Event Recording

Dr. Jutta Steiner - Blockchains Beyond the Hype

Name: Dr. Jutta Steiner - Blockchains Beyond the Hype
Uploaded: 2016-05-24T12:00:00+02:00
Duration: 24 min 5 s

Dr. Jutta Steiner

COO

Ethcore Ltd.

Posted on May 24, 2016

For the last few months, every day there has been a new announcement of a major corporate (successfully ?) trialing blockchain technology in a Proof-of-Concept. For anyone outside of the blockchain space and hype, it has become difficult to discern the signal from the noise. We give a brief introduction into the true technical innovation of these open multi-user platforms and present several use cases where businesses can benefit: From IT security to data privacy to IoT.

Video Description

Show Transcript

Okay. So we were asked to be very, very in time for all those people who switch between those sessions.

You know, very welcome to you all after the lunch break, we have this difficult task to bring you into discussion. Although you have hopefully interesting discussions, great meal, and something to drink, we are very proud to have gorgeous plenary. And for example, and especially in the beginning, having a gorgeous speaker at the beginning, Dr. Stein who's with us will present, but perhaps we should say a little bit about us very shortly, carving GLA long scientific advisor for copying a coal since the end of 2015, very few month.

And I'm teaching at a university finance information management and FinTech stuff is interesting for me. So I that's, that's my relationship to the theme and Catarina DACA.

Hi, I'm senior consultant at PAAC in France, and I'm in charge of financial services and more precisely everything that goes to FinTech and blockchain. Yeah.

We, we would like to guide you through the sessions for this afternoon. So stay with us. Interesting. And we have the very interesting beginning with, who's telling us a little bit about yourself, because I think it's important to know what you already did, and we could switch this for you to have a bit better. Sorry. Did it Australia. Okay.

Yeah, it's a, it's a great pleasure to, to be here at the conference. It's a, it's a nice kind of different sort of event to what we, what I usually go to, to present what we are doing at ESCO and deser. So not one of these standard blockchain events, but especially I'm, I'm really, it's really nice to not speak to a, a purely financial audience. Cuz I think this, this whole thing is much more powerful than just what the financial service industry thinks it is. Yeah. So my name is YTO diner. I am found of a company called ESCO.

I tell a little bit more about what we're doing there in a few seconds. I started working for a project called Ethereum who have years has heard about Ethereum so far. So a couple of people, but yeah, Bitcoin, I guess everybody has heard of, so a project called Ethereum so far. Yeah. Where I worked as I managed a security audit prior to launch. So we built a whole, whole new blockchain from scratch. So I engaged the, the researchers and companies that looked at the protocols, the code based implementations.

That's what I managed before that I was a consultant for McKinsey, worked there for a couple of years, left that to dry ethere I have a technical background in applied Matthias. So did a PhD on mathematical physics. So that's a bit short intro about me. I'm I'm also founder of a, of a company and that's where it comes to use cases called Providence, where we try to use blockchains for more transparency and supply chains, which might be interesting to you for you to hear about like in terms of what you can actually do with this technology.

So please interrupt me if I speak like, or if I geek out a little bit about the tech, I'm happy to go a bit more into details about tech, if there are questions. So yeah, just feel free to, to interrupt me. So what we are doing at ESCO is building software and infrastructure for the new decentralized internet. That's how we see it. So kind of way beyond blockchain itself, there are additional additional protocols that we are seeing being developed like IPFS for file distribution, other decentralized protocols that we think will make a whole new infrastructure for the decentralized web that's.

That's where we see, see us as a company. We are a spinoff of the Ethereum project. And I'll tell a little bit more about what that is in a few seconds. So a few companies that have tried our software are named here. So there's a project called grid singularity. They try to use the software for managing organizational issues in the energy sector. There's R three that some of you might have heard of in, they work with financial service in the financial service industry. Mainly the big banks there's slack it, which is interesting project.

So they do, they do T applications using blockchains and also they trial some new governance models for organizations with their technology, which, which is called a decentralized autonomous organization. That I also talk a little bit about in detail later on then there's Olga, which is an, which is a project that builds a decentralized prediction market on top of the Ethereum blockchain, which is also an interesting project. And IBM has also forked our, our code base to test their IOT stuff on top of the blockchain.

So we started with a full we ASCO as a company, started with a full clean room implementation of the protocol, which we call parity that you can download and, and test. So it's an enterprise great implementation in contrast to how the Ethereum project started, which was BA basically, basically some people sitting in there, their living rooms coding away, hacking a bit. So it's fully tested, fully integrated from, from the start. So in order to make it actually usable in high security environments. Cool.

So yeah, what I would like to speak about it's, It's just the chair. So yeah, I would like to give you a sense of how we see the entire ecosystem development and what we think needs to be done in order for this decentralized web to, to come into existence. What are the, the obstacles that we're currently seeing?

That's, that's, that's kind of what I would like to get across. So that are, these are all terms that you might have heard of in the context of blockchains, like smart contracts, proof of stake, proof of work, Ethereum, scalable public blockchains consortium chains. So I don't wanna explain these terms and details. If you have questions about that, I'm happy to talk about it, but like this is the sort of world I'm I'm I'm living in and, and, and that the decentralized web is, is built off. So what is Ethereum? So some of you have heard about Bitcoin.

So Bitcoin, as we see it in contrast to Ethereum is kind of a, a simple calculator. That's decentralized where you can send like discrete values between peers while Ethereum is kind of a decentralized computer, which is very different from a normal physical computer in that it's virtual and decentralized. So it's kind of a, a trustless logic environment where everybody can upload their programs, which are called smart contracts in that context that can be executed.

Everybody can be sure of how, what happens that this code that you upload will be executed in the way you expect it to be executed and also for an indefinite amount of time. So it's a secure computer cuz every transaction, every interaction with that machine needs to be signed. Cryptographically signed. It's a transparent computer because everybody can inspect what's going on and it's decentralized. So there's no single operator. Nobody can take it down.

DDoSing is very difficult because it's it's distributed, but at the same time, and that's why the, the Mac is there it's or this old Mac is there it's really slow. So because it's decentralized, everybody is everybody has to check every transaction at the way, how it's currently architectured. It's it's really slow. So there are seven transactions per second, more or less like in Bitcoin.

And, and this is what, why people speak about the fact that we need more scalable blockchains. So what is it good for?

So it's, it's good for any sort of security application where you need to manage entities or participants that fundamentally don't trust each other because you have this secure environment that everybody can trust. So for DNS ID management, DDoS resistant applications, data access, but then there's also a whole world of consumer applications like decentralized marketplaces. Some of you might have heard of a project called open, bizarre that just launched.

You could say it's kind of a, a more consumer friendly version of, of se road and that it like has no operator and everybody can trade everything, but it doesn't run in the dark web on, on, on tour, but it's openly accessible and easily accessible. As I said, like we used it for supply chain transparency. So we have certificates that are issued at like when a farmer farms or harvest something and can be tracked throughout the supply chain, by everybody UN inspected in the end, in the shop by every consumer.

So they can be sure, oh, there's no double, no physical, double spend are used for that. And in less kind of developed areas and in Europe, or especially in Germany, peer to peer trading, wouldn't be economically viable because you have feed and tariffs at the moment, but it can be used to reconciliate transaction on a higher level between the, between the company. So when a company buy and sell electricity, currently it takes like months to consolidate all these transactions after the fact.

And then there's a whole new world, which is called of applications where blockchains are used as organizations out of the box. So as a, as a way to implement any sort of business logic, and one example where people have been really creative is, is with Dows decentralized autonomous organizations. So where it's kind of the next development of, of the company of the firm, you could say, so you can buy into the Dow, there's no central operator, the stake you have in the Dow can then be used to vote on projects can be that, that the Dow shall execute.

So that's, that's a, that's a really interesting thing. And there was the Dow or one Dow was launched couple of weeks ago. People can buy in and it's already so far the kind of third, I think, third or fourth, most successful crowdfunding project. So they have raised already 20 million. So 20 million us dollar have been put into it. So it's quite a significant amount. Yeah.

As I said, so we see this as part of, as just one part of the technology stack that will build this future decentralized web. So there's logic, the blockchain where you encode, how entities, how people interact with each other and that the, that commoditizes trust there is data distribution. So there's an interesting project called I P Fs the interplanetary file system, kind of a further development of what we know as bit torn as all these file sharing systems. And then the third layer you need is encrypted messaging between peers.

There's also protocol called whisper that can be used for that. That then can be accessed from people, by people, through a browser or just a browser, a plugin for Chrome for like, for example, where you have, unfortunately I think you can't really see it in detail, but you have your identities, you have the different networks, the different wallets that you wanna interact with. He is the Dows that you are part of or that you have bought in.

And, and so this is, this is what this decentralized web could feel like not much different from, from what it used to be, but with more, more agency with the, on the, on the user side. So what's, what's holding it back as at the moment. So there's definitely the problem of scalability so that every node in the network at the moment needs to process every transaction. So that's one thing that needs to be solved, but there are interesting proposals for that kind of paralyzing process transactions on the node, but also across the network there's confidentiality.

So by design, the, this decentralized computer is transparent for everybody. And ideally like the holy grail would be a con like a privacy preserving global computer, which we don't have yet, but there are also projects called zero. There's an interesting project called zero cash. They kind of try to do a, a, an anonymous implementation of, of, of what Bitcoin represents so where nobody can, or where everybody can interact or send money anonymously between peers. They are launching in a couple, in a couple of months, hopefully.

And this is something that would be also nice to have, not just like on the Bitcoin or on a currency or payment layer, but also on this more general compute layer, then there's security, I think so far. And also from the experience as a security manager for Ethereum, the system has proven to be very resilient.

I mean, there's the 6 billion bounty out there, the, the market capitalization of the network that nobody so far actually successfully could attack all the attacks that we have seen targeted mainly the, the access points. So the centralized exchanges where we use conventional technology, but nonetheless, there are some security issues that need to be dealt with there's key management, but there are also nice ways, especially in Ethereum, how to deal with it. So multisignature approaches where you have delegates in order to manage the risk of losing a key or keys being compromised.

And then there's this whole world of regulation, which is, which is there's no, it's really difficult to make like a coherent statement across industries. So in some industry risk regulation might help adoption of these systems because it can be used in ways to, to, to help secure privacy or, or the management of personal data. But in other, in other worlds, like in the financial service industry, it's quite, it's quite diff like it's quite opposite to what the industry wants. Okay. So let's make a little bit of a jump.

So there's also this whole world of, so, so far, what I've been talking about was this world of public permissionless blockchains, which we think is the biggest innovation behind blockchain technology. But as you could, can use ethernet for building internet and internet or the internet, you can use blockchain technology for building public permissionless, ledgers, as well as building permission, ledgers in, within a, a confined set of participants. But it's quite a different, it's quite a different thing.

So there, the obvious facts like the public blockchain is much slower. And with the permissioned blockchains, you can get rid of this proof of work way of coming to consensus. And so that can be SP speed speeded up. There's the public ownership against managed upkeep.

So the, the op the several operators, so to speak of the system decide who, who gets access and who doesn't open and transparent versus private membership. One system is trust free by design. The other one is trust bound because we have, we do trust for the permission, blockchain, certain entities, that process, and verify the transactions.

And then, which I think is an interesting notion. There's the fact that these systems, by the way, how they are set up, kind of have to comply with, with regulation or the, the local law, because it's quite obvious who are in the end, kind of still the operators, although it's more distributed than in the normal way, why for the, for the public blockchains, it doesn't really make sense to speak about legal or illegal. It's more kind of an illegal system because it can't be taken down. So the only thing that you can do is you can go after the users, but you can't go after anybody who is who's.

I mean, there's no operator in the, in the, in the center. Okay. So maybe how much time do I have left?

Ah, okay. Five minutes. Okay. So maybe just for the, for the techies amongst you and the people who know a bit more about the, the, how the technology works in, in more detail. So one thing we are working on at, at a core is making this whole protocol stack within, or this, the sets of protocols that are used, or algorithms that are used for building a blockchain more modular. So self specifying contracts is one interesting thing. So which could avoid hard forks of the, of the blockchain in the future, if there needs to be, if there's a need to make updates to the protocol.

So that could be an elegant way. Also combined with proof of stake, making the system more scalable. And as I said earlier, integrating approaches like zero knowledge proves or ZK snacks into the system to, to, to get several layers of confidentiality for the users.

So, yeah, I mean, if there's like one takeaway, I guess that I, I would like you to, to get from this is don't get too much like dragged away by what you lead, read in the media about financial services use cases, but rather look for cases like where you have scenarios, where economically disaligned actors that you want to bring together, where you, where you have this in your, in your business to deal where they come together to deal with each other. And this is like where blockchains really Excel. So this trustless environment for implementing applications on top. Thank you, Katarina.

I, I probably think there will be questions should be anybody would like to start with a question that no, Go for it. I think this Is On, I wonder if it's a good analogy to think of the comparison between permission and permission list as sort of internal and external routing protocols and speak up a little, compare it to the way that today the internet is routed and the way there is a, a good, a good synergy between the use of both along the OS island model.

So, I mean, I think there, there are reasons for using either of the two, like there, there are obvious use. I mean, there are use cases where, where one makes sense and the other doesn't make sense.

And, but still like one problem at the moment is there's no trustless way of linking these two. So having that would be ideal in the future for, for kind of capitalizing on the technology as a, as a whole, If that makes sense, you meant it. Yeah. You meant it's like illegal. So you could just to ensure per of something done on a private ledger, just put a message on a public one without the need for too much protocols or standards around that.

Is That, I mean, so I think one, I'm not sure whether I understand your question all Good cause of the slowness and the latency. Yes. Only certain transactions based on requirements to make them completely illegal and completely free from ever being erased. Should the consortium fall, could just quickly send a message onto any public network That that's one thing you could do where you would just like use the login check of a capability of the blockchain. That's one thing. Yeah.

I mean, obviously since you have to pay for any transaction, any house, you, you would only put what you really, really need to put on the public blockchain. Yeah. But I think it's also important.

I mean, in terms like the discussion about private and permission ledges, not just because you're using the public chain means you can't permission who can intact with a system. Right.

I mean, it depends like what, what the business logic is you build on top and who has access. You can perfectly build KYC on top of the public blockchain. Any More question, more question, More questions from the panel? Was it no. Yes. Can you explain the difference between, you know, big chain database and the IPFS protocol?

I mean, what's the difference Between big chain, database and IPFS? Yeah.

How, how does it relate together? Is it nothing? Nothing? So my understanding of, so IPFS is purely for data distribution. So no logic in terms of consensus or whatever involved BigchainDB tries to.

So, I mean, they try to start like from, from a distributed database and kind of add certain aspects of, of blockchain or distribute of coming to a consensus on top. I'm not super familiar with how, how BigchainDB is architecture.

So I'd, I'd rather, instead of like making a false statement, we can talk later about it. Any more questions anymore questions do people are done From lunch? Gorgeous, no gorgeous chance, especially because the Ethereum background is really different to what we often hear about this Bitcoin, blockchain too tired from lunch, too tired from lunch was we already spoke about.

So, but when, when this is the case, I think, think over it, take help yourself to water and coffee, perhaps then we take the five minutes off. Of course, I think we are in the, in the following session, discuss a little bit more over this with more attending in our panel, then see you in five minutes, we begin here at three o'clock. Okay. See you in a minute.

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Dr. Jutta Steiner - Blockchains Beyond the Hype