’ve seen over the last years these very big players coming into space. It’s not so much about which protocol is going to win. It’s about which protocol is best for a business case and what kinds of service options are available. This protocol versus that. And so we we deal with double softcore and ideological fights between crypto currency protocols and my bitcoin maximalist or my theory my view of this. We’re really talking about practical applications here and the range of services that can be brought to bear. This is not the end of the story.

We lost our.

Ok. But we aren’t even the biggest is the cutting edge of cutting edge developments that are taking place in the last month. That’s the wheels coming full circle. with some very surprising new pattern that we’re seeing in enterprise of launching.

And the primary exam I want to talk about something called Daniel.

Damona stands for Digital last week. It is a smart contract developed by a company called Digital asshole who actually sold the story in the collection of hypothetical donation that made co-pays to clinics. They did a lot of smart programming language it’s not a part of all. I can go spin no woods and Daniel rather it’s a it’s a better language for writing a smart contract it is more reliable it’s built on functional programming and Haskell so it has very few side effects. It’s also human readable by subject matter expert and it’s a domain specific language for business relationships in models counterparty its rights and obligations and how those rights and obligations evolve as we interact with each other. Top ADL to eat watching protocol and most impressively they’ve open source the language and achieve integration partners to make damn all of the language work on a variety of different watching calls. So they’ve announced just in the last month integrations with hyperlinks Sawtooth and VM. New forthcoming. We’ll take our calls or they announced just last week. Hydrologic fabric.

Are three quarter and very surprising one. Amazon or Medicare Advantage longer.

I was on a roaring is a cloudy version of the sequel. This is a database. It is not a deal to me it’s not even a block chain. It’s a single database and so we now see the return to the origins of block changes which are simply relational.

No sequel.

But we now have the ability to write smart contracts for single databases and networks of distributed databases in the form of large chains. Why is that important.

Well for the enterprise he wants to experiment with logic.

Their first goal in the past has every needs every protocol. Was it a really poor way to begin a design process.

I need to lock myself into a certain style of smart contract a certain style of network architecture is a global ledger or is it not a global variable obviously you can choose from it or not. I’m gonna make these choices first before I can do any kind of application design. This flips the paradigm on its head and allows enterprises to build an application first. Damn let us model the business process run up through test net. and see how it works then I think about who are my counterpart is Can I bring them to the table. Maybe I can be the operator of the entire solution or my counterpart. We choose the networks second. And so I don’t have a walk in anymore. I’ve now got the ability to carry my application logic to a wide variety of different offerings whether they’re full service offerings like the VM where or some of the traditional local watching letters. I typed letters all two from hydroelectric power or even the peer to peer model of an art a three quarter or something like an Amazon or four which is the first of a number of different databases that not only will be on the market is coming down the pike now to very interesting game database offerings from eight of us and the other from Google cloud. enabled us to something called the Q LTV quantum ledger database. It is a single database which has cryptographic probability that what gets written to it in all future changes to.

So you can track and prove that the database has been touched or that additions to it or per contract language written to work on top of it. Google has a similar cryptographic database trillion. They’ve got a very good point growing right now. These old trees marketers one of the corporate primitives of watching. And so we see the return of the data database a single database instead of a distributed network. And so the other reason this is important is as we think about building enterprise solutions utilizing this range of technologies. Now we can now begin to bring cost and rationality back into the equation that I know how much it takes to run a distributed network. On a per party basis I mean we can make those kind of calculations for bitcoin but we get that question all the time with our enterprise customers. This sounds like a really good application. I’m giving my counterpart is on how much we charge here. This is my team going to have to run that. They’ve never seen an error in their life. They really don’t know what this thing works. Can you run it for me. And that’s a really interesting option it sounds exciting you know we can run all the. Except that you realize if I’m running all the nodes the logic is you’re just trusting me. At the end of next year why don’t I just choose them the platform and that has a margin for my operating costs and that might be a database that you may not be fully distributed lecture.

It may not even get launched. And so we now have the ability to choose across that trust spectrum across a service spectrum and across a half a cost in margin spectrum for the best technology to bring to bear for these kinds of you multi-party workflow solutions that block changes originate. And so we really have come full circle. And so the notion legend awards is really about competition. Competition and of course competition over network architecture competition over affordability at HP which really did a very quick evolution for blocking I think fitting where we are today with our network society wide availability of power architecture out there. It’s kind of like the evolution of the Internet and fast forward. It’s only taken about five years to reach this level of diversity and this level of completeness in terms of a full product offered for enterprise to employ for watching the fealty. So we’re going to use the war metaphor then go Did the soldiers to shoot because it is on now it is on with the likes of Amazon Google Microsoft et cetera. It is on a wide variety of companies who are developing cryptographic techniques for distributed databases that it is on for application developers to find the best and most reliable and was flexible tooling to bring this kind of solution architecture to the writing business. Thank you very much.

Applause.

Because one more button here that I’m not going to have because it comes with questions.

Beep beep beep.

Right. So that’s what the question is between the smart contract language like a dam on basic services. So is. What’s what’s the what’s the connection. There was the integration on there. Yes. So the SA contract operates under client level. Different clients could be provided to different counterparts and then we’ll go to the smart contract code dictates what they’re able to write to that database or to change about that database. And so in Daniel terminology you might have the right. to make an update to that ledger or to take the next step in the business process and my client would enable me to make that change to the database right to it. Now I don’t have the right app for the smart contract. I simply can’t write to the database in that regard. The cryptographic underpinnings of the database. This is not a war. This would be like in a queue LTV or a trillion. I can then turn around as the operator of a database and provide proof to those client users that it’s not just me making those decisions on your behalf. It’s actually your code and it’s actually cryptographic imports from the database that it’s impossible to make those kinds of changes to the database without the authorization of the application code. And so it is a single database and you are trusting the operator of the database that it gives you additional guarantees that the operator can’t be right against all search.

Eat you up and eat.

Yeah absolutely. In the case of a regular sequel database like Aurora it is about the trust of the operator it’s about the service level of rationality of all players. But we still have the ability to write multi-party workflows in a very programmatic way so all the parties understand exactly what’s possible and what’s impossible that given the current state one of the benefits of law change in general but specifically the smart contracts is that all the counter parties share the real time State of the business process. I can’t overstate how valuable that is because we were always operating in the dark as businesses in healthcare specifically as a relatively new contract in its files called value based contracts. I worked for a large hospital company we operated for a year without really knowing how we would perform because the KPI is not measured by us. They were measuring.

So we had our own internal calculations right. We were making good bets if you will. Well we really didn’t know and we wouldn’t know for 18 months. And so a lot of these arrangements are I want you to take financial risk now and I want you to perform in a vacuum of information. And if you do well you get a bonus. And if you don’t you get penalized but you’re not gonna learn your fate for 18 months.

Right it sounds insane but businesses are doing across all kinds of industries and so the ability for counter parties to share. I know exactly where we are in this business process. I know what’s next. I know best to do it and when it’s done is incredibly empowering in the reduction of cost and the ability for us to do value creation styles of businesses that simply aren’t possible because we don’t have the infrastructure for it and so cost efficiency is kind of the first hurdle that we get to deal to in watching the enterprise. But beyond that I think there’s a really rich area of exploration. We’ve got better more responsive infrastructure for businesses so we can do fundamentally kinds of things to each other.

This four year period for.

How is this standing over your shoulder on the slopes. The government. Directly I could see you I everything from what we’re seeing happened 18 months down the road. Your performance relate to their payments. That’s more I think it looks excited to kids get deep interaction with the government. Are you sure secondary is yours.

That was more subtle. We’re enterprise clients. I’m in selected the operational basis. When we get go down the other. banks that way to do more selection. is their best student. The the failures in setting that up wasted and what is it worth you’re actually going to be when they see new folks another day more than a year now this month that will be pretty frustrating if I just spent a ton of money shot sure a very specific program.

Well two great sets of questions. The first of which is the health healthcare example but the fundamental question is the attention of your counterparty or your ability for your counterpart to move faster than can today. And this is the interesting overlap in all DLC kind of design. Some of it is technical and some of it as well all political or the intentions of your counterpart is and the abilities of your network concerns. And technology can’t solve for now. I don’t want to pay you all the time I’m not no matter what the technology enables or if I’m not able to pay you on time. It’s just not going to happen faster if I can. And so in some cases we can’t solve it. And healthcare is a particularly thorny area because unlike some other industries it is a what I’ll call a morass of misaligned incentives. Everybody’s got their own incentive.

And they usually don’t align with yours. I’d like to give you a knife fight in the dark closet. A lot of people would start stabbing at each other. Here is the pharmaceutical manufacturing organization. Hospital local level at the network level. Everybody wants something different in the middle is the patient who’s kind of lost wandering around wondering how much this is. What’s going to happen to me I don’t know.

And so that’s a that’s an extreme example but here’s what the long chain can do. Even if people don’t pay. This is a great example I have to turn to a colleague of mine. He said well you know what I mean. What we’re talking about claims you know whether or not the insurance company wants to pay faster.

They say on average 30 to 45 days to.

And you know they make good money off of that 30 day wait. Was a nice float there and certainly you would think well they’re going to have to want to pay faster than you lots of lodging. Maybe the value is not getting paid faster. But it known the true value of the client. I’m a doctor. That plane is a moving target until it gets a good the 100 percent. It could be eighty five percent of what I asked for it would be unlikely to the.

You know it’s.

And I can say the insurance company keep your foot. Right. That’s valuable to you. That’s fine. But tell me on day one how much I’m going to be getting. And then I could do a variety of other things with that information. I can securitize it. I can use it as collateral or a variety of business situations. And so even if I can’t move incentives into the perfect alignment there’s a lot of room for getting creative on how we design DLC and interactions between counties. Your second question is what’s what’s what’s the reaction when you learned that sometimes our work is experimental best and may not lead to further development. Now this just before from my own experience a lot of our clients were burned by the air highway which preceded launching. Gone off and set up the labs and centers of excellence for A.I. and she learned to. Maybe dropped a couple million dollars that it went nowhere. And so we find generally maybe it’s specific to health care. Sure I don’t work in other industries is that enterprises are extraordinarily cautious when it comes to technical innovation. They’re not going to go off and do two things. They’re not going to spend a ton of money. I’m trying to build the solution first star clients want to learn first they want to expand they want to fail. They want to learn where’s this thing break. What can I reveal Is it true or not. And I want to experiment failed she failed experiment with. And so in some context it’s OK that we do this on purpose.

That it’s not going to go well. There was a great article I got to find the link was shared overheated. Someone’s estimating that the additional lodging our kitchens and our prize our shelf life two years. before they’ll have to be fundamentally redesigned a new architecture. That’s a pretty good life cycle for any kind of software. So I think that’s already baked into some of the attitudes but something like that and I don’t think it’s going to be either. You’ve only protocol agnostic smart contract language fundamentally changes that dynamic and so it really is I’m investing in something that I can carry forward and I can now separate application development from some of this back into infrastructure and really wait in some cases for the best offering available to me to deploy this. The second way that enterprises really hedge their bets. at least in healthcare I know this is true is no one or very few enterprises in the world are going to their core architecture their core pieces of technical infrastructure say that Britain plays with launching that is a huge bet. And so we find that people are more willing to experiment around the edges or the or the adjacencies of their business before they’re willing to go into the core really rip out very well tested and battle hardened infrastructure. Right. I know that insurance companies are still running mainframes. And let me tell you they have optimized those things to have life cycles of 40 years. That is investment that they are very unwilling to part with based upon the promises of a flashy new architecture.

There are some really good examples though of enterprises are going to part or two of them primarily are in our equities markets. The Australian Stock Exchange now the Hong Kong Stock Exchange. Australia’s the ninth largest in the world who is replacing their core settlement engine with a new deal to built. Now it’s not an open launching kind of network. It is an operator ASX is an operator for financial services in that market and they’re building a better engine better service clients. So it’s not a philosophical choice. It really is a pragmatic choice but it is a large one and that’s a project that’s going to take four years. Now that’s on the order of civil engineering if you will. How big and complex that is. But they’ve made that commitment and they’ve got to turn on data. And we’ll see when they have to turn off the old infrastructure that’s going to be a really really compelling to watch. And I commented on in the past that it’s one of the real launching applications that I’ve seen rise. There’s a lot of announcements about experiments and that’s fine. We do that work. Our competitors do that work. Enterprises do it all over the place. That’s one of the real examples of someone standing up and saying we are making this that we’re going forward. So I think we’re going to see more and more about these enterprises and I.T. departments frankly get more comfortable with this new style of architecture and the various to.

Another question. Yeah follow up with us here. Here. With the air. 30 45 days.

Making a smart move 24 years ago you make love him. Period or maybe that’s the person personally became the face of it would point out more. Different opinions on that for sure. Or if you try to see your meaning that you do if you will you remember that selected American person sure discussion how much of that error in interpersonal reaction is actually to be available to have the.

So I mean I think if look at very complex and deeply business processes how much debt time is in there just to make the data available. You’re really talking about Enterprise wargames integration of these ledgers systems and the production of data systems say hey look we know what the minimal data set is to future this determination we’re going to pull that data as fast as possible of this common shared record and let the logic handle it. And if we disagree maybe we can hold it but at least we both share where the data came from what it says and the rule that was applied in germination and let’s just get that out of the way as fast as possible. We have an honest disagreement about something. Let’s have the honest disagreement. Let’s not sit around and wait. Did you set the date. Yes we did. We have to look at it. We have to transform it in some way. I mean there’s a lot of dead time and really wasted action in some of these business processes and those are the ones I think we can speed up fundamentally. But if there isn’t I mean technology of course can solve some. Sometimes the data is not available or it’s not available from this apartment. Some third party grants. How do we get them to give to us faster. So some of these application designs and that’s why watching is really a mix of technical engineering as well as sociology. You have to understand what the counterpart is. What’s important to them what they’re capable of doing to really design a good solution that can bring value to all those parties. So it’s not really one sided that these are all great questions that reveal just how hard this work. In some cases it’s impossible. You can’t solve that problem.

He’s not one of the highest floor demands. He’s hostile to see us very close.

I’m sure I can back up a little bit. Privacy is a an obsession of mine. If I were to write a thesis on my job now about privacy. I’m watching. I’ve spent a stupid amount of time thinking about it. But it’s what always has troubled me about block chain and deal to get to go back a couple of slides. You know that sort of youthful.

We know the original law changed are radically transparent. Everyone can see everything that happens on the watch. I can see everything contract transactions ever happened the past 10 years. Now if there is a privacy model of a sword on Bitcoin from his wallet address. It’s not my name attached to a transaction as a wallet and I can generate those will. And so it can be hard to attach a wallet address to an entity or individual. It is certainly not impossible. Governments are very good at this now on tracking money laundering organized crime terrorist funding etc. and you can start to correlate external events with a large chain transaction. You can start to look behind the law of progress and figure out who is really doing these kinds of transactions. And so it’s not really privacy notices. It’s not at all because all the records are there will always be there. So all you’re doing is giving a lot of information for those algorithms to try to figure out who’s doing what. So when enterprise of launching that started the notion of how we going to handle privacy is a crucial one not only from a business attitude perspective I don’t want to share this data but regulatory concerns are overarching. I can’t share this data that I can’t make it available to anybody who cares to look. And so the very first effort at doing privacy is around architecture. We’ll make it for mission. So instead of a radically transparent ledger that’s visible to anybody who cares to look and open for anybody to run a note. We’re going to restrict that and say you know what in my network you have to be one of my business counterparts to run it and willing to restrict access to who can see the ledger to this group of people. And that begins to make sense to you. Think about what what kind of business are we going to do on his watch.

I could do data sharing.

I can transact data that is fundamentally valuable to my development. But it has to be data that I don’t care who sees it in this network. And so the set of business problems which that applies to this small. What kind of business process do I have here. I don’t care what my competitors see. About me and what I’m doing with other parties in the ecosystem. And so that gets you only so far. But it really limits the kinds of applications you can write. And so now we have an explosion of new kinds of privacy mechanisms that come to bear on these different protocols. They all have their pros and cons. I’ll talk about three very basic. The first is with hydroelectric power. They began something called private channels. So yeah we have a global ledger that we share you know on a commission basis between all these counter parties. But if I want I can transact one on one with another counterparty which sounds cool when you dig down to our you realize two things. First of all that private channel is actually another election but it’s a ledger with two parties. And if you do math you begin to realize the nightmare that this architecture becomes to have private channels where all the constituents on a network is what has to the end minus one.

Which grows very big very fast. And the facts with the banking consortium or the banking communication layer did a trial on fabric private channels. They estimated that at scale. Further proof of concept they would need. Three hundred fifty eight private channels but at scale you would need perhaps tens of thousands of private channels which means that your nose is running 7 8 10 20 different ledgers at once. And it gets very clumsy.

The second downfall of the private channel approach is that assets that you transact across a private channel are not interoperable with other ledgers. So I can transact one on one with my counterparty but I can’t take the example of an asset that assets to another private channel and transaction. See to your stranding assets and your stranding business workflows within these private channels. And so it becomes a development operations and dev ops nightmare. While you’re also reducing some of the utility that have the ability to interact with a wide variety of players. And so it’s an interesting approach. But ultimately I think it’s one that becomes overcomplicated and none of these are production scale yet. So these are estimates on what it will take but it’s certainly a warning about that. It’s pretty scary. The second approach is something like a quarter to quarter one with a radically different budget architecture and said forget the global ledger. There is no global ledger. You no one has a ledger which has a record of what you do. That’s a record of what you do with any other counterpart and all transactions are only on. Now the big difference there is you get the global ledger. You get cryptographic guarantees on blocks of transactions launching blocks of cryptographic links to each other.

And Merkel trees inside it so if any that any one transaction changes you can detect it going on. So you get these cryptographic guarantees with courting and cryptographic guarantees and transactions. There are no blocks of transactions. There is no logic in fact cordite Naderi was the first people to develop the phrase to ledger technology because people said that that’s not fortune. What they really meant was hey you dirty enterprises in Mexico. My my new ideological tool. And they said you’re right it’s not a gotcha. Both ideologically and technically it’s not watching at all. And so this model’s very interesting in that you get the privacy guarantees transaction. But I also get its portability of the assets to be counterparts two floors or two of local drawbacks of this model and there are always possible benefits to every one. It’s no good having to transact on the court a network. You’ve got to be a. I can’t provision access to the ledger to a client. Every transaction entity is a node with a certificate attached to it an IP address etc. and so that means that every counterparty has to run a global network which could get expensive and or costly or complicated devils. The second problem is although I can transact part in a partner and no one else sees anything.

If someone takes that asset a transaction with a third party they’re going to know it came from the original. And so I can’t hide the history of an individual transaction if it goes to a third party or fourth party or third party. And so there is some information leakage in that model that comes to come to bear and in many business contexts I don’t want that to happen. The party shouldn’t know where that asset came from. They should just know that it was legitimately counter parties and now it’s legitimate in the title history of some assets. It’s not should be open fundamental to to to do so counterparts across the network. And so that’s another interesting approach. There is a third approach. and that’s one that’s talked a lot about ideology Belgian press and that’s the zero knowledge. It’s their knowledge. So these are really bleeding edge mathematical or computer science formulas. It is especially impossible to prove something is true without revealing any information about any of details about what it is. So in cryptocurrency land I can prove that I have a sufficient balance to give a certain amount to another counterparty without sharing with the network who those counter parties are or how much was transact. I know that sounds counterintuitive and say the math works.

And so the notion of what we call trusted or problem proves the legitimacy or ability of a transaction of feasible. And so you report that proof to the watch and you don’t report the details of the transaction. Drawback here is that these things are really bleeding edge very computationally expensive. We did some experiments that I hacked on the area watching and estimated that our transaction fees our gas cost in the area we’re running one of these kinds of transactions. That’s six hundred dollars transact. And so all that computational power that you need to generate those kinds of proofs is really not ready for prime time yet nor is it very fast. at all. There are innumerable other kinds of approaches. Maybe we can just encrypt the data and then put it on the block change course then we have to have a provision for exchanging keys and then you’ve got to encrypt the data and give the data on a blocking release. Our contracts can’t do to them because you can’t really apply applications to encrypted data until another bleeding edge former cryptography comes along encryption and there’s tons of different approaches. I like the simple ones the best. This something like that. If you don’t want to share the information.

Don’t share the information.

Sounds simple don’t put it on the ledger or have a ledger that doesn’t share with parties on the issues. If there’s a whole area of game theory that I’ve recently been researching about utility costs for maintaining prices and the effort that parties will go to to hide information on an open or transparent network actually has a very negative cost on the overall efficiency of the system. And so privacy guarantees are not just a nice to have. They actually have a very tangible impact on the ability for value systems that we can actually measure and quantify. And so this is a really important area in enterprise blogging. It’s necessary from a wide variety of regulatory and privacy regulations not least of which my actions about things like GDP are sharing financial information. Why why am I getting my see kinds of functions as well. And so privacy is it is a core demand for enterprise to utilize this technology. And so the different pricing mechanism that come on some of these calls is really important which is why I think the return of the data is a really interesting model because I know who has the data that can have a service level agreement with them going to have a master services agreement with them I can have a business associates agreement with them and I know who to sue if they reach. So that businesses understand they don’t understand is there an. I don’t think any of us really do they understand that other legal so similar is going on usually work least in the near term for a lot of these kinds of situations.

You ask questions.

Yeah. Good to see you older like January calling.

Their ability.

Has gone through where. Someone the someone.

That’s a great question. I don’t know. That brings to mind all kinds of sayings mostly from the theory. The code is law. Our contract is law and there are even some states Tennessee included which is that yes our contracts can be legally enforceable. In my opinion I’m not a lawyer so I said on a front most of that is redundant law because we most legal systems in the states already recognize digital signatures. And possible. And so we really didn’t need this notion that smart contracts are actual contracts. I’m not aware of any court cases where breach of contract term was brought and the evidence was some sort of lettering recording contract. There’s all kinds of interesting functions court has got a really interesting one you can actually attach legal documents to the transaction and say hey this transaction is governed by this legal document. And if you accept the transaction you’re fucking related to that control. And so it’s exactly your vision. It’s not about trust lawlessness it’s about all nobility and enforceability. If you’re going to you can lock the larger than life letter all day long but if you lie on the letter I’m gonna have a nice time stamp on it and a legal docket attachment. That’s usually the best place to start.

That’s great.

All right. All right John. Thank you all.

Thanks everybody. No doubt. Special thanks to even ask for a national watching meetup. Thank you. I’ll be in D.C. thanks to prosper on top media our sponsors things we work we have sponsorship openings coming up soon so if you want to companies that want to sponsor the meetup talks Giles upcoming conversations this year include the emerging consortia and health care. We’re doing some research right now on consortia that are coming out there so you can source the health care consortium announced in twenty eighteen months five so far this year 19. And so we’re starting to do some research and some newsletters that are focused on what we’re learning from these enterprise consortia that are merging the design patterns and those consumers that some of the protocol is being used by the expert source et cetera. And there’s I think a lot of indicators that we can look at in terms of what they can expect in the second half of this year. We’re involved in two of those hashed and we see we’re planning on being involved in a couple of wars and that’s a big trend that we want to share with you guys. We also have some work in the opioids base that we’re planning on focusing on later this year and we plan to meet up around that. We’re going to Good Shepherd and the remedy chain folks come up from Memphis to talk about their project around track and trace for pharma. And I’m not sure what else but those are some of the topics coming up in the second half of the year. So we hope that. Thank you for coming and I hope you’ll come back again. And thanks to all who joined us on the livestream. And until next time we appreciate you guys departing National Lunch. Thank you.

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