Introduction The Decentralized Finance (DeFi) Revolution is taking over traditional finance (TradFi) and centralized exchanges (CEX), with billions in...
Brought by The Forum Blockchain 2 on November 9, 2018, 5 CTOs including David Zhang, CTO of Stably, Jonathan Smith, CTO of Civic, Paul Sonier, CTO of DragonChain, Rui Maximo, former CTO of StormX, LifeID, Concreit, and Matthew Blancarte, CTO and Co-Founder of CryptoSlate discussed the current and the foreseeable future of blockchain and tokens in technology stacks.
Watch the video and learn more about the interesting facets of blockchain technology from the exclusive CTO panel on Blockchain and Tokens in Your Technology Stack.
(Source: TF Labs)
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Transcript of video below, there may be some grammatical errors.
Intro: We have five amazing technologists. All these gentlemen up here are our CTOs, Chief Technical officers of their prospective companies. And I’m really excited for them to talk about how you think about blockchain when you’re actually building a technology stack from the mind of the… of the developer of the engineer. So with that I’d like to introduce Matt get back on stage.
MATTHEW BLANCARTE: Hello everyone I’m Matt Blancart. I’m the Co-founder and CTO of Cryptoslate. We’re a media and data site based out of Southeast Union here in Seattle. I’m really excited to host this panel today. I think should be pretty interesting discussion and we’ll hopefully find out in detail kind of how the technology stacks at your companies work which I think is pretty often an opaque thing… you know, when you’re just looking at things from the outside. So yeah if we just go down the line here and introduce yourselves.
RUI MAXIMO: All right Rui Maximo, I won’t rehash what I said previously. I’ll just say a little bit about… what about my background. So I’ve been in doing smart contracts, developing smart contracts for the past two… two-and-a-half years now, started learning about Satoshi when I was at Liberty. And then I worked at StormX and then LifeID and now Concreit.
PAUL SONIER: Paul Sonier, Chief Technology Officer of DragonChain, so I’ve been in software professional for 20-plus years, been thinking about blockchain for the last five to six years, really actively engaged with it for about the last year… year and a half or so, yeah.
DAVID ZHANG: I’m David, CTO at Stably. I’m a relative newcomer into the blockchain space I guess. I’ve been developing smart contracts for almost two years now. I come from a traditional software background plus traditional finance, so that’s where I come from.
JONATHAN SMITH: Jonathan Smith, CTO and Co-founder of Civic, so I have a quite a solid background when it comes to technology. A lot of my career was spent in investment banks, building the analytics and risk systems… for those of you who understand, credit derivatives and CDOs and CDO squares during the financial crisis. I built a lot of those so that kind of gives me a… I have quite a big perspective on the big banking institutions how old-school tech works etc and then coming into blockchain tech less of a hobby and more professionally in 2015… you know, the startup world and… you know, trying to bridge the gap between how you build real-world software and software for institutions. It’s… it’s been a very interesting journey.
MATTHEW BLANCARTE: Cool right and so Rui, you were talking about on the last panel there’s a number of layers to what makes up a technology stack that’s front end there’s a back end, there’s web services, the smart contract themselves and everyone in this case here. Yeah if we just talk about… maybe start with you, talk about your technology stack at Concreit… and you know, really from top to bottom what makes up Concreit?
RUI MAXIMO: Yeah sure, so we’re actually… so we have obviously smart contracts, and we are creating security tokens. They’re gonna be based on ERC 20 tokens, but we’ll have an additional layer of verification there, so anytime there’s a transfer that happens through the transfer function the trans… or the transfer from function will do some validation there whether the person that is buying the new… the person buy is an accredited investor, for example, and whether the seller doesn’t have their tokens are not locked up for example, or whether they’re allowed to sell to a foreign investor or if the number of total investors doesn’t exceed the allow… the allowed allocation, so that’s… that’s a piece there we’re… we’re. I’ve been studying a lot of different protocols are out there whether it’s Harbor or Open finance Polymath and so. And there’s a trend that people want to have something that is not specific to a particular company, so there’s ERC 1400 1404 1462 that I’ve all studied. And so that’s still there’s no clear winner in that space or no clear consensus like ERC 20 or ERC 777 is not as well widely adopted ERC 20
MATTHEW BLANCARTE: And when you say ERC, just specifies that the Ethereum request for comment and the number just specifies a particular interface functions that need to be implemented on that standard correct?
RUI MAXIMO: That’s correct, yeah sorry. So I just assumed everybody had that, so yeah it’s just a standard of the interface in which you can call those functions in there and so we’re building our own which we’ll call CST20 so Concreit Standard Tokens based off of the ERC20. And then the rest of our stack is going to be web base so it’s gonna be on… on the cloud and… and then we’ll have a mobile. We’ll have a web interface as well as a mobile interface there. But my point is even though we have the technology stack, what we’re trying to do is we’re trying to put the blockchain in the background, so users don’t have to worry about wallets. They don’t have to understand any of that complexity that comes along… along with it. So for them that… that perspective is that they just look at the properties that they can invest in and then they just click and then they… they get those. So that’s the… that’s the premises trying to make it accessible to the everyday user or investor, I should say, without having to know anything particularly about blockchain.
MATTHEW BLANCARTE: And Paul, maybe you can tell us about DragonChain.
PAUL SONIER: Sure yeah so at Dragon Shane we’re focused on providing a business-to-business block training as a service solution. And so in much the same way, they’re always talking about their platform sort of keeping the… the blockchain not as we’re putting up up front in terms of requiring or going to have a heavy knowledge of it. In the same way, we see a lot of enterprises that they’re clearly a lot of ways by which they could benefit by using blockchain but they don’t really want to build out the internal keys on blockchain. They don’t want to build their own blockchain etc and so our technology stack largely allows for them to not need to worry about that. So we provide restful interfaces for enterprises to be able to interact with their private blockchains. And we’re plait a path for the transaction confirmations or of the operations that they’re doing on their private blockchains to eventually migrate up to public blockchain. So we’re taking the hybrid model and presenting it in a way that’s going to be easy for large enterprises to integrate with their existing systems. So restful api is and things like that they can gain the benefit of a blockchain without needing to expend the frequently very large quantity of money that’s involved in getting up to speed with blockchain.
MATTHEW BLANCARTE: Oh and Jonathan, I know Civic is a pretty mature platform at this point and compared to a lot of projects, you guys have identity.com along with Civic itself. So maybe you can talk about that whole thing.
JONATHAN SMITH: So I think… you know, when we started, we adopted blockchain long before… I would say long before. But we adopt a blockchain relief as an attestation framework in other words a way to peg a piece of identity data anonymizers on the chain we used Bitcoin for that. So what we were doing is we were creating effectively small Bitcoin entries that represent facts about an individual in a completely anonymized way. And it’s really just a way for a third party to prove that the data that they’ve received is actually authentic and verified by a trusted party and so similar to the way when you do Facebook connected checks with Facebook, if everything’s okay, but of course you’re sharing then everything with Facebook. This is a way for you to replace Facebook with the blockchain and then you go and prove that then… you know, if they say this is their email, you can actually see, yes this entry proves that it is their email. So that’s effectively what we started with and the company started like that. What we evolved into them as we saw the need for a marketplace and that’s where our token comes into effect. And so that’s where identity.com is. It’s really a marketplace where anyone in the identity space can participate. And it allows… and what the token allows is really the transfer of services so it allows you to pay within that marketplace for identity services but it does a lot more than that in the sense that the smart contracts within that ecosystem control behaviors and how people will act. And we’re right at the beginning of what these token economies. And I don’t know if we will talk generally on token economies. Maybe not, but you know what a token economy is and the importance of token economies. They’re not just a way to raise money. There’s actually a bigger future for how you create these micro economies and govern them with smart contracts and why tokens are important to that. It is really really important to have them there for those purposes. And that’s what identity.com does and any company can participate in it as an open framework.
MATTHEW BLANCARTE: Very cool and then I guess that kind of leads me to the scalability question, the Ethereum at the moment where we have Casper coming up, sharding, these things that should theoretically improve the end scale capability of the tokens, in these token economies, so just open… open up to you guys, what… how are you guys feeling about the current scale of the network and how are you feeling about the future and some of these new protocols coming online?
JONATHAN SMITH: It sucks. It is really bad and I can tell you this from someone who’s running production code on these on Ethereum for real business transactions. And it is really bad and so what we’ve had to do is build around it, so make it an asynchronous system. We have to really worry about fees that’s… you know, a lot of what we do the micro transactions and your… you know, to prove an identity costs between let’s say $1 to do it, when sometimes you have to pay two dollars just to get the transaction through. It’s not practical and we’ve… we have built a lot of software around that. And I think that’s what people don’t realize when they build blockchain businesses. You… you’re actually building on top of it’s like trying to build Amazon when there’s only TCP/IP and no-one’s invented a web browser yet. And so you gotta build all that before you can actually have a product. And so that’s a lot of what happens today and it’s something to be mindful of, but you can get around it. We’ve gotten around it but the Ethereum needs to get stuff fixed, otherwise they’re all competitors on his heels.
RUI MAXIMO: So it’s interesting because Ethereum or these blockchains have short shortcomings. And we’re… we’re end up doing is we’re building around it. We’re building around these shortcomings and trying to take more of that workload off chain as opposed to on chain when some of it makes sense to put on chain. And so I think and this is something that’s interesting, I think we need to think about that and say maybe we need to instead of putting a bandaid on there like really rip it off like put as much as… you know, the… the transactions that make sense to put it on chain and really just see how well it scales or how poorly it scales which we know with cryptokitties for example, and then have the world… you know, show it to the whole world, and that will actually put precedents and say, okay we really got fix this. But right now, we’re just putting band-aids and we’re like trying to… trying to like… trying to off chained as much of those transactions. I think another problem just to slice it’s not necessary sidestep your question. But I think a bigger another problem that’s big is the on ramp off ramp into crypto. So it’s a big friction to go from your fiat into crypto and vice versa. And that’s a big problem right now that needs to be solved universally. I think because just about everybody who is going to be on the blockchain, it is transacting which with a currency and so that is a problem that everybody needs solved. And it’s still difficult, a lot of it has to do with regulations unfortunately.
JONATHAN SMITH: I don’t know if I agree that it’s the on ramp off ramps a problem. I think it’s utility that’s a problem, it’s user experience that a problem is actually having something to do with crypto, something useful that you can do with this stuff, that’s the biggest issue. To be honest, there is absolutely for the most part in no real world use cases for most crypto as we know today. And I think that’s a real big issue and user experience will fix a lot of that and people will want to get crypto if there’s actually something I can do with it, and then on-ramps make sense.
PAUL SONIER: But I think that also leads to a chicken-and-egg problem. I mean having something for people to do, brings them in but building applications you only want to build applications where the people there who are going to be using what you’re building something useful.
JONATHAN SMITH: Yes that’s the reality. I’m just… because it can be on crypto, it is on crypto.
PAUL SONIER: But it it sort of goes back to the nature of the original question of scaling which is yes, Ether is suck for scaling. It’s a short version. The long version involves more words. They’re unfit for a panel but the fact is any system as designed and built has upper limits, they’re frequently not visible, they’re not something that you perceive we happen to have seen them quickly in the case of Ethereum because of rapid growth. But that rapid growth is indicative of the growth of the industry in the space. And we should be thinking about the way we need to scale any solutions that we’re building as our industry grows rapidly. As an example, so IPv4 the Internet Protocol internet addresses, we’re limited when they were created to there being four billion Internet addresses. And back in the day, wow, that was a lot of computers who could have thought we ran out… I don’t know, 10 15 years ago, real bad, so any system that’s designed with finite fixed limits will run up against those limits. And as we look at more and more of our world moving into the crypto space, the blockchain space, etc, we need to be prepared for the scaling that comes with a massive influx of… you know, billions of people coming onto these platforms and doing many… many operations per day per second on these platforms. Is that easy? No it is not easy to design for that type of scale, but it’s something that we need to at least be thinking about at this point.
RUI MAXIMO: So just want to add there, so totally agree with the UX part that is definitely a big problem and something that we’re trying to solve at least in the commercial real estate space. So going back to my comment about working around the performance of Ethereum, for example what that ends up doing is that it creates a centralized solution right because now you’re having to go to a website in order to go and talk to a blockchain, well that defeats the whole purpose of decentralization, right? I mean I should be able to go to the blockchain and talk to any node and be able to get the information I’m looking for, not having to go to a specific website which is centralized, which is hackable, which is… you know, taking my information and now I’m back to… you know, equivalent of a Facebook for example.
MATTHEW BLANCARTE: Yeah I mean that’s almost I think that’s because things started with Bitcoin right or it’s everyone assumes that everything must be maximum decentralized, maximum trustless and so… you know, things like sharding and what not where was moving away from that kind of raised those questions whether or not that’s that’s feasible or the right thing to do. So David I’d like to ask you actually about tokens in particular in the token life cycle at Stably, because you… your token, if I’m not mistaken can come into existence and then leave existence, maybe you could talk about that concept?
DAVID ZHANG: Yeah so for at Stably, our initial product called Stable USD is really nothing more than like a digital money order essentially, right, so the workflow is pretty simple. So I mentioned stuff like PayPal and Venmo earlier, and it’s really pretty similar. So you have some sort of payment method, maybe it’s a direct wire from your bank one day, maybe it’ll be credit cards, debit cards, etc. You send money into our systems. It hits our custodial accounts and then once we see that the money has settled in our custodial accounts, we essentially issue you something that represents that money that is now in custody. And these are the tokens, these are the stable coins, right. And then you can go and do whatever you want with the stablecoins. You know, they can live for however long out in the wild. And then at some point somebody takes some amount of them comes back to us and goes like, hey I want to redeem these… you know, maybe I’m paying my taxes or something, right. So you know, they give it to us and then we wire money back to their account. So very similar to the experience that you have nowadays with exchanges and etc. But basically we want to make that like a one-time pain, like getting into the crypto world should just have to happen once. And then if you want to get into a Fiat equivalent value, you just get into a stablecoin. It’s low friction and then the only time you have to go back through that painful process again is when you want to convert back into a real-world currency. But even that we think should be a frictionless process but again regulatory issues so that’ll be a much further down the road, type of thing.
MATTHEW BLANCARTE: Cool and that kind of leads me to my next question: What… what sort of regulatory considerations were made, I guess even down the line, anyone can take this what regulatory considerations were made when you were programming your smart contracts? And do you have any concerns? Or did you have to work around any… anything coming out of the SEC or CFTC?
RUI MAXIMO: I’ll take that, for sure, since we’re a spot on a security token, we obviously have to be compliant. And so they’re looking at the different regular regulatory is whether it’s reg D reg A, whichever we’re going to pick or whichever the sponsor is using. We have to comply with that and enforce those regulatory rules in the smart contract so for sure.
PAUL SONIER: So for us, we don’t have a huge amount of infrastructure that’s on Ethereum. We’re our own blockchain but that said as a b2b focused blockchain, we are constantly thinking about the needs that our customers are gonna have for this. Because thinking about regulatory requirements for any company that’s getting into blockchain, even if they’re going to be using blockchain in a way that’s largely obscured from them doesn’t mean that it’s completely obscured and that they can ignore any of the rules and regulations processes, etc. And it does get back to these questions of how do companies maintain their data security, how do they maintain their proper operations, etc. And so our concerns with this have been largely around the meta issues of what tools can we put in place, what processes can be put in place to allow for companies to make sure that they’re building things that are going to be in line with any regulatory requirements. For example, if they’re going to be doing something with creating tokens, how can we make sure that they’re going to be making sure that what they’re doing is going to remain in compliance with any regulatory requirements, and then sort of keep up with where the regulatory mood is at any given point. It’s tough but it sort of goes back to the idea there’s a… a broad overall concern that goes not just to our company, but to our industry overall about what are the best ways that companies can go about building and structuring their smart contracts or their tokens or anything they’re doing the blockchain to make sure where they’re going to be in compliance with today’s regulations and tomorrow’s regulations and maintain that compliance.
MATTHEW BLANCARTE: Very cool and Jonathan, was Civic… what considerations, I guess any are being taken with GDPR?
JONATHAN SMITH: So I think GDPR is probably very good for us in a lot of ways, because the very nature of the businesses, we don’t store private information that’s the ethos from day one, the idea is that use always towards their… their information on their device. So in a lot of ways we started as compliant, there are a lot of nuances that GDPR brings and I would urge anyone who is collecting any personal data to be very careful of GDPR. It can destroy your business if in the future if you… if you fall afoul of it. But you know, for us being able to use that and say well, we are actually compliant and making sure that we store no data, it also changes the way you think about tech and where you store your data, and why are you storing your data. And that helps us because bottom line is done, store it, store what you need to store and make sure you’ve got everything in place to remove it and to communicate with your users. And a lot of that is how we are building the product is to say I want to share it with you, I’m only gonna share what I want to share with you, and you should only be asking me for what I need and then I should also be able to take it away from you at a future point if I don’t want it. And that’s where we go ultimately with this and a lot of countries in the world are adopting similar standards in the US will follow I think at some point. It’s inevitable.
MATTHEW BLANCARTE: Very cool, yeah, I think with Civic, one of the really cool features is the granularity at which you can expose your data, which is it’s very cool. And it’s just a general question to the whole panel. You know… what, at what point and… and how should CTOs be thinking about integrating blockchain and tokens into their tech stack? Because a lot of these solutions… you know, can be thought of in a centralized manner or decentralized, but at what point you’re like… you know, what this has to be done on the blockchain?
RUI MAXIMO: I think the question you have to pose yourself is what are you trying to achieve, what… what attributes that the blockchain do you want to leverage, is there going to be the ability to… to give ownership to the users of the information, or is it to be able to have an audit trail that is available there and that’s what we’re using the the blockchain for, or is it for any other aspects of it. Now there are some things that that it’s not good for like privacy. It’s not going to be good for that, because everything is on there, unless you use some kind of zero knowledge proof or you store the information encrypted off chain, because if you store it on chain, it’s just a matter of time that it gets decrypted. So that’s that’s really the… the impetus of what you want to start thinking about. And then from there, you decide what is the data you want to store and then you can build the rest of the stack off of that.
PAUL SONIER: I’ve been asked this question before in a different forum. Largely, it’s come in the forum of why blockchain, why not build on a database. And the answer I usually come up with is blockchain over trust. It’s about trust in your data and trust in data is critically important. And at an enterprise level, anybody who’s had to deal with auditors knows that that’s really important. But also the ability to have the public have trust in your data, to have the public have trust that the information that you’ve been storing has not been tampered with. It’s about the trust, honestly, so where there are points where in your data you need to have and expose trust, from my experience, that’s the ideal place to begin considering working with the blockchain.
DAVID ZHANG: Alright my rule of thumb very quickly is if you’re asking yourself if you should be using blockchain and your tech stack, the answer is probably no. Like there’s actually at the current state of things, there’s actually very few use cases that I think makes sense like, if you need to be able to verify some sort of digital transaction or if you need to be able to maintain data integrity in some way. Sure! Other than that? Mmm… maybe wait a few years.
JONATHAN SMITH: You know, I definitely agree with that. I think I think everybody will have blockchain involved in their business in the future. I think there should be no reason anyone would think otherwise. It’s like you know we can look back in history. There was a point in time where building a website wasn’t necessarily good for your business, would have slowed you down and wasted your money. Now a business that’s not online, it’s almost inconceivable and the same will happen with blockchain. However, right now the amount of pain to put a blockchain in I would discourage startups heavily from doing it for most… You’ve got to build a business. You got to get users. You’ve got to get growth that’s far more important for your survival than if there’s a blockchain in there. If you’re raising money, that’s a whole different use case, and that’s not allowed to be discussed in this panel. And I will not give any advice on that.
MATTHEW BLANCARTE: Very cool. Well this time, we’ll go ahead and open it up questions from the audience.
Audience: Thank you, very interesting panel. So if… if the use case… said problem that you’re trying to solve is to address things like fraud, corruption, bid rigging, bribery, concealment, how do you… how do you do without the blockchain if you can imagine? I meant that’s just giving you a thumbnail button?
JONATHAN SMITH: What’s the industry, what’s the particular use?
Audience: Well, fraud and corruption and bid rigging is a global issue, particularly in… let’s say condominium space. There’s a lot of bribery by suppliers and vendors of property managers. And there’s not enough, it’s not enough governance.
PAUL SONIER: So certainly, there are approaches for… for example, having a neutral arbitrating third party who you can say, okay these have been submitted to and they’re… you know, auditing firms that will take these things. Say okay we’ve got these and we can validate that, yes this bid was in fact the highest without exposing the other bids to everyone else and… But a lot of those existing processes are expensive, difficult. You end up engaging external auditing firms that those don’t come cheap. And they’re not great in terms of public visibility. There’s some aspect of that. Again there’s a component that those companies tend to come with trust involved. Ao you go to a company Deloitte or some other company like that that you trust to manage the auditing these processes. So the way to do it off the blockchain is to basically use a trusted authority to manage your process to bring trust back into the process. I think where I see and probably people in the room see the value in being is that you can remove that expensive trusted authority with a blockchain that has shared trust.
JONATHAN SMITH: But that’s a good example of a problem that exists has existed for a long time. A lot of solutions has… haven’t worked and now there’s an inkling of hope for something new and worth doing because… you know, you can start from the core can be blockchain and build up. You know, we were having an interesting conversation outside before the panel around seers, you brought up seers. And they just couldn’t change their ways and eventually, it died. But Amazon from its very core was solving a problem for the future. And it took a long time and a lot of money to get to a point where people believed Amazon would even survive. And that’s kind of where we are these… these blockchain solutions right now people we’ve got auditing firms, we’ve got all these things out there. So why do we need to do this, the visionaries will start and build these from the beginning and many as let everyone think well how could why did we need those auditors that don’t exist anymore, why does Deloitte not exist anymore, whatever, not too big funder tonight, but you know… but that’s where we are in the evolution, so…
PAUL SONIER: And I think the other part of that too that comes back is that it’s a it’s an economic concern. So right now your economic concern for the thing that you want to bring trust to may not be at the level that you want to bring in a trusted external authority, that’s expensive etc. And so these trust based solutions that are on the blockchain can bring down the cost, so they can bring the trust down into a wider market and we can see that.
RUI MAXIMO: Just to add on the fraud aspect, the best way to solve or prevent fraud is transparency. If you put it out on the blockchain, every transaction, every activity, then it’s hard to hide behind that, and so that helps… I wouldn’t say eliminate, but it certainly would help reduce it.
MATTHEW BLANCARTE: Very cool, well, let’s give our panel a round of applause!
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