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SMC3: Blockchain Panelists Talk Current Use Cases, Regulation, And Crypto

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SMC3: Blockchain Panelists Talk Current Use Cases, Regulation, And Crypto

FreightWaves continues its coverage of SMC3's Connections 2018 conference at The Greenbrier in West Virginia. On Monday afternoon, FreightWaves CEO and BiTA Managing Director Craig Fuller moderated the panel "The Practical Guide to Blockchain"; participants included Brian Glick, the CEO of chain.io, Austin Mills, the chair of the blockchain and cryptocurrency practice group at Morris, Manning, & Martin, and Stephen Rogers, who runs blockchain projects at IBM Supply Chain. 

Fuller opened the conversation with a brief ‘blockchain 101' introduction: "We like to describe blockchain as the DNA of data—it's very difficult to alter or fake, there's a long lineage that can't be changed, new blocks (children) retain a link to history, many copies make information resilient to attacks on single cells, and it contains built-in-code that self-executes," Fuller said. Fuller cast blockchain as the next step in a long evolution of how economies works. "Conflicts used to be won by the biggest tribe, then we had agreements enforced by institutions, but now we think that contracts will be executed by the technology itself.," said Fuller.

Then Stephen Rogers from IBM (NYSE: IBM) talked about what he's learned from doing pilot projects with partners like Maersk and IBM. "The underlying technology of the internet doesn't matter to you, the user. In the near future, blockchain is going to be the same way—just another technological tool in your arsenal… It's just a digital record of transactions about exchanging assets. It saves time (transaction time from days to near instantaneous), removes cost (overheads and cost intermediaries), reduces risk (tampering, fraud, and cyber crime), and increases trust (through shared processes and record-keeping)," said Rogers.

One thing that Rogers was surprised to learn about international logistics from IBM's project with Maersk was the importance of uniform data formats. Rogers said that unlike airports, "there is no universal code for each port." Rogers also commented that "the Internet of Things and blockchain is a marriage made in heaven." 

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Rogers went on to speak about the advantages of permissioned networks with a smaller number of nodes: "If you raise the threshold of who's allowed to participate in the network, you can lower the threshold of your consensus protocol and increase the network's throughput." He stressed that "a private, permissioned blockchain still needs governance and operational oversight. Simply because it is distributed and decentralized does not mean it is self-managing. Governance responsibilities include things like adding an account or organization to the network, defining and managing permission levels, deploying and upgrading smart contracts, adding nodes, managing upgrades to the system, revoking access, etc."

Brian Glick drew on his expertise to paint a panorama of current and future use cases for blockchain: "There are verification use cases that are already live, but these are very small-scale—things like Vault by chain.io, Learning Machine, and Peir—and they're just capturing a moment in time. Then there are collaboration use cases being done by IBM and Maersk, Fr8Network, and Slync. We're getting there—it's still testing, haven't hit the mainstream yet… this is the next thing. Those things are gonna get solved relatively soon. Live contract execution is still probably ten years out. Then there's blockwashing: when a company gets up on a stage and screams blockchain at you for 20 minutes, and then they say give me a bunch of money. To me this is the number one use case for blockchain at the moment—hopefully the others catch up soon," Glick joked. 

Austin Mills focused on two regulatory questions: the question of whether electronic smart contracts are enforceable, and the issue of data security and privacy. The short answer to the first question is yes. "The laws are already in place and have been for something like 17 years," Mills said. "If it's signed electronically and the parties know what they're agreeing to, it's a contract, whether it's in an email or on the blockchain." Various states' legislation intending to allow the enforceability of smart contracts and open up business to blockchain might even cloud the issue by defining contracts in an awkward way, and sometimes erecting unintentional limits.

"The takeaway is that electronic contracting is valid, whether it's email or on the blockchain. that's not a problem, the only issue is technological," Mills concluded. Then the attorney turned to the thornier issue of data security and privacy, and the ‘right to be forgotten' recently enshrined in European law. What if a company inadvertently records data it isn't supposed to be recording, or keeps it longer than it's supposed to? Mills framed the issue in a succinct rhetorical question: "If your customer says ‘take my data down', can you?" In other words, the immutability of a blockchain-based ledger could actually be a liability for businesses.

Fuller let the conversation run its own course, including into some tangentially related byways—he asked the panel their opinions on cryptocurrencies. Mills was the most bullish, saying that he thought bitcoin would be the dominant global currency for electronic transactions within ten years. Rogers said that he didn't think floated cryptocurrencies would be as important to enterprise applications, but acknowledged that tokenized solutions could offer speedier exchanges in international contexts.

Lastly, Fuller asked, "If blockchain becomes ubiquitous, who are going to be the winners and losers?" Brian Glick might have had the most pragmatic answer: "Net, this is a technology that's going to lift all boats; it's going to remove friction and make things more efficient. I don't subscribe to the idea that it's gonna change everything and in ten years up's gonna be down. But first movers are not always winners. You don't want to be the last mover or the stick in the mud who lets down your clients. People in the middle are gonna be okay; people on the front end might win a very big bet, and people in the back are going to lose out."

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