The current state of Blockchain

John Davies, CTO and co-founder of Velo Payments and Conor Svensson, author of the web3j library to interact with the Ethereum blockchain, give their insight into the current status of the blockchain.

InfoQ: Please introduce yourself and explain your connection to the space.

Davies: Hi, I'm John Davies, CTO and co-founder of Velo Payments. We are a startup but a little different as we have a lot of experience, that is we are veterans. We make cross-border B2B and B2C payments (not salaries) for Fortune 100 companies, mostly in the gig-economy. For example, app programmers, car and truck drivers, hotel supply chain, etc. One of my co-founders was the president of Visa, where I was the chief architect and where I started watching BitCoin in 2009.

In the summer of that year I was personally 0.25% of the transactions in the whole world in a single day – there were only 400 that day and I was one of them. I owned more than $ 0.5 million at the maximum value, but I sold a lot in 2013 and the rest just before the peak in December 2017. I did a lot of blockchain talks over the years and put them into production.

I am definitely a skeptical blockchain, I love the idea of ​​BitCoin but it will never work, I think the crypto currencies are a total waste of time (and energy) and a Ponzi scheme at best. Yes, you can make money but also Madoff. The most intelligent cryptic societies quickly left and invested in legal currency.

A blockchain is a database people, has all the same problems and problems as a distributed database (for example, the CAP theorem) but apparently, for some reason, people now think it's the solution to every problem. Like any tool, used in the right place, it solves real problems, there are problems out there where a blockchain fits and fits well.

Svensson: I am Conor Svensson, author of web3j, the Java library for the integration with Ethereum, founder of blk.io (https://blk.io), a company blockchain technology company, and the chair for the technical standards of # 39; Enterprise Ethereum Alliance.

InfoQ: How would you define the current state of the distributed ledger ecosystem? Is, as some have suggested, "the end of the beginning", or is it something else?

Davies: Two points here … Firstly, a blockchain does not have to be distributed to be a blockchain, it can also be centralized or decentralized. A lot of people understand that, but there are still some tough guys who think it's not a blockchain unless it's banned and distributed, it's just wrong.

The second point is that blockchains are not all master books, I do not like this hypothesis that the word blockchain can be replaced by the word ledger. If you're filing legal documents in a blockchain, such as the land registry, there's no ledger, if you actually want a ledger, then the relational databases have worked well for decades.

So "end of the beginning"? No, "is something else"? Yes, it's another tool like a graphical database or NoSQL.

Svensson: I think it's right. The initial advertising campaign on the blockchain has been resolved, and we are witnessing the emergence of some platforms that have a significant mindshare for developers, with a number of companies both consolidated and new on them.

InfoQ: what are the real cases of use of the books distributed master? Are there specific markets and sectors that can make a particularly positive use of them? How widely are the use cases?

Davies: I struggle to find a justifiable use case for pure DLT outside of BitCoin and the other 6,000 CryptoCurrencies, this use case has been severely tested, DLT is a "solution" to research of problems. Any organization with an existing infrastructure will have to replace and replace the entire system to replace an existing system of record or source of gold with a DLT. If your bank says you left € 100 in your account and your DLT tells you that you have £ 120, you might believe your DLT but good luck trying to spend the last £ 20.

SvenssonSeparate ICOs, resource tokenization and utility tokens have certainly gained much traction in public blockchain networks. These are certainly good use cases for technology, however, at the moment there are too many different projects providing their own flavor of these technologies, and a lack of large-scale adoption to say which one will really succeed.

In authorized public space, the tokenisation of resources is very popular, along with identity initiatives due to the decentralized nature of blockchains that allows individuals to have greater control over identity, ie not rely on advanced technology to exploit data on of them.

In terms of general use cases, any business process that has data that spans multiple boundaries of the organization, resulting in duplication of data and therefore reconciliations in progress, may potentially benefit from the DLT.

InfoQ: What sense do you have of real projects that use distributed master books and the ideas behind them? How many current production systems are there out there based on distributed registers?

Davies: We are using a blockchain on live payments today and we have been in a while for a while, we do not use blockchain as a ledger, we use it as a control trail and secure data store. Initially we have solved this problem with a database and, to be honest, we can implement almost everything we have in an RDBMS, but investors and customers like the technology with blockchain in them we have one too and everyone is happy.

The immutability in a blockchain (at least the oldest blocks) makes the replication / history of changes more transparent than a traditional RDBMS (where you should perform additional work to ensure that no one has subtly changed a historical transaction). We have designed our "VeloChain" from scratch, built in C for small impressions and performance (six digits per second). Safety is top priority when we work in the international banking sector, geo-fenced (which you can not do with a DLT) and options for post-quantum security.

Everything on our system from AML to KYC, penalties and SWIFT messages are recorded and registered on our blockchain. Our customers (payer, banks and beneficiaries or sellers, banks and buyers if you prefer) can add metadata, e.g. invoices, declarations, boarding documents on our blockchain and proof that processes, payments, regulatory and compliance requirements have been met.

We can guarantee any metadata (field level) with precise and controlled access control, which is also defined in the blockchain itself. The encrypted data can only be unlocked (decrypted) by the user's private key, even if we can not see part of the content. We have an encrypted filing of records, so we are also GDPR compliant.

It's not a sales pitch because we do not sell it, we're not a blockchain company, it's part of our platform. We will open it anyway just to disturb the hindrances.

Svensson: There are projects in production that use distributed registers, but I think it is important to differentiate those that are running in a production environment by replicating data from existing systems and those that are directly responsible for supporting income generating activities of the business.

In the enterprise, there is certainly a lack of this – most blockchain projects that go beyond the proof of concept stage in production are not yet supporting business-critical processes.

This is not surprising if one considers the challenges of coordinating infrastructure changes that span multiple organizations, each of which has its own technical and safety diligence processes that must be respected.

There is also the question of general liability in case of errors or bugs. If you have a consortium or a group of organizations participating in the same DLT on a scale, who is responsible? I think you will need regulatory or industry support under way with many of these projects, otherwise the stakes may be too high in case of significant bankruptcies for an organization to be hired.

InfoQ: Thinking specifically about the distinction between public systems (such as Ethereum or Bitcoin) vs authorized private systems, what do you think is the balance between them? Do projects prefer to use public or private registers? What is driving this distinction, if it exists?

Davies: I think I answered that in the last answer, I think public blockchains are a waste of time. If you have something you want to send, put it on Twitter or Facebook, if it is a secret, the last thing you want to do is to distribute it publicly, encrypted or not. However if you want another cryptocurrency, then a public blockchain is the technology for you!

Svensson: Established companies that work with DLT tend to use authorized private registries. This is to address a number of challenges that exist with work with public accounting currently:

• Performance – public records are very slow (a few dozen transactions per second), moreover you are at the mercy of what the other participants in the network do: the crypts that slow down the Ethereum network are an example
• permissioning – companies need fine-grained authorizations for the user, the business unit and the organizational level, these controls do not exist on public networks
• private life – transactions on the network are in full view of all participants. Companies must be able to maintain private data, especially in light of regulations such as GDPR
• Safe key management – the purpose of transactions is the rule with public records, this provides little protection to organizations in the event that the keys associated with public blockchains are compromised

Although over time public networks will be able to address many of these elements, it is now logical that many companies use private ledger books. In some ways it is similar to the Internet or intranet topic.

InfoQ: some technologies represent a minor improvement in the state of computer science and some represent a real change in the sea. For example, we could characterize the elaboration of complex events (CEP) as an example of the first and the arrival of Hadoop announcing the processing of Big Data for general purposes as an example of this last issue. . Thinking about the technology in these terms, where do you see the registers distributed as sitting on that spectrum? Can you indicate any indicators on the market that support your position?

Davies: CEP and BigData are recent "technologies" and for those who know me you'll also know that I'm not a BigData fan. For me it's what happens when you take normal data and store it inefficiently, it gets big. CEP was OK, just another name for SOA, SCA, ECA etc. Every seller would have sold the same idea with a different name.

Blockchains are databases and usually slow. They all have the same problems and database problems, we solve some problems but 95% of today's "blockchain problems" can be solved equally well with a standard database, Oracle, Postgres, Neo4J, but probably not MongoDB.

That said, just like any other niche database technology that 5% of opportunities in which the blockchain is the perfect solution is worth billions and this is the niche I think I've found for our systems.

Svensson: I see distributed mixed books that represent a real change of the sea, especially when looking at what is happening with public blockchains, such as Ethereum. The amount of innovation that is occurring here is phenomenal. Web 3.0, as reported, radically changes the incentive structure for web actors.

A case in point is the adoption of peer-to-peer technologies. Although it is widely used for certain use cases (file sharing), participants have the opportunity to run peers on the network. Decentralized networks like Ethereum, IPFS and the multitude of services under construction above solve this problem. By providing value in the form of cryptocurrencies or utility tokens, you are able to provide an incentive model for participants who provide value to the network to consumers, which is a completely new paradigm on the web.

It will take time for this change to reach the average person – technology is still too complex to work with the average person. However, we are still at the dawn of this technology and there is still an infinity of infrastructure under construction that push us closer to this new, more equitably fairer model with more control in the hands of many rather than few.

In corporate environments, I believe we will find ourselves with a number of basic DLT platforms, just as we now have databases. However, there will be governance models that support them that optimize the implementation and management for the consortia or organizations they support. Some of these will be connected to the public blockchain networks to support the transfer of resources or other types of value between different networks, within this blockchain network.

Information on panelists

John Davies, CTO and co-founder of Velo Payments, has over 30 years in the IT industry from hardware C, C ++, Java to the corporate architecture and membership of the board of directors. He has lived all over the world from the Far East, although Europe is in the United States. I am currently working on a stealth product in a stealth company, more when we jump above the radar. His experience is large-scale and high-performance architectures, from business to global. He managed FX trading systems at Paribas, directing global architecture at BNP Paribas, global architecture manager at JP Morgan Chase and chief architect of Visa & # 39; s V.me (now Visa checkout) in innovation team. John is a regular speaker at Java and banking conferences worldwide, QCon, JavaOne, Devoxx, JAX etc.

Conor Svensson he is the author of web3j, the Java library for working with the Ethereum blockchain. He is also the founder of blk.io, which provides a corporate blockchain platform based on Ethereum.