Event Recording

William Mougayar - State of Business in Blockchains

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Where we are, and where we are going in blockchain implementations and strategies. What are the implications for various industry sectors and stage of enterprise adoption? How to think about new blockchain-based business models?

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Why we, why we're preparing technology here? You are with an, a venture capitalist, right?
Yes, I am. And I'm also an advisor to a number of companies.
Okay. And let's see whether it works. Yep.
Okay. Excellent. Thank you very much. Perfect. Thanks for inviting me. And I'm very happy to be here coming from Toronto Canada. So to understand the future of the blockchain, we need to reflect on the past of the web for the last 20 years. So if you think about what the web has given us, there hasn't been an industry that was not touched by it. Everything from e-commerce to publishing supply chains. E-services e-business. But to really think about the essence of the web, it was mostly about moving information around from one place to another, but there has been one area that has been very vexing to all of us that was not touched by the web in the same native way as we have websites being part of the fabric of the web. So what do you think is that area that has not really been touched by the web at the core, that area is money. The
Money aspect has not been part of the web in a very native way. So you might be thinking, well, what are you talking about, William? Yes, we have banks. We can move money around by using our bank accounts. But if you think about it, yes, we have banks. We have financial intermediaries, we have financial institutions, but every time you want to move money, we are really doing this via the banks. We are not doing it from a peer to peer manner. So the banks really have led us to believe that we need them, that we need their trust in order to move our money. And they are the representative of that trust. But in reality, what are they doing? They are updating their databases between each other. So what is the one area that the blockchain is really disrupting as a whole, from a technology perspective, this is a technology conference, the database, the database, really what the blockchain is disrupting all of the world's applications today, run on databases in the future.
Many of them will include a blockchain component. So what is the blockchain at the core? At the core, it is a technology. Every time I go places I ask people, have you heard of the blockchain? And most of the times the answer is no, but then I say, have you heard of Bitcoin? And they say, yes. Well I say, well, the blockchain is the technology behind Bitcoin, but Bitcoin has a higher awareness level. So the blockchain is really about peer to peer, transmission of electronic value. So money is a form of value, but it is not just about money. It goes beyond money. And the key point here is doing it without an intermediary. So the innovation of the blockchain is for the first time for components have come together. One of them being cryptography, cryptography science, it's very important for the blockchain and it does multiple roles.
One of them is for security of the storage. When something is cryptographically stored, it is a lot more difficult to hack it and to get at it because the level of security is much, much higher than what we are used to today. There's a new world that is coming. Cryptography is also used to secure transactions between each other to validate transactions and cryptography is used as well and will be used to secure our own identities. It's an emerging area. Secondly, game theory, the basis of the blockchain is really about game theory. And it's really about a set of economic incentives that cannot be disturbed will not be disturbed because if you start to disturb them, you will lose more than you will gain. So nobody disturbs the system and there's a number of checks and balances and everything stays in an order that looks like a little bit of a chaos from the outside, but everything is checking on the internal basis. Thirdly, it's really about a peer-to-peer infrastructure. And yes, we all know about cloud computing, which is a decentralized infrastructure, but all of these blockchains are really emerging now with a new set of networks, a new set of computers that are emerging blockchain Bitcoin, for example, runs on about 6,000 computers. The second largest blockchain is called Ethereum. Ethereum runs on about 12,000 nodes. This is new infrastructure. This is peer to peer, and it is not just about the computers being part of the infrastructure. The users are now the infrastructure.
And fourth, fourth, the main theme of the blockchain is about decentralization. That is the main theme. Most of the applications that we know about today are centralized applications. Although the web is, is decentralized. We, we have not been very true to its origins. Tim burners, Lee is now not very happy with the way the web has gone back to centralization. So we gotta bring back the web to its roots and go back to decentralization, which means that everything is out there. Interspersed Facebook is a very centralized application for every flavor of centralized application that you know, today there will be another flavor of decentralized application. It brings also about the topic of governance. And there is a security aspect. Again, when everything is decentralized, then getting it to go down is gonna be much more difficult. If you have 6,000 computers working to back each other up, even if 10 of them go down, even if a thousand of them go down, even if 3000 of them go down, the rest of them will continue to work and will continue to assure the validity of all the transactions.
So lemme talk to you about seven areas where the blockchain is disrupting from a business perspective. First one is being the area of cryptocurrency. At the end of the day, Bitcoin is the most known application of the blockchain and it is a cryptocurrency. So cryptocurrencies are going to be the new money. It is not just about Bitcoin, but it is. Think about it as a crypto asset. It's an asset. It is not just about money. There will be many different cryptocurrencies. As of today, there are probably eight to 900 cryptocurrencies. I just took the screenshot an hour ago. This is where Bitcoin is today. $1,800. There is a lot of movement today. All of these blockchains are worth about $50 billion today. And you might think, well, is it a big number or is it a small number? It's a relative question. It's not a big number in the grand scheme of what is going on in the financial markets, but it's a big number in terms of where it can go.
I remember the days when the web had 10 or 15 million users, I remember the day when we celebrated 1 million in transactions on the web and look where we are today. Everything starts small until it gets to be big. So if you're interested in the world of cryptocurrencies, go to a website called coin market cap.com and you will see really what is going on. Second aspect is the distributor leisure technology. And that is the subset of the blockchain. It is not the umbrella theme. And if you're in the big enterprise, you may hear the word DLT, civil leisure technology a little bit more than blockchain. Why? Because when big companies started to get used to what's going on with the blockchain and aware of it, they didn't like everything. They didn't like the fact that Bitcoin was a public network. Banks are not allowed to run their money on public networks.
It has to be a private network or network that they own part of or know a lot about. So they totally dismissed Bitcoin. And a lot of the blockchain infrastructure is public. So in typical fashion companies say, well, let's pick and choose. We're gonna keep what we like. We're gonna reject what we don't like and what the big companies liked in the blockchain is the fact that now we can have a shared ledger that is distributed, that is known to each to everybody. So everybody's on the same page. So the analogy is using Google docs versus Microsoft word. If you use Microsoft word and you wanna share a document that needs to be updated by somebody else, what do you do while the other person is making the changes? You can't do anything. You have to wait and you don't see the changes. This is how the world of databases work.
You have to wait until the other database gives you an acknowledgement that the change was made. Whereas if you used docs in the cloud, every time there is a change, the other person is right aware of it at the same time. And that is the concept of the distributed ledgers. So what this means now, a lot of banks are running lots of projects and, and pilots where they are doing bilateral and multilateral transactions with each other that clear and get settled within seconds without having custodians in the middle or intermediaries in the middle banks and big companies can get busy for the next 10 years doing DLT projects, moving some parts of the applications from databases to the blockchain technology. Third area is decentralized protocols. All kinds of protocols are getting to be created. Now on top of the internet, on top of blockchain technology and it results in applications like decentralized peer-to-peer commerce.
One example is open bizarre, which is working on a eCommerce system. Think of it like eBay without eBay. Think about eCommerce without transaction fees, without listing fees, without credit card fees. That is beginning to happen today. We will have decentralized cloud computing, decentralized file storage. We will have exchanging assets in a decentralized manner. All of these are happening. They are very small today, but they are currently going on. Proving something. One of the characteristics of blockchain is that once you write something on it, it is totally immutable. You cannot it anymore. It's like a ledger. You don't erase the line above it. When you make a new entry, you just keep adding another entry one after the other. So you have the whole history intact. And that is a very important feature of the blockchain. This means it could be an excellent record keeping technology today, when we want information, what do we do?
We go to Google for everything in the future. We're going to go to blockchain services to prove that this person is who they say they are, that this person owns this asset. Think about land registry. Think about verifying everything. Last year, I wrote an article called the blockchain is a new Google. And the next day I got an email from Google and they asked me to come and explain what I was talking about. So it may not be one Google. It might be many different companies that will allow you to go and prove something and check something. And if you're a big company, you have to think about what services you want to now allow others to get, to be able to check on smart contracts. Another buzzword of the blockchain. It's really the language of the, of the blockchains. It's really about business logic. With money, business logic that can manipulate value at the native level. Business. Logic has not business logic. Business programming. Logic has not, is not something new. It's been around for a long time, but business logic with money and value, changing hands very quickly. Peer-to-peer that is new. And that is really what the blockchain is, is giving us. There are a number of languages today that are blockchain specific, but here's the problem. How many different blockchain developers you think we have today around the world?
About 30,000. Okay. To give you an comparison, how many Java developers do we have in the world? I'm using Java because Java is the language of the web. The reason why the web prospered in 95 and afterwards, because Java became that standard language where you write the application once and it ran anywhere on the web. We have 10 million Java developers in the world, and we have 30,000 blockchain developers. It tells you where we are, where we need to be. So if you have people in your departments start to learn the new blockchain languages, token based models. Now these cryptocurrencies are not just about money. They represent a, a function. They can represent work that can represent attention in the world of the blockchain and the world of decentralization. Maybe Facebook, if it were to exist in that world would compensate us for our attention. If you think about it, the average person spends about an hour per day on Facebook.
What are we giving them? We give them our attention and they go and sell advertising on it. What do they give us back? Nothing. But there are new companies now that are having publishing services that are decentralized. Where if you have attention, if you give attention, or if you get attention on your, on your content, you will earn tokens. You will earn cryptocurrency. That is real dollars, real euros, real money that you can then exchange, check out a company called steam it.com. For example, the tokens are coming. Another area that is being disrupted is venture capital with a phenomena called ICO, as opposed to initial price offering. So a lot of these companies now can raise their own money. This is how Ethereum was started. This is how Bitcoin was started. The money was created and it starts to get distributed and there's value. There's an ecosystem around it.
I'm organizing a summit in New York in three weeks called the token summit, which is going to talk about specifically the token based models. I'm not too excited about new tokens, but I get excited when I hear about new business models that are enabled by tokens, big difference, five themes to close on about the blockchain. What is going on right now has been mostly about the core development. So it has been really a technical story. The blockchain, a lot of the activity is very technical. It's really at the infrastructure levels. It's about the nuts and bolts of it, but going into the future, we're gonna get more into the app development and the story's gonna be more about applications. This is how the web started. First. We had to get the infrastructure, the standards, and then the applications came. And when you hear about it, make a distinction between protocols versus the blockchain versus the apps I had.
This slide that I've been using for 20 years, infrastructure, middleware applications, it has not changed. It's always gonna be the same. Developers, want middleware to run on a good infrastructure and that's really what's going on. But the names are changing. Standards are very important in the era of technology, but there are very few standards in the blockchain area. One such standards is called ERC 20. It's a, it's a money. It's a standard for issuing tokens for issuing cryptocurrency. And the reason why there are so many ICOs and so many initial cryptocurrency offerings, because the ERC 20 exists. So when you put standards in the marketplace, adoption, skyrockets, if you were to dumb it down, the blockchain is a series of API calls. It's a series of application programming interfaces calls you call to verify something. You do a settlement, you verify an identity. Is this the right name?
Is this the right logic regulation versus innovation? I hear a lot about regulators being a little bit worried, but you cannot really regulate something that is new. That is just coming up. It's a baby right now. The blockchain let's wait until it grows to be an adult. And then we can regulate the world was not regulated at the beginning and think about whether you are doing something to support your existing businesses or whether you are creating new businesses. Most big companies are not going to be jumping on disrupting their own businesses. They will first start to improve their own. Going forward. The database is gonna be disrupted. A new type of virtual environment is going to emerge. Remember the tokens as a killer app, smart contracts as the new language and Googling 2.0 will exist. We will enter the new blockchain economy in the same way that we entered the web economy 20 years ago. And I predict that the blockchain economy is going to be bigger than the web economy in the next years ahead. Thank you very much.
Congratulations. Well at the second, perfect timing. Two questions. There's a number of questions we can see them here and thank you for actually raising the size of the, of the font. I think the first tool we should have time to discuss him. And the second and the third I identical. So maybe first question about the energy consumption. Isn't isn't that isn't blockchain, especially given that proof of work step, which is indeed somewhat hard to achieve consuming a lot of energy and being not being economically sustain.
That's true. The biggest energy consumption is, is from Bitcoin itself. The Bitcoin infrastructure is based on proof of work, which is really about proving mathematical equations, but it requires a lot of expensive computers that heat up a lot. Correct. But there are new technologies that are coming on the horizon called proof of stake. So proof of stake might be replacing proof of work. I'm not saying it's gonna replace it for Bitcoin, but for Ethereum, for example, that is the way to go.
Okay. And the, the upper question, what about privacy? Anything is public on blockchain. It's
Not really true, not everything is public. So blockchains have, there's a level of anonymity that exists there, and there is a level of privacy that exists there. So not everything is public. That is not correct. The other thing is there are public blockchains and there are private blockchains in the similar that are intranets and public internet. And there is a lot of activity today in private blockchains, and that is totally private to the stakeholders that are involved in it.
Okay. Thank you very much again, William. Thank you so much. The next speaker is ping from ping.

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