Heidelberg Laureate Forum Panel: Applications of Blockchain

Transcript

[Music] so I hope everybody has done a little bit of energy for our last panel today it was a heart marathon without the coffee break I'm happy that the the room is still full and so many people are still interested even without coffee in our topic short introduction of the new panel which is the session the

application orientated session to my left we have Mia Elysee is founder of Akasha and founder of Bitcoin magazine and co-founder of aetherium Akasha is a new type of social network based on blockchain technology and his vision is a free and really decentralized internet in the middle we have Demelza Hays she's researching at University of liechtenstein about the role of cryptocurrency in asset management and I think she is one of the persons who has a Bitcoin wallet so we can maybe ask a question again from the last panel and on the right side from your point of view is text ahead Lee from University

of California he is a medical background he is working with AI and cancer imaging and yes big because this vellum bit on blockchain technology for helping to manage the the data the private cancer imaging data he needs yeah he needs for AI uses as I asked the other panelists starting around what is the use case you are most excited about I think maybe the answer is to year but so I would like to add to that question what is the most the use

case you are most excited and why is that use case really why is blockchain really a perfect solution for your use case let's start this Dijkstra sure thanks fairly I think health as the most at least in my world to benefit from a distributed decentralized sort of system in America probably more so than in Europe we have more socialized health systems and a capitalist health system is very easy for bad players to take control of patients data which is just incredibly wrong on a number of levels but from a

scientific perspective it stifles innovation so where as I see business AI is sort of making a big deal in search and advertising all over the place so in medicine by law that is sort of not the case because technologies like distributed Ledger's they don't exist yet sort of or they haven't existed yet so I see blockchain to redistributed Ledger's this idea of of democratize data as the main benefit the healthcare team alpha application great okay well definitely I think the open

source aspect of public blockchains basically allows each cryptocurrency to be its own experiment in monetary policy so for the for the past eight hundred years or so we've had tons of centralized currencies and basically two professors from the US Reinhart and Rogoff did a data analysis of these currencies that have existed and in almost every case it ended in hyperinflation or default or partial T partial inflation we're basically the purchasing power of the currency was debased over time so this means that the average people in society lost their savings and I think that with cryptocurrencies we can see right away

that the cryptocurrencies that had inflationary mechanisms did not gain networks of people who used them so for example you had a Fry coin which was a coin that started in Germany early on it did not gain a very strong Network because it had demurrage embedded in the protocol where basically the currency just lost its value over time and I think that what's going to happen over time is not that going back to Mohan's point it's not that people want to be to get rid of our current existing system it's simply that we want to add competition to it so now what we're going to do is we're going to allow this technology to experiment with other models that might not be the current

models and what that's going to do is if those models have some beneficial features the current system can adapt and overall I think we're going to have a higher quality in currency and in stock markets and and several other financial applications so I'm going to echo some of the points made by Silvio on the previous channel on the previous panel as in you know self-governance is a big one especially if you think had this set up where for the first time in human history we have over half a planet connected and interconnected although we have this intermediaries in the middle

that can easily manipulate the masses and we saw you know in the early days the gentle push to buy a product and then a gentle push to vote left right and so on right so it's a big part of our society and how it can influence our future and the identity and when you put the two as in self sovereignty you know owning your identity or theta and when you combine these two there is like this I know utopia in a sense but at the same time it feels that for the first time we have the right pieces of the puzzle to enable us to experiment worth finding what works and what doesn't and if you look at the bigger picture for the first time in human history we are able to

test and iterate super fast many parallel governance identity and economic systems that will or might become very relevant in the near future who knows but if you look at the current economic system and how everything is hinging on you know is this year going to crash or is it the next it's not a matter of when things will go bad it's rather a matter of when and having an alternative and an option to the current system doesn't seem like a bad thing on the contrary it's in our own interest as a society to have an alternative in case things go bad and you know you had a clear example with Cyprus and other

economies where people or which they thought they had their money and so on we're effectively cut from there well you know you had revolutions and everything so that's for example an application where I'm excited about as in offering people the alternative when the moment or occasion arises and hopefully when that moment happens we will be able to transcend that in a more peaceful fashion than you know in the past where it was always revolution blood in the streets and so on in this case hopefully by having something there that could you know slide into the daily flow of the people that might you know offer a better way forward maybe tell us a little bit more about your idea around

akasha and why maybe helps to decentralize the Internet as well wise internet centralized at all wasn't that the idea of the internet to be decentralized and what went wrong well it depends on who you ask I suppose but ultimately we Takashi in this Odyssey of discovery he sought to say in the past few years we started from like how can we make a blockchain application work and we realized that there is this again complementary technology so when you say blockchain it's not necessarily just that it's like you're having horse classes and looking at just one piece of the puzzle you also have for example the interplanetary file system which can be

combined so you know one of them yeah one of the previous panelists highlighted how the interplanetary well actually people were storing messages on the Bitcoin blockchain which is like super expensive and very inefficient so in this context you can merge the two in and come up with all sorts of applications and in our case it was a social network right and in this context where you have like serf sovereign identities and like this data spiraling around the user and user being in control of it and choosing with whom I want to share this data you have like this emergent social network between the identities which are those interactions that in some cases require trust in some cases require semi you know some kind of trusted not connecting the two entities

and that's also where I think something that is exciting is especially this room and the work done by these bright minds when it comes to mathematics and computer science in some cases we are looking at decades-old mathematics like for example the elliptic curve cryptography which is at the heart of many blockchain projects and in this context of blocking or new you have the opportunity of actually applying some of these hidden gems last in the footnote in history or in some Wikipedia page and actually people without even understanding when they send that you know Bitcoin or whatever cryptocurrency

from one side to another they're making use of public private key and it's I think as if we were saying a matter of iterating and exploring what can be done with this it's almost like we are in the early 90's of the web we kinda see the black text on the white background that's like the digital money and we cannot really imagine what can be done with this moving forward and just like we had with the web we had a continuous process of iteration and exploration in which okay we had the dot-com bubble yes we had also the bust but after that we do have things that are completely changing the way we interact with each other we have social networks you have real-time video

communication you have all sorts of things that maybe would not have been possible without that failure it's a trial and error right so with Akasha what we're trying to do is basically an experiment driven project in which we are trying to figure out how to make things work using this technology by putting in the first place the human as in not being the product and tap into and explore this alternative business models that otherwise you know just the default internet standard is surveillance capitalism as in monetizing your data and so on but in this paradigm you also have the open let's say question of what can you do if you have this untapped resources around so it's

like if we take ipfs again as an example we have these petabytes like huge amount of data available in smartphones laptops and so on that in theory people could monetize by sharing it with the network so in that case you know you already have a flow of wealth and redistribution in the society that even someone in in in Africa you know has on the second second-hand phone which is like if it's an s2 or as for as in an Android phone it's already quad-core might have a few tens of gigabytes so I think where this is going is that people and entrepreneurs should be excited about this to try and explore additional

business models alternative business models and also for scientists and this community to overlap with the let's say the more non-conventional blockchain crowd because it is in a way very interesting over and up and like an application of some of the core ideas that were invented years ago decades and by this overlap hopefully we can turn some of those ideas in years into actually meaningful applications rather than you know decades that sounds like it has many parallels to Texters idea or project with distributing health data or especially images which can help HIA I to classify cancer maybe you can tell us

a little bit more about how that works with blockchain technology yeah definitely so where as you're trying to put a akash trying to put personal information and you know baby pictures or whatever that you're free to put anywhere you want most people put on Facebook now I mean the idea would be put it on a decentralized storage platform in medicine you're not in medicine this idea of who owns your medical data will I don't I can't change my medical record but I'm a custodian of my medical data right I can decide to give it to you into you and not to you so so there are a lot of parallels ipfs I put I'm putting I want to put gigabyte

files of data on ipfs I don't know how much baby pictures or whatever you would put on social veena but so technologically it's very similar their architecture is probably exactly the same but the application is is very different than the need there's a whole privacy law that has shut down innovation in medicine in America and there's no way around it I think blockchain distributed Ledger's and even more so I think as physicians I mean can anybody name one killer app on out of apples 1 billion you know apps for health there's not I mean I feel like as physicians today we have totally failed our digital patients why would they give us anything

so so I mean why there's kind of similar very very similar to yours I want to at least here's the mammogram you paid for you might as well see it it's yours and if you can see it then you can share with me I mean the law says this can all go through today it just doesn't because of bad actors and bad players so it's very similar I totally agree and probably the same motives on your data so your ideas that patients can somehow keep their data or owned their data and sell it to researchers or how many people in this room have heard some scan done in medicine ultrasound MRI cat scan how many have seen it none of you a few of

you the really hardcore ones but the idea would be what you paid for that why haven't you seen it you pay for all kinds of stuff you see it in medicine there's you know you just what happens to it it disappears and somebody else profits from it and that doesn't seem right it just doesn't seem right something may be connected to this is also the idea of how Bitcoin beyond you know like the digital currency you also have this concept where you have this big pot of money and some incentives that makes people move towards that thing right and the results almost a decade later from the simple idea with algorithm distributing that you need which you know subjectively has some value depending on who you ask has led

to this like equivalent of a supercomputer generated by these people that were basically just trying to get some of that which is like more powerful that the top 500 supercomputers combined and it's not a super nation state it's not one single entity that was able to generate that was a bunch of people so like an idea here is that if we can use the same type of thinking to create the incentives and the right incentives to actually better humanity right so instead of just breaking sha-256 maybe in this scenario if there is some kind of incentive where people if they put their scat scan and there is some value kind of you know pot of money some of that value to be distributed towards

searchers that would actually make use of that data and then feeding back into the the whole system so the sort of tie in to what to order what you do there's different values on the data right so a true positive exam where okay they say you have cancer they say you don't have cancer in you really don't have cancer there's a lot of those right but if somebody said you have cancer and you don't have cancer I mean there's a lot of consequence to that and pain and suffering and that data should be valued more it's gonna improve the model that's currently representative of radio you know radiologist knowledge and and the other as well if somebody's if if you're a patient who does not have cancer that

somebody claimed that you had cancer those kinds of data are inherently more valuable than than the true positive and true negative value who is gonna value how much that data cost it's sort of like a stock or a bond how about performs is what its value is and to me a distributed trustless system is how we can value it and then have an exchange where this is open its private yes it's I guess I'm in the open blocked in camp here but um it they can be a active marketplace I work with at least three or four companies I want access to my data set and the way it works is you pay me money I get to do whatever questions and answer whatever questions you you

have and give you the results but I can never give you the data right if there was a mechanism to patients to directly be Vantage of their own data that would solve a lot of problems and they're hard numbers is 40 million mammograms run a year I just went five of them just five million just total that's totally doable but not by any one health care institution that's not possible just one short question for now standing do they have more value of these false negatives and false positives because I can learn more out of them more precise yeah if you're learning what you already know it's not as valuable as learning the wrong predictions right so yes luckily for me there's a lot of wrong predictions in breast cancer but there are different levels the woman who lost

the breast because of a false reading that she didn't need to lose the highest category she should be paid the most for her mammogram first was somebody who had a true negative reading right so there's different values and I'm not technically enough to to pretend to understand how it works but I think of it like a stock there's different performance and different data points and they should be valued based on what people are willing to pay for them something else may be tired you know since we're moving towards the future maybe not so distant it's like when you have these nodes connected like in a network effect be the people that actually contributed the images the researchers that might actually use the fund to do the research and maybe you'll also have this concept of crowdfunding you know which is like really easy in

this paradigm because every identity is also a wallet you can have bottom-up build laboratories and maybe even hospitals in the long term so that token or that can also represent a membership that can benefit well here's the problem I work for a federal institution uh-huh and I am terrified to have an ICA even though I have a legitimate cause yeah it's not who knows if it's legal or not I mean I guess I should probably talk to you after but uh but it's a thin line like you don't want to you know sell your reputation by just having another ICEA in a big part of our shady ICS I'm not necessarily advocating like to have an IC o---- but I'm trying to explore how the right incentives and in an ecosystem can create the interesting

feedback loops that can actually but the people that participate in get out the other and better off right in terms of health in this case not necessarily as in gains monetary yeah last question before I open to questions from auditorium dementia we had this more or less philosophical discussion about value I know it's argument quite often the last days from people here that cryptocurrencies don't have a real value what is your comment on that okay well it depends on how you understand value but in 1871 there was the principles of economics written by carl menger he basically wrote that value is subjective

so the way that you value an orange is going to be different than the way I value an orange and actually it's the fact that we have different values of that orange that is the basis for why we trade the orange so if we valued the orange equally no trade would occur okay so basically with cryptocurrencies it's basically a subjective value and you can determine that value for yourself and anyone that says it's about it has no value well that's clearly empirically not true so empirically it has a value and if it's going to have long term value that's very difficult to forecast but I think in general the concept of having you know currency that is global and

permissionless I think that's it's hard to argue that that concept doesn't have value in your talk you made an interesting point that there was no correlations between stocks and cryptocurrencies can you talk a little bit about that what do it why sure I mean if you do yeah one thing I didn't mention in my presentation is that if you do time frame analysis so if you change the dates that you'd pull data from you can see that the correlation is increasing so the first couple years the correlation basically didn't exist but if you just take the last year of data or if you just take the past couple months of data the correlation is slightly increasing over time and I

think that's I think right now it's increasing over time because there's actually more institutional investors that are joining the cryptocurrency market and they're basically speculating on cryptocurrencies the same way they would speculate on the stock market however I think that originally it was basically uncorrelated because it has a different governance model so cryptic or let's say stocks and everything stocks and bonds they basically exist within a regulated financial market and they have central clearing houses that clear transactions and and I have a they have insurance companies and and different intermediaries that reduce counterparty risk and there's it's a very different

governance model with crypto currencies basically there's nobody backing it and there's also no centralized system of clearing and so basically you just have a different set of risks and so I think that originally the correlations were different because of the different core different governance I mean one one aspect of cryptocurrencies that makes it extremely unique as a financial asset class is that it cannot be confiscated so so so so stocks I mean if you look at that if you look at the DTC see in the United States is a central clearinghouse in every single year they get sued by companies for allowing naked shorts which is basically where the settlement

time takes more than an instant so with with atomic swaps on blockchain network you can do instant settlement but with the DTCC it's a centralized clearing house and you have stocks where the the investor will go and buy all of his stocks off of the stock market and then the next day his stock is still trading and you ask how is that possible how is it possible it's because of the way the settlement works it's a it's a tea it's a it's a it's a tea plus three settlement date so you have three days to give back the stocks that you shorted and sometimes these Shorter's don't actually give back their stocks which is when it when it becomes a naked short so

these centralized clearing houses have been attacked for for losing stocks for four years and and basically what what it actually is is it's fractional reserve holdings of stocks so it's just it's the same way that the banks work with fractional reserves it's the same concept and of course these brokerages earn money for lending out stocks okay so I think that definitely cryptocurrencies offer a very unique return and risk profile compared to other asset classes and that's why it's uncorrelated yeah there's some on since around this point of the correlation between crypto and equities is there a

correlation between fiat currency and equity and stocks we're both uncorrelated currency oh the hole is just not correlated with its it's very low correlation it's very low correlation in one paper peer-reviewed paper done about a year ago they showed that there some positive correlation between Bitcoin and emerging market fiat currencies so I think that could be because a lot of the trading going on a lot of the volume for Bitcoin is actually done in emerging markets so I think we have at least three questions from the audience just start yeah I saw two Bs Maya I run the HLF Twitter channel and I have a question to the males and the others

too it just picks up on what you just said so when an ICO so initial coin offering by a company or curse essentially you treat this currency as an equity same would be say a company issue stock so with having stock come certain rights for an owner so that the that's the first part of the question and the other part is so if a cryptocurrency in from from ICO is treated as a stock how does that relate to a crypto currencies such as Bitcoin or etherium which are treated like currencies like money that you can that you can deal with so can you elaborate a

little bit more differences of those use cases of cryptocurrencies sure okay where to begin well I was at a Chatham House meeting at Warren about two weeks ago and this was one of the main discussions that came up and basically currently the the the investors and I CEOs do not have clear rights I mean basically the white paper can claim so the white paper that they release is kind of like a prospectus it's not a prospectus but it's some kind of document that gives investors an idea of what they're investing in that doesn't actually give rights to the investors and I think it's a very tricky situation because if the ICO cheats you and you go to the court and say look

that that startup company cheated me well the court systems say well why didn't you go why didn't you invest within our existing regulated financial system so you want to skip all the cost of our existing regulated financial system but then you still want all the benefits right so I think that would be a very hard to make and I don't see why the courts would actually need to enforce the claims that are the rights of the investors in this situation however I think that what the way that the u.s. is going I mean the US is basically going in a direction where they want every white paper to announce basically what a prospectus announces okay and they're gonna have basically they've all come up with different models but there's one

model where they basically have you come to a sponsored agent who is registered with the SEC that sponsored agent is gonna look at your white paper make sure that it has all the requirements and then basically announce that you can actually launch your ICO but if you don't get that sponsored agent and the prospectus approved you you you know you're basically committing financial crimes and then as far as the way different tokens are treated you know in the u.s. you have all these different financial market authorities so you have the SEC saying this is a security you have the Commodities Futures Trading Commission saying this is a commodity you have you know the Federal Reserve saying this is a payment system I know

so you have basically different ways to look at this technology and I think that again this goes back to subjective value how do you value it how do you use it many people use it for multiple use cases and I think that it's it's just it's very hard to fit into any kind of existing regulatory environment because it fits so many different policies and I think the one final point to make on your question is that despite the extreme volatility the you know well-known cases of fraud people still prefer using it so what does this say about our current system what does this

say about our current financial system can I add something to try to please yeah sure I'll try to keep it true so even the word ICO it's like a hangover from IPO right and if you look at it stakeholder is like shareholder again hangover and we humans in the longer term seems to seem to have like this tendency of copying the previous iteration of what it was and a very good example would be the automobile so the early prototypes let's say of the automobile did not have a steering wheel they had a tiller right which was borrowed from what we had previously as boats so I feel to some extent we are doing kind of the same thing trying to borrow what worked in the previous

iteration and on the note like in the presentation I had mentioned briefly the conversation of daos which should in theory kind of alleviate it in a sense this disconnect between the stakeholders and the actual you know foundation or whoever is actually developing the protocol because currently there's a complete disconnect between the two once you give them the money you sign on that I agree that you have no rights this is actually not I share all the stuff that you actually read when you find out that you were scam but the system that would enable continuous feedback between the participants and the actual developer of the protocols should at least bring that shareholder you know ability to steer

the course of the project which should alleviate also the problem of this complete disconnect between shares and I tokens so I think it's we are still very early we're still learning and this is us breaking eggs to making bacon omelet can I just say something one last thing on that there was a really nice paper written last year coin operated capitalism by professor at University of Pennsylvania by the last name of Hofmann it's an excellent paper what he does is he took 50 icos from last year he had 100 doctoral students in computer technology in the in the computing program look at the smart contracts of those I see owes and he found that there

was a very small amount of the smart contracts that actually coded what the white paper said the coin did okay but the thing is is that nobody actually reads the smart contracts before they invest and he basically showed that these smart contracts can be completely modified so mountain of coins can be modified the amount of you know committees that make transit that make validations can be modified the whole entire system can be modified and that's built into the code so I definitely think that it's something to consider prior to investing is that's actually understanding what you're investing in sorry we have two more questions we have two questions and the discussion here and let the next

questions you asked so I asked a question about value but in a different sense many applications and consequences of distributed natures and society are controversial and that's beyond the scope of the scientists of an engineer to solve so do you or did you work with an ethicist how do you solve these problems i think that's maybe something for dexter i do not talk to the administration about blockchain technology at all no i did not work with an ethicist well that's not true so we work with an institutional review board which is the ethical board to conduct

any kind of research in my case it's very little risk even if we put your mammograms out in public it's very hard to identify somebody from an on a mammogram with no identifying information so there's very little risk in what I'm doing once you get into ultrasounds the patient's name is on the ultrasound there's ethical concerns of privacy but one of the reasons I picked digital mammography one because I know there's 40 million of them floating around America at any one year and two it's completely anonymous so this can go an ipfs with very little ethical issues the first thing is you think if you

think about health data and blog Chinese's this is immutable and is stored forever is that a problem in any case so any IRB is gonna mandate for genetics and genomics work anonymized data is put into the public space and people work in the anonymous space I don't think blockchain is any different I guess you can I mean the way to me it works is at least for medical data there is a steward of the data for instance I'm a steward of all these mammograms I'm gonna collect if you don't want to be in my study I'll just stop sharing your you know I will just stop being a steward for your data to the points that were raised last night

at dinner and throughout the day today today if you already have a key to that data and ipfs or if you already have the address well that's it everything and then you have everything but prospecting in the future I just don't give out that address if somebody does not want to be in the study anymore and of course they agree to inform consent all of this is explained and they have to agree before I would accept your data so you know in the clean world of academia I think there's ways to still leverage this technology in spite of the shortcomings you know it's no different a regular database atomo Hans point and he made it before Atika implications it it makes you

wonder for example Facebook and these companies that have the ability to influence in mass people and they conducted actually experiments trying to see if they can make users either feel more happy or sad they're depending on the content displayed on the feed so there are tons of examples like these that make you question like the ethical behavior of that company and I think the open source and the transparency of blockchain in some regards can put in place a system that makes it hard for people that want to exploit it or do something unethical to be seen by others similar to how you have the open source and if someone tries to plant the backdoor you just count on a number of eyes to find that backdoor right so in a

similar sense if you have something similar to Facebook where the algorithm algorithm that actually decides what appears on your feet is a subscription to an address and you're just putting the data from the blockchain where it is you are at least in control of seeing the information flow and when it comes to if we interacted with ethicist like we are constantly you know have these soul-searching into what is what we are doing is this going to end up like some black mirror thing or is this actually going to be improving humanity so I think this kind of question and deep questioning is something everyone should should do in this field because it's something that potentially could

influence on scale right in the current interconnected set up but what I like to sum it up open source and transparency I think could provide a solution to the lack of ethical standards because people could point to what's going on Kearney you cannot it's a black box we currently have medicine privacy Trump's ethics the way data flows today is not a thing a little nobody would agree that we have an ethical system for data management yeah we have a private one so last short question and short answer yes I find the idea of an open transparent system very

appealing and I was but I was just wondering whether the discussion could include perhaps there being a spectrum of central versus decentralization when it comes to the use cases so do you envisage an ecosystem where all of that is possible and each one essentially answers a particular use case and so I think that spot on and in the future there is this gap between fully decentralized I don't know 10 years further down the road who knows maybe earlier maybe later and there will be this gap to bridge which in terms of user experience when you have a completely this decentralized system getting that information or that it's experience up to you just click and it

loads it's hard so I think there will be an incremental use of like just required and where is like the maximum impact I can strong authentication verifiability traceability where these things draw where this thing can be fit in a let's say more centralized system and gradually as the infrastructure matures and we have like public you know block chains being able to scale and the cost of transactions lower and so on maybe in time we can you know move to a fully decentralized set up but I think in the near future the hybrid will be probably the approach that will be I think it depends on the application I mean by the

nature of Medicine it's a private enterprise like I don't you know patients doctors and developers are really the only people in my network that need to see this data very different for a social network very different for a financial network so it totally depends on the application and sort of the context but for example if someone would visit the website to upload that picture if they would have to spend ten seconds well the thing is routed they would probably end up not using it right so we have this example with PGP which was great you know but people didn't use it because it was not user friendly even today it's hard to set it up so I think we also have to think on how to make it usable so people actually use it right so it's I think everyone has to gain and

to be practical very easy because it's not there yet to be used in everything right make it easy I think that's a good point to wrap up and I think this is what's coming so thanks a lot a lot for staying with that all the time without coffee thank you [Applause] you