What you will learn?
Hind El Aoufi: First, can all of you introduce yourself?
Lambros Photios: I’m Lambros, I run a business based in Surry Hills called Station Five. We do software development.
Rian Finnegan: Hey, I’m Rian. I’m a software engineer with Microsoft and my role really involves helping our partners and customers build cool software.
Faraz Maghami: Good day guys, my name Faraz. I’m a lawyer by training and profession, but I also run a consulting firm around tech startups and government relations.
Hind El Aoufi: Okay, so I’m going to start with a little bit of the why, why blockchain matters. The first question is, what is the essence of blockchain? Anyone who’s quite passionate about the answer-
Rian Finnegan: I was talking about this earlier today. I think blockchain is actually a really bad name for it, like how your phone is called a phone even though it’s not just about making noise. Blockchain is called blockchain because of the data structure that came originally from Bitcoin. But actually, I think when you’re talking about blockchain, what you’re really talking about is building decentralized networks and the networks that generally what we call a BFT or Byzantine fault tolerance. That means it’s a network where people can be anonymous within the network. That’s really what we mean when we talk about blockchain.
Hind El Aoufi: Thank you. Anyone else wants to add to it?
Faraz Maghami: I might just say one thing from a layperson’s perspective, not having a techy background like the other two chaps next to me. There are really two different types of blockchain. The way I always explain it to people, the public blockchain and then the private blockchain. A distributed ledger, which means no central actor is following it i.e. there is a bank that holds your funds and says you’ve got 10 bucks in your account and you have $1,000 in your account. The ledger is distributed between a number of different holders, if I can call them that. And then you’ve got- you would call that a private blockchain, you would call that an intranet. A bunch of companies who control a decentralized system, technically it’s not even decentralized. Then you’ve got the public blockchain and the best examples is – everybody would know – would be Bitcoin or Ethereum and that would be equivalent to the internet. Nobody owns it, nobody really operates it, but everybody can use it. So the internet and intranet, public and private. Just keep that in mind because that’s a very crucial difference that most people just skip over.
Hind El Aoufi: I was actually aiming at the more simple explanation. The next question is, how would you explain it to kids?
Lambros Photios: I might start this one off because we’ve got two complex answers over here. I’m going to have a crack and be third time lucky. It’s an example I gave at a women in tech event, so hopefully it’ll work again. Does anyone remember when they used to go to the news agency and you get those ledger books, the accounting ones with the little cubes? A few people like smiling and like, “I haven’t seen that in years, it’s excel now.” You know how you could lodge every single transaction that would happen in a business? It could be say trade, buy or sell. Someone could walk into your shop and they could buy a bar of Cadbury milk chocolate and you’d put it into the ledger. The idea is that after a year you’d have this book full of just lists of transactions. Yeah? The thing is that’s obviously centralized, that’s for you only. That’s for your business. Realistically, what blockchain is doing, is it’s keeping track of transactional data. It’s keeping track of transactions. But it works slightly differently. It’s decentralized which means we’re all connected to it at the exact same time. For instance, if Rian and I wanted to make a transaction, because since we’re all connected to it we can trade between us. I have say 100 Bitcoin, I probably wouldn’t be on this stage if I had 100 Bitcoin. But if I had 100 Bitcoin and I’m talking to Rian and I say, “Rian, I’m going to give you 100 Bitcoin.”
Rian Finnegan: Okay.
Lambros Photios: Yeah, cool. He started off by being very happy. The second thing that would happen is, everyone else who is connected to this blockchain, which would effectively be everyone in the room, would have to authorize that transaction and make sure they agree with that transaction. As in they’re okay with that transaction and it follows the rules and procedures of the Bitcoin network. You can’t just turn around and say, “I don’t want that transaction to happen therefore it wouldn’t” but there are certain rules and everyone on the network verifies it. If I said, “I’m going to send Rian 200 Bitcoin, but I’ve only got 100 Bitcoin.” The idea is everyone else in the network would say, “I’m not going to authorize that because you’ve only got 100. How could you send 200 Bitcoin to Rian?” The whole premise here is that, it’s a completely open, decentralized, distributed ledger and everyone’s connected to it and everyone governs those rules. Those rules are predefined, but everyone’s governing them and it doesn’t just have to be related to cryptocurrencies, it can be any form of transaction. It can be the movement of a diamond when it’s first mined, all the way from the point of being mined, all the way through the process. The idea is that everyone who’s connected to that network, has to make sure that every part of the process is in check and no one can break those rules.
Hind El Aoufi: I just wanted to say, I think the kid you’re talking to is probably 18 or 19.
Lambros Photios: Probably not like eight, yeah.
Hind El Aoufi: Yeah. Anyone else who wants to answer the kids’ questions? No?
Rian Finnegan: No.
Hind El Aoufi: Okay. The next one is, why the hype?
Faraz Maghami: I was just going to say, can I take the temperature of the room? How many of you own Bitcoin or any other form of cryptocurrency? 30%, well, the hype is really centered around – if I can be very frank about this – greed. Somebody says that they bought a Bitcoin for matter of cents or low dollars and now it’s worth, I don’t know, how much is it worth today? 6,000 USD and they’ve made X% profit. The hype is all about the greed of us, all of us. Buying something at a low cost then it’s going crazy. But the real, the nerdy part of the hype behind blockchain I think is the impressive part, that is to take away power from individuals, certain individuals or companies and given them – hypothetically, at least right now, theoretically speaking – to the people. I think that’s the nerdy, the real answer behind it. I.e. there is not a central bank that can tell you how or how you can’t deal with your money and that it is a – as we’ve talked about – a distributed ledger, it’s an open, public arrangement that you can play with. And that’s just the fintech aspect of it, but I’ll leave the rest of it.
Hind El Aoufi: It’s a little bit like the Montessori Academy, so it’s a school without a real teacher?
Faraz Maghami: Yeah, well, that’s right. That’s the management of decentralized arrangements. I think we call it DAOs, decentralized autonomous organization. It’s very exciting. I’ve been working with a client in France recently. It is basically a management-less company, a company without a CEO, a company without a real set of managers, with hard coded arrangements as to how the business should run.
Hind El Aoufi: It’s a new type of democracy.
Faraz Maghami: That’s right.
Hind El Aoufi: That’s why the hype is so-
Rian Finnegan: Yeah, I agree with those two points. Definitely the price signal. Everyone sees this thing that’s massive in price and I think to a lot of people that signifies, “yeah, there must be something valuable there.” But I think exactly as you said, people say this as an opportunity to form new ways of forming organizations. I think it’s a little bit different to a democracy because in a democracy, generally speaking, it’s one person, one vote. But in a blockchain network, you actually get out what you put in. The more I contribute to the network, the more my voice has weight within the network. If I don’t contribute, then I have no voice.
Hind El Aoufi: Okay. Thank you. The next question is, why is it so disruptive? You’ve probably started to answer that, but why is it so disruptive?
Rian Finnegan: Yeah. Actually I don’t think it’s been very disruptive. I think the only big disruption I can think of, is probably in the retail illegal drug market, seriously. But other than that, I actually don’t think it’s really disrupted much yet. I think it actually has the potential to be extremely disruptive to our society, in the sense that it can form a technological basis for new types of organizations. Organizations that will compete with corporations, like we talked about in the previous talk, or maybe not. Maybe it’s going to be a complete failure. I’m actually not sure. I’m leaning towards the very disruptive side, but we can all be wrong.
Hind El Aoufi: Okay. Anyone has another opinion on that?
Lambros Photios: Yeah, I wouldn’t say it’s a disruptive technology. I think the applications that are going to emerge out of it are disruptive. If you look at the smartphone and the internet, would you call them disruptive or would you call, say Uber disruptive to the taxi industry? You’d probably say Uber is the disruptive part of that equation, but the internet and smartphones were around for much longer, before Uber actually became a thing. I think it’s a foundational technology. I think it has a lot of potential. I think that that’s naturally going to drive it towards being the foundation, of a lot of disruptive tech that comes off the tail end. It just requires a lot of innovation still.
Hind El Aoufi: What does success look like if it was pervasive? If it was applied more?
Rian Finnegan: For the technology or for a specific company or something built on blockchain?
Hind El Aoufi: For the technology.
Rian Finnegan: I think it would pervade every part of our life. In the same way I think that building is starting to pervade all or parts of our life. We all got computers in our pockets, and the trend you’re going to see I think over the next 10 years, is compute moving into all of all that buildings and everywhere. You can imagine decades from now, that all of these chairs will have computers in them and we’ll know exactly your weights from sitting on them and it’ll just be sitting in some tech cloud or whatever. I think blockchain as a technology has the same potential, because all of those computers can be linked by a fabric, which is quote unquote blockchain. But more in the sense that those pieces of compute units can form consensus through this kind of technology.
Hind El Aoufi: Okay. In terms of, I guess that potential around trust, what are your thoughts around… Because for me, disruption is around trust and the trust system and as you were saying, it’s like an organization without the CEO or school without the teacher. When I look at the numbers on how many CIOs are investing in blockchain is very, very low. It’s about 8%, so what are your considerations around that trust?
Lambros Photios: I think the first thing is that, even though it’s not being heavily adopted, it’s been heavily researched. If you’re talking to a lot of CTOs and CIOs, then you’d know that even though it may not be an active project, it’s something that a huge amount of R&D is going into. That’s something to start with. I think generally someone’s going to enter enterprise, for instance, when the banks and the consultancy firms start to play in that space and that’s already happening. Anything else to add there?
Faraz Maghami: I was just going to say the issue of trust, is often flogged quite a lot within the blockchain, I don’t know industry, if you call it that? Sphere. What it simply means, is that you don’t need a trusted actor in the middle. You don’t need a middleman anymore. If say, Rian and I can come to an arrangement for the purchase of a particular thing, for a particular amount of money. Ordinarily I would have to either give him cash, but nobody uses cash these days, very few of us do. The other option is obviously to transfer the funds, whether it’s PayPal or whether it’s your bank transfer or I don’t know, the new app version of Commbank, that you can send money to phone numbers. But trust is key. That is, Rian doesn’t trust me because he doesn’t know me, in order to give me the thing, whatever it is that I’m buying from him, until he gets the money. Then you’ve got services like the escrow service, where large corporations would pay a couple of million dollars and it’s held by a trusted third party again, until the thing is delivered and then the payment is released. What do you get in that? Inefficiency. Something that should cost you a dollar, will cost you a dollar 10 because the guy in the middle will charge you for the services. Now the trust, the inbuilt arrangement, it’s an autonomous, which I think we’ll get to in a minute. It’s an autonomous arrangement. It’s a contract that says, “If this happens, then do that.” If I receive the goods, then automatically release the money to Rian. I think trust as we know it, is not really understood in the blockchain or in the decentralized sphere. It’s an almost an automatic or smart contract, which I think the more advanced guys we’ll talk about in due course.
Lambros Photios: I think just adding to that, not just transaction based but data in general. I think everyone’s familiar with the whole Facebook data scandal and everything that happened with Cambridge Analytica. I think that caused people to realize that a huge amount of their information is owned by organizations that aren’t them and they don’t have control over it. That’s naturally sparked trust, external to the transaction side of things. But just that idea that, people are becoming less comfortable with this knowledge now. Which was triggered by other companies effectively own their data and can do whatever they want with it, without your permission or kind of your permission, but you didn’t know that you agreed. Yeah.
Hind El Aoufi: Thank you. In terms of the challenges, what are the main challenges with blockchain? Because I’m hearing a lot of positive and benefits-
Rian Finnegan: I got a good challenge. I think the challenge is that everybody wants in, but no one knows what to do. Everyone’s got ideas and most of them are really bad. I’m being mean or cruel. I think it’s a technology that’s not particularly well understood, and it’s seen as a panacea for a lot of problems. Everybody has problems. A lot of businesses have problems, a lot of companies are trying to go through a digital transformation and they think, “How can I do this? Oh, maybe I need blockchain.” You probably don’t, you probably just need a radio operating system or something on your PCs-
Lambros Photios: He does work for Microsoft. That’s just what they say when they get the phone calls.
Rian Finnegan: No, it’s like, “I want to do blockchain, but my developers running on Windows 7.” I don’t think that’s your problem to be honest. I think that’s the biggest hurdle, is people understanding what the technology actually does. But I think first that requires us as a community of people who are I guess are into this subject, to create a good narrative. I don’t think the narrative is very good and I think a part of that is, from what I said earlier, I don’t think blockchain is a very good name.
Hind El Aoufi: Okay. Any other thoughts on the other challenges?
Faraz Maghami: Oh yeah. I was going to say, firstly, there are two steps. Firstly, understanding what it really is and secondly, adoption. Because those who actually do understand what it is, and I’ve spoken to very senior IT people and CTOs and whatnot, but the implementation of it is still a mystery. They understand what a decentralized arrangement is. They understand what it means not to have managerial supervision over something, and allow smart contracts, for example, to operate, to execute and arrangements. But they don’t really know how do you apply the technology to real life problems. I think that’s the key. In this room, in this whole floor today, there are a bunch of very smart entrepreneurs and people who are in the sphere of startups. The moment you turn your mind into what blockchain is and how it can be applied. Dare I say, very quickly you’ll find solutions to real world problems.
Hind El Aoufi: In terms of those examples, do you have examples at three levels? What does it mean for individuals and it’s applications for everyone like us? What does it mean for businesses, and then what does it mean for society?
Lambros Photios: I might cover the individuals one and then hand it over to the others, because I know they’re very heavily involved in the business side of things. From an individual’s point of view, it’s an underlying technology for what are decentralized applications. If it’s implemented correctly, and Rian may disagree with me here, so I’m open to that, it is a panel after all. If it is an underlying technology that’s going to be part of applications, realistically the user individual shouldn’t know it’s there. Or it’s something that you shouldn’t know it’s there. You may be conscious that it’s there, but… Application should be designed around the user. I don’t know if everyone was here for the last talk with the gentleman from Lendlease, but realistically the application should be designed purely around what the user wants. It should be user centric. Blockchain may enable certain things to be done that couldn’t be done before or in a better way, but it may not necessarily change. It probably won’t change your experience whatsoever in the grand scheme of things.
Rian Finnegan: Yeah, that’s a good point actually. Most applications are actually designed around the user and that’s the principle that you should follow. I might take society if I can, and you can jump in the middle there. I think it has the potential to create new types of organization within our society, which is what I said before. It’s a kind that we’ve been able to create before. I think every type of organization, social organization that we have, is built on a fundamental layer of technology, like can’t have government without swords, and you can’t have cooperation without writing. Maybe there’s some kind of organizations, which we’re trying to create today, which you can’t have without a technology like blockchain. I think that is what happening. There’s a lot of people working in this space. For example there’s an interesting, I don’t know whether you would call it a startup or an organization or something, called DAOstack. They’re building what are basically operating systems for your organization. You get templates, and you get to say, “Everyone in my organization gets a single vote and maybe no one’s allowed to spend more than this amount of money, and we all contribute into a pool.” Those fundamental rules form the basis of your organization, and then your organization can evolve. You can see in that maybe the promise of smart contracts that we’ve all… It’s smart contracts, which are amazing, but then you actually get down to try and write one, and you’re like, “Oh, it’s just about blockchain strings.”
Faraz Maghami: What was the third one?
Hind El Aoufi: The third one is for businesses. If you want to have a-
Faraz Maghami: Well, I think it really will make a lot of businesses, as we currently understand them, defunct, which is a good thing I think. It’s that razoring away the unnecessary and inefficiencies in business. But at the same time, it doesn’t mean people will be become unemployed. It’s just that businesses will become smarter. Take a law firm, for example. I think one of the sponsors of the event, Lehman Walsh Lawyers. I see the partner, saw the partner here somewhere. They were one of the first firms who adopted, I don’t work for them, just so you just say so. They were one of the first firms who adopted a paperless arrangement for a contract, not a smart contract, but a paperless arrangements, which was the big thing. Or the conveyancing aspect, most of you will, some of you may have purchased a house. Conveyancing is just the most archaic form of doing things. You get a lawyer, you pay them $1,000, they get the contract, they look at it, they go and sit in a room with another lawyer. Then they exchange it, as they exchange their hand, the check over and Bob’s your uncle. Now there’s a system out there, that everything is done seamlessly. That’s just one example from my neck of the woods as a lawyer, but really efficiency. It builds efficiency, it forces efficiency and governments will follow suit.
Hind El Aoufi: Thank you. As I said earlier, I’m really passionate about social impact and how disruptive technologies can really impact society as a whole. One of my favorite examples was, I know that the World Wide Fund used blockchain to track tuna. If you are in a restaurant and having tuna you can actually know where it comes from and if there is any fair trade around it or not. I was really keen to learn other potential applications. Actually, what is your best favorite example around the application of blockchain? Potentially around social impact because that’s what I care about, but any other applications that are quite-
Lambros Photios: My favorites one that’s pretty well done, it’s cycle in terms of maturity. It’s called Horizon State. Has anyone heard of Horizon State? Yeah, a few nods, cool. Horizon State effectively is a voting platform built on the blockchain and the idea is that since it’s decentralized, since it’s trustless, people don’t feel that, a) it provides a platform that makes it super easy to set up voting processes. But more importantly, naturally you’ve got individuals who don’t feel that they can completely trust the voting process. They don’t know who’s behind it, they think the results are getting skewed and Horizons State is a bit of a retaliation to that, starting off more with the votes in the private sector, but with ambitions to move into, into government. I think that’s something that could really help to build trust around the voting process, when you get to that federal level voting within government.
Faraz Maghami: I’ve got my top three, that was one of them. Democracy, it’s huge. Maybe not in our country, not yet. But in majority of the countries, the concept would be completely foreign to us, to have trouble voting for people that will represent you. Been talked about, so I won’t elaborate on it. The other two, they’re very close second, is renewable energies for me, the power sharing scheme. There is a company in Perth called Power Ledger. Some of you may be familiar with them. Again, not a plug, I have no dealings with them. I don’t have any of their coins, but I find that concept interesting where solar panels and surplus power can be held by you and then shared with your neighbors. Through the network that they’re building, a trustless decentralized arrangement. I say these decentralized because they’re not really centralized, still a bunch of guys running a company which is doing this, but still amazing. You can sell your surplus energy to your neighbor. Another really favorite aspect of the application of it would be digital identity. I’ve had various meetings with a few ministers and shadow ministers in relation to My Health Records. I assume you know My Health Records are. You might have opt out by the way, but it is basically a digital database of your health records, which the government says is to be shared between medical providers, open bracket and a whole bunch of other organizations close bracket. Which is public, but they don’t really talk about. Now imagine having an arrangement, or a system where it is you, the person who has the information, who owns the information, you walk into a doctor’s office. For that visit you choose to share the information, so they have all your information, your health records, your background, vaccinations, mothers with babies, all of that is there. The moment you walk out, you press a button and they no longer have access. Digital identities is huge, which I think really feeds into voting, democracy and a whole bunch of others. Those are my top three.
Hind El Aoufi: Thank you, that’s great. That sounds great. One of my favorite quotes actually comes from Picasso and he says, “Whatever you can imagine is real.” If we could imagine anything and if we had all money the in the world. If you were an Elon Musk and had all the money in the world, what would you do to scale it up and to make it mainstream?
Rian Finnegan: I’ll have a crack, that’s kind of hard. Part of that, I think we need to wait for some geniuses to come along and do some really smart stuff. In some sense I think, the problem is not lack of money. There’s a lot of money that’s been made over the past few years, especially with the spike in bitcoin. I think the things we have to do, firstly is time. We need to think about the problem and we need to build infrastructure and we need to build protocols. On top of that we need to build a community and I think that the community is actually really strong. I think if I was Elon Musk and I had a billion dollars or whatever, I would build some insane building somewhere and throw the biggest, crypto Bitcoin conference in the world that lasted a few weeks. I think the interactions of all people who’ve been inspired by this crypto movement.
Hind El Aoufi: We should invite some kids to that conference.
Rian Finnegan: But old ones, right?
Lambros Photios: If I wanted quick adoption from Elon Musk, I’d probably reach out to Kim Kardashian and asked for a sponsored post or something to that effect, because that seems to get quick adoption everywhere. But if you wanted true adoption of technology, and we’re talking like long term, think internet, email, everything that you’re doing mainstream now. For context, the iPhone was invented in 2007, that’s when it became a thing. Bitcoin was released, the first commercial application of blockchain in ’09. We’re talking it’s only been around two less years than the iPhone and everyone’s got an iPhone or some device that spawned off a series of smartphone technologies that were emerging. I think realistically there are natural adoption cycles to everything, and we’re still in that first quarter in terms of adoption. Realistically, people want to say in three to four years it’s going to be mainstream. If you want to go by the trends of say email and internet technologies like 15 to 20 years, I think we’re probably going to be somewhere in the middle, because things are naturally adopted much faster now. Because we’re much more open to new technology and people want to adapt and grow faster and work out ways to implement and innovate much faster. But I think there is still quite a few years, before it becomes something that’s truly mainstream. That can’t really be accelerated much, I think, unless you’ve got corporate, enterprise, government getting behind it, which is actually starting to have quite a bit in Australia.
Faraz Maghami: The only thing I would add to what was said is, if I had the money that’s Musk does, I would set up a blockchain, a purely blockchain incubator. In fact, we’re working, or what we’re consulting is, working with a few clients to set something up in Melbourne. I’m trying to dissuade them, trying to set it up in Sydney. But we need governmental support and obviously investments, but it really is an incubator. Imagine your usual startup incubators, but it’s focused solely on blockchain. Sponsored partially by VC money, which I don’t personally like, because as the last panel talked about, the control they takeover. But a real form of decentralized, money pouring in. That comes down through what a lot of you would probably know, ICOs, Initial Coins Offerings or ITOs, Initial Token Offerings. Monies are raised and you have a very focused approach to researching, the R&D behind the applications of the blockchain ecosystem, to everyday problems. That’s what we do.
Rian Finnegan: Can I take up on something we said before?
Hind El Aoufi: Yeah.
Rian Finnegan: Something you said Lambros, about we need governments and companies and whatnot to start using it, in order for it to become more widely adopted. This I think comes partially from my experience. I’ve seen a lot of tension when companies try to do blockchain projects and I think that’s because firstly, they’ve done this thing backwards. They’ve said, “I want to do blockchain and what are the problems I can solve?” Which is a backwards way to doing technology. But the other thing is, the direction that it puts you in towards is semi-anonymous decentralized network, is generally not the way that most corporations are organized. Corporations are organized hierarchy, which is at tension with the way that blockchain is good at, organizing people. Inevitably, you end up with this question where the corporation wants to implement Bitcoins, sees it as being a risk to itself, and maybe will stop it. I think you’ll see a lot of a large enterprises talking about blockchain. I don’t think you’ll see so many of them actually, start to organize their own internal company using blockchain or really much else. I think a more likely scenario is that startups and small companies, because they’re agile, because they can try new things, one of them will hit on this nice pattern way to use a blockchain and also maybe do something internally and that will grow. Then I think at that point, that’s when we’ll see disruption.
Lambros Photios: I think just adding to that, one exception to the rule that I’ve seen, is supply chain management. I’ve seen global supply chain management like logistics companies, freight companies, shipping companies. They have actually implemented blockchain quite considerably, filled out several applications. It’s already in full swing. It’s already a core part of their business. That is one exception to the rule, but yeah I completely agree.
Rian Finnegan: Yeah, I’ve seen that as well actually. I think Maersk is a recent one who did a project, obviously worldwide shipping.
Hind El Aoufi: Thank you. It sounds quite the big challenge. I think from a cultural perspective, it disrupts the culture of organizations and then we have to count on more smaller companies. It’s something to think about, and consider. Not explained. It’s not yet mainstream. My last question before maybe we can have some of your questions to the panel. I think you started the whole conversation today by saying it’s not the right name. If you were to rename it, how would you rename it?
Rian Finnegan: I think a lot of people in this space tend to call it crypto, rather than Bitcoin. But then that annoys people who are old school, cryptographic experts. Naming is really hard, naming is probably the hardest thing you can do. I’m definitely not going to attempt to name it.
Hind El Aoufi: Okay. Anyone else?
Faraz Maghami: I think forget the name, stick to the application. What can you actually do with it? Privacy coins, I think Verge is one of them. You can pay for things and people don’t know who you are and everybody gets scared, including governments. But there are real use cases behind it. The other misunderstood aspect is that Bitcoins are really private. That is, if you pay with Bitcoin and you buy some, I don’t know, some form of drugs, nobody can track you down. That is not true. The whole concept around a decentralized approach or from a fintech perspective, Bitcoin or other tokens, tokenized payments, were to really take out, as I said earlier, that central actor. The person in the middle who charges you money and fees to do something that you should really be able to trust. I wouldn’t call it anything else, except I think it’s the application we should think about.
Hind El Aoufi: Maybe the trust chain instead of block. Having a go. Thank you. Any questions from you to the panel? I think we have another just five minutes, right? Yeah, just any questions?
Audience 1: Firstly thank you very much for everything. I’ve got a couple of questions. I should be relatively short. Rian, I think you mentioned that a lot of companies look at a possible solution and try and fit a problem to match that solution. The ASX appears to be playing around with blockchain, to use it for their transactions within the stock exchange. I thought maybe if either of you guys have rubbed shoulders with those guys, give some detail on that. Also, the other question is, technical challenges for a blockchain, the number one there being speed. I’m wondering if that’s something they can actually be solved or it’s something that we need to change the way we look at our data availability. So that if something takes 15 minutes to verify, do we need to be looking at things like eventually consistent models instead of… I’m trying to think of time [INAUDIBLE 00:32:15], real-time applications?
Rian Finnegan: Yeah, good question. I think the ASX one is interesting. I don’t- disclosure, I don’t actually know anyone working on that project, but I think partially maybe the reason why they’re doing that, is because they can see that this technology is one that could disrupt their industry so much, they would make the ASX redundant. Because that’s what the ASX is, the ASX is a trusted third party that makes sure that when I trade stock, everything goes down fairly. That kind of thing is the kind of thing you could implement, as a purely smart contract based blockchain system, and then the ASX would be redundant. I think in that, you see the tension that I was talking about before. The tension between existing organizations, that mostly exists as a trusted third party, and with their own structure and this new technology has the potential to totally change that. Then the existing one tries to use this new technology and hopefully will succeed. I hope they do succeed and I hope they make a blockchain based stock market. Your other question was?
Audience 1: Regarding technical challenges.
Rian Finnegan: Oh, technical challenges. Yeah, there are heaps. Speed’s a big one. I think in that case you’ve got to think about it at a protocol level. There are people working on Ethereum, try to make Ethereum faster with technology like sharding, and also proof of stake is a really big one. People may have heard of… Which is basically moving away from this whole random cycles on your computer, to form consensus with proof of work, to a system where it’s more based on the amount of money, you can basically bet on something being true within the network. From a game theoretical perspective, should make it stable. I think those two, proof of stake and speed are probably the two biggest at the moment. I don’t know if you have…
Lambros Photios: Yeah, so Ethereum network is slow, which is probably what you’re referring to. Bitcoins even slower. Ethereum is doing sharding, that’s due for launching in mid 2019, last I heard. There are other networks like ARK which obviously trying to improve that. I think speed, I think it will be an issue of the past, over the next kind of six to 12 months and some networks are already overcoming those issues. The ASX issue, is one of those things where not many people know who’s working on it. I’ve personally been trying to scout around. I don’t know if has anyone who he knows… He seems to know some interesting people, I just don’t ask questions. But I haven’t spoken to any of the developers on the project. I don’t really know who they are, but it is one of those things where I would assume it’s a very close knit circle and they’re trying to keep it as down pat. But that said, there’s also a lot of talk about it overseas. During Blockchain Week in New York, a lot of people were talking about what the ASX is doing. Because they’re getting a bit of world attention, with other stock markets trying to see the impact. It’s being treated like a bit of a dummy case for the rest of the world. Fingers crossed, it all goes well. But yeah.
Faraz Maghami: The only thing I would add to that, I can’t really address your question. But the only thing I would add to that is, time and again we’ve passed the torch on, from one centralized entity to another. From MySpace to Facebook to I don’t know, Google+ or whatever else, whatever the chain of events were. What the decentralized arrangement, and I keep calling it that, because blockchain, as we’ve already said, the name can be misleading. Crypto is definitely misleading, but the decentralized arrangements simply takes out the old guard and ASX is an old guard. What they’re doing, they’re trying to protect the business. The business model, I should say. Being a trusted middleman, they are realizing that very quickly, someone much smarter than them will come up with a trading platform which requires no CEO that gets a couple of million dollars a year, no middle management or otherwise. That’s why ASXs, Commbanks, HSBCs of the world are investing in a decentralized system, but it’s still centralized because there are a bunch of people, a company that’s going to run it, continue to run it, I should say.
Audience 1: Could you please explain the difference between decentralized and distributed networks and why you would use one over the other? That’s for the kids, by the way.
Rian Finnegan: Can I even remember? I could draw it, I think decentralized, there’re many connections between lots of nodes and… Yeah, I can’t honestly, off the top of my head. But you’re right, there is one.
Lambros Photios: I think when we talk about, you may correct me here, it is one of those ones, that just no one really talks to you much about. I’ve never heard it asked. People generally when they refer to decentralize, refer to the nature of the network and the way that the network is set up. When people talk about distributed, they’re more talking about the data. Which I know it just seems really strange, because blockchain is a data source and naturally think they’re one and the same thing. When people talk about decentralized networks, so they’re talking about the fact that you could have multiple nodes, connected to a network that each contribute to the compute power of the network. Each mining or processing transactions or making sure those rules that I spoke about before upheld, whereas a distributed ledger is more referring to the fact that the data is distributed amongst that whole network.
Audience 3: [INAUDIBLE 00:37:36]
Faraz Maghami: Yeah, in simple terms, decentralized means there is no core management, if I can put it in lay terms. I always try to put it in lay terms, because when I’m sitting down with the minister who I won’t name, he’s got no idea what it is. He’s very fair about it, is on TV saying, “I don’t understand what it actually really means.” Decentralized in laymans speak is, there is no core management and distributed, as already been said, there are copies of the same ledger. We all know what a ledger is? No, a ledger is a bunch of entries as to who owns what and how much. Basically a set of data. That’s a very simple fintech answer to it, but a distributed ledger is number of copies on multiple machines around the world that if I want to commit fraud and change one on this machine, the rest of it will pick me up and say, “Well, hang on a second Faraz. You are doing something naughty.”
Audience 4: Just over here. In terms of payments, crypto payments, how do governments in future keep control over anti-money laundering and some of those hindrances, to keep control?
Faraz Maghami: In simple terms, I guess the best person to answer it would Johnny from Lehman Walsh Lawyers. But can I say this, AML, anti-money laundering and the anti-terrorism financing provisions around the world, are built for a particular purpose. What they were not built for or designed for or a written for, and this is a very lawyerly answer, was to stop the emancipation or access to finance. The difficulty is, most people, politicians especially, misunderstand this concept of a distributed ledger and, or Bitcoin, let’s just call it Bitcoin because everybody says Bitcoin. Bitcoin is not really anonymous. The point is you can still track who owned that portion or that whole point and passed it onto who. All you need to do is go in the ledger, and there are companies who are doing it. But how do we get around it? Is by regulation. Regulating how an exchange… The way it works for people who don’t know, there are exchanges, you sign up to an exchange. You put in your details, driver’s license number, your bank record, you link it up as long as your bank records in the same name as your registration and then exchange. You can put cash in, fiat currency and buy a particular coin and there are thousands of exchanges around the world which you can… For example, if you buy Bitcoin, you use Bitcoin to buy other coins, other tokens. The only way governments can start preventing people from doing it, is through the regulation. But the problem is regulation is a choke hold and that’s the difficulty with the current AML and the anti-terrorism financing legislation. Which are designed to do great things and to protect all of us. They are crucial, but they don’t a dovetail nicely with the current technologies that we’re talking about. That’s the short answer. The long answer is a three hour meeting, that I’ve had with various people.
Hind El Aoufi: But everyone is hungry.
Moderator: Yes. Thank you guys. Thanks.