Why Blockchains Won't Fix Digital Identity - Steve Wilson, Constellation Research

Transcript

[Music] hello and welcome to the blockchain and us we're pioneers and thought leaders talked about their journey in blockchain technology crypto assets and a token economy and I'm your host manuel staggers if you enjoyed this podcast please give it a top rating and review on iTunes and feel free to follow me on twitter at Manuel's dagger this episode is brought to you by the car to finance the cart is the leading swift Digital wealth manager providing its products and services to individuals family offices charitable organizations banks and asset managers its investment strategies lead the way they harness the

largest know-how and only a digital investment advisor can to learn more please visit www.imtcva.org [Music] and electrical engineering and has focused on digital identity and privacy since 1995 steve is a vocal critic of many blockchain applications especially in identity and health services he holds several patents and is responsible for breakthroughs in identity infrastructure and governance authentication frameworks public key infrastructure smart cards digital

credentials fraud control and privacy engineering and he has advised national ID frameworks in several countries steve founded a lockstep group in 2004 and has been vp and principal analyst at constellation research since 2013 where he leads digital safety and privacy and now to the interview hello Steven thank you very much for making time today hey Manuel it's a great pleasure Steve we already conducted two interviews in the past and the last one was in Silicon Valley about a year ago and recently I saw you wrote an article called identity is dead can you explain what this means yeah you bet look clearly I'm being a bit

provocative but but I I'm calling on people to rethink what we're trying to do in identity management's it's um it's been a long road to get form us nowhere in in a lot of the grand plans for identity we've been working on federated identity and I should say that I mean that by federated identity I mean the grand vision of having a much smaller set of identities where we can share identities between banking and government and healthcare there was a an expression of this I I deal when the White House started its national strategy for trusted identities in cyberspace mm-hmm at the beginning of the Obama

administration so we're going back in or nine years and the vision was that a student would be able to UM get up in the morning and use her student card to log on to a bank or could equally use her bank ID to log on to a health system so there was the vision and you know it rolls off the tongue it's something that we experience in social identity all the time I can log on to all sorts of things using my Twitter handle and that's pretty cool hmm great but the grand plan of being able to share you know let's call them serious identities across healthcare government banking with with a few exceptions it's never happened absent legislation it's certainly never

happened and in stick in the u.s. national strategy trusted identities in cyberspace went for six or seven years and and never quite achieved that goal so that's what I mean by identity is dead the the idea that we can have a digital identity that is so powerful to me is something that is just remains out of reach you know it embarrasses me that every time the identity have an argument or a debate about identity we fall back the glossary zand definitions and we talk about authentication and identity and attributes oh my god it's fundamentally flawed I don't think it's ever gonna happen that way and so

when I say identity is dead I mean why don't we just kill the idea that identity could be constructed in this mythological way because it ain't happened for the last ten or fifteen years and I think we're wasting our time so interesting yeah it'sit's a good point I just in the last few months I've seen there were a few blockchain identity project started in Switzerland I mean there's something called souq identity there are several identity startups you know that one - the one is doing identity on the Bitcoin blockchain and others use use other block chains I mean have you have you looked into those as well look I don't have an encyclopedic

knowledge of these things anymore there are so many identity blockchain ideas out there and you know I I might have told you the story about how I first got into blockchain and identity because three years ago there was this strange phenomenon out there where every blockchain identity startup was really coming from a blockchain entrepreneur or a blockchain advocate there were almost no identity people out there doing blockchain identity I noticed that in 2015 I noticed that all of the blockchain identity fire and fury was coming from the blockchain sighs mm-hmm now I remain very perplexed by most of

these I can talk about one or two identity distributed Ledger's that do make a lot of sense and that they're coming from a very balanced position but there continues to be the perplexing number of startups that think that there's something about this immutable distributed ledger that in and of itself provides an identity solution and um a lot of its misguided I have to say that most of all you read about the block chain remains wrong and most of you read about boxing identity it's often just full of category errors I mean that has been your your view for for a while I mean the last hour French news I've heard or seen or read with you you always

described how people still misunderstand the idea what a block chain really is and what it can do I mean in in your view why would using a block chain be a bad idea well let's go back to what the original public block chains were for and they solved an unsolvable problem which was Alice and Bob wanted want to use cryptocurrency they want to exchange real amounts of money between each other but they want to do so in a decentralized environment so that any intermediaries and for about 30 years we've had various forms of niche cryptocurrency which worked with digital intermediaries the problem with is double spend you know if I've got some

digital money and I can copy it because it's just one zeros how does the system stop me you know bad Steve copying my money over and over and spinning it twice so we always thought that you'd need some sort of cost like a like an umpire or or an intermediate to a monitor every single transaction and the those were the first ecash ideas right were you always exactly somebody's still looking at all the transaction and making sure that they actually or valid right ecash and digi cash was the product name for something that was very clever and about 30 years old now that was unpalatable to um the libertarians and that and the real sort

of cryptocurrency geeks will were always frustrated by that and the the interesting and powerful thing of nakamoto's invention coming as it did right in the middle of the financial crisis was um you know we you know we the community finds banking problematic and the libertarians you know find banking completely distasteful so they want to find a way of doing cryptocurrency just peer-to-peer yeah and you still need to watch every single currency movement in the big but what Nakamoto did was that they crowd-sourced the surveillance of the of the crypto movements and that was just genius not only crowd-sourced to figure out a way of incentivizing the thousands

of computers to do this volunteer work with whistle owners with the miners the Bitcoin miners are rewarded for turning a lot of computer cycles into looking after the network so it was it was genius look I have to say it was genius but also as a thought experiment you cracked the problem that crack that unsolvable problem what's happened since Bitcoin is that there's been an enormous amount of innovation and you and I talked about this it was like the Wright brothers flyer yeah people saw it they tried to copy it but a lot of really serious engineers looked more deeply at it and tried to replicate some properties of blockchain for the enterprise so we've had our three and

quarter hyper ledger fabric especially a lot of the new work being done by Microsoft and IBM and a group called hadera hash breath these are really serious engineering projects that have replicated in a very sort of selective way some of the blockchain properties and they're doing things that are you know inspired by blockchain but are really at the heart quite different so but what these what these projects did they they tried to they tried to separate the currency from the blockchain idea correct yeah they did the the new alleges in general are concerned with much bigger use cases than just cryptocurrency hmm you know

paradoxically perhaps cryptocurrency is a really simple use case it's very simply stated you know Alice and Bob want to exchange real value without any intermediaries it's a very simple and actually a very special use case it's special in the sense that a physicist will talk about a special case not the general case and the special case of cryptocurrency is very special is there's nothing like it in normal business normal business you don't have the luxury of getting rid of intermediaries or getting rid of umpires or getting rid of standards and administration so to that extent cryptocurrencies really special and that you know if we could get technical for a minute not terribly

technical but sure the shell the challenging them in most crypto systems cryptography systems is what it's all key management so I think people know that at the heart of a Bitcoin wallet is the thing called a private key and it's a private key is your personal key into the system it's a it's a cryptographic code that needs to be safeguarded you need to keep it in a Bitcoin wallet ideally it's a piece of hardware a hardware wallet that you that you keep secure or maybe protected with a pin or whatever but that's your personal key into the system the amazing thing about Bitcoin is that nobody knows where the keys are nobody knows which person belongs to which key in the original

blockchain it really didn't matter and in a sense it shouldn't matter because there was this total self registration so nobody knew which keys went with which person if you happen to lose your key then it was just understood that you were on your own it was Wild West obviously many people have lost their hard drives in thrown them into the counsel tip yeah accidentally I've even got a pet theory that I think that Satoshi Nakamoto actually fried their own private key I think that's the best explanation for why why nakamoto's fortune has never been spent I think it's possible that Nakamoto lost their private key really and had a record so well it can happen to the best of us now

you know you know why you know I want you to imagine a sort of a swarm of private keys sort of out in the ether there's there's tens of millions of these private keys floating around and they command the movement of cryptocurrency from one key to another to another to another and it's a wild sort of um swarm literally a swarm of private keys that do happen to be under the control all of individuals but nobody cares you fundamentally don't care that Alice has a particular key or Bob has a particular key because the Bitcoin network sorts it out it sorts out that through that possible chaos of cryptographic movements Alice's key only ever gets

used once per transaction and and cryptocurrency flows from Alice to Bob to Eve to Carol to mate and so on and the magic of blockchain is that doesn't need key management people self-enroll they set up their own wallets they load them up with money in a way they go now that is comes back to my idea that that's really special there's nothing like that in normal business there's nothing like that in healthcare for example I mean you absolutely need to know that this patient Steve Wilson has a particular key and you need to know that a doctor has a key and that a nurse has a key and that medical researcher has a key and you just don't have that sort of weird luxury of not caring whose

key goes with which person that goes back to identity we need to know people really are who they stated yeah well it does and that's that's why this is sort of a long story and a thank-you forum for bearing with me you know identity it's the exact opposite identity you you need to know who goes with which key so the funny thing about blockchain the original public blockchains is that they're fundamentally unlike identity if you've got a system that can that can um tolerate that lack of key management and still move real money from one person or not to another it's a special case the reason why blockchain is so elaborate and so expensive and and you know the reason why it takes ten minutes to

decide that a transaction is valid is that you don't have key management interesting point you come along with any use case no my favorite contra example is the refugee identity case you know the giving digital identities to refugees is that is a keen problem and you know I'm as energetically in favor of that is the next libertarian we want get people up to speed in the digital world we want to close the digital divide we want to get people engaged with banking we want to get the unbanked connected to digital commerce so there's this vague idea that blockchain is the

way to do that but when you when you dig into it the way that people enact and and live their digital lives is usually through a mobile phone of some sort and that's great that's real goodness the mobile phone is a powerful tool for sure and it needs some identity but you know what for a refugee to have a mobile phone they need a mobile phone account they need to be connected to a cellular network and to get a mobile phone account they need to be identified first so the funny thing about most of the refugee news cases I see is that they start with a mobile phone which means that they must start with identity mm-hmm before the blockchain comes along and does any magic and and once again if you can solve key banishment then I

don't think you need the great big glorious public blockchains of etherium and bitcoin you may need a different ledger and you know maybe we should talk about some of the identity management projects that are using new Ledger's and they've been quite clever in them and quite careful but you know to rule a line underneath it I just don't see that the public blockchains have the sort of properties and they're not they're just not engineered for the sort of problem that we have with identity yeah I see I see your point I mean I don't understand all of it I'm not very technically versed mostly I focus on the stories right behind behind these phenomena so but still what what I

understand is that you're saying it's very hard to separate the idea of currency from the public blockchains and it's also very hard to mix on chain and off chain and put it together on the same blockchain yeah look that that's absolutely key most um you know blockchain thinkers are at pains to tell you that blockchain and Bitcoin for example it different and that you know distributed ledger technologies don't necessarily have a coin or a token and all of that is true but if you go back to the to the public blockchains aetherium and Bitcoin separating the cryptocurrency is not simple to me it's

a bit like trains and railway tracks you know the the train is technically separate from the railway track but it doesn't do any good to separate those new things that they were designed to go together and it's you know the the truth is that Bitcoin and blockchain are so tightly joined together that you can't really tease them apart you have to go back to the drawing board which is exactly what people did at r3 when they created the quarter algorithm they went back to the drawing board hyper ledger fabric is the same sort of exercise so takes take some really serious engineering and some real brainpower to to make that jump to the sort of 3rd generation technologies you also said in our in our blockchain interview you

mentioned that we should look out for for blockchain version 4 yeah and that that would really be the real innovation and until then you know there's a lot of trial and error and failing forward so it's that what you see happening now with these new distributed Ledger's there was a speculative talk on my part imagining version 4 and I don't pretend to be authoritative about this these generations I do think it's interesting that a couple of things have happened in the last 12 months that look like like generation 4 and it's got more to do with governance and technology so there's a couple of really powerful new projects that have merged governance and

Technology one of them is the sovereign network was created initially by a company called Evernham in the US that has been rethinking identity and self sovereign identity very carefully and taking great care to solve a particular problem and I think it's fair to say that even Inman sovereign less concerned with identity now even even though they used the term self sovereign identity they're really much more concerned with component attributes that make up some of these identification and the problem that's out there you know the engineering problem with digital identity is really how do you have confidence in the attributes you know

think about kyc know your customer in banking you normally have to prove a number of things about yourself to open a new bank account anywhere in the world you need to prove you your legal name you need to prove that you live somewhere solid you need to prove your residency or your date of birth or you know your country of origin great you have to hold up your pallet or it's next to the camera and your face and place all those things so although there's different factoids are only as good as the issue one so you know you need a quote unquote official passport and you need a quote unquote official birth certificate and a proof of residence so there is an idea that some distributed

ledger technologies can help at least record the fact of an attribute and perhaps record interesting metadata about an attribute so who vouchers for an attribute when was it vouched for how do you revoke an attribute and how do you keep up a really accurate timestamp record of the you know let's say the life cycle of attributes so a lot of interesting work is being done by Evernham and another company called digital bizarre some of the IP of Evernham has gone into a new foundation called the sovereign foundation and in turn a lot of the code has been donated to a new hyper ledger program called hyper ledger in d so it's an interesting ecosystem and I don't know who the

winner is going to be in all of this and I doubt there will be a winner I think there will be a continuing contest of ideas around yeah how do you manage a it's an you know what is the role of a distributed ledger for recording the life cycle of an attribute so isn't what what you just mentioned is isn't that exactly combining off chain you know meaning this person really has a valid passport and notary X you know prove that on this in the state and therefore it is valid and then it gets written into a blockchain I mean that exactly mixing the off chain and on chain world that you make a really good point these new algorithms the plenum algorithm of of sovereign and the work

that Manus spawn is done with digital bizarre they're very conscious of the blend of off chain and on chain processes so let's just remind ourselves about how important the off chain thing is when when you look at Bitcoin nothing really happens off chain because it doesn't matter who belongs to which privateer right if Alice loses okay then so be it the the only action is on chain it's a purely digital world and it's quite different everywhere else in an identity in healthcare in physical assets you know if you're talking about land titles on the blockchain what really matters is the is the is the link between the

analog and the digital so what is happening off chain that allows a token or a digital representation on chain to stand for anything physical so if I've got a code on a blockchain that stands for a piece of land or if I've got a code on a blockchain that stands for a diamond how did that code get into the blockchain in the first place it has to happen through an off chain process you need to have it trusted usually a third party sitting off chain with a key putting up their hand saying here's a block of land and I'm putting it on the blockchain yes there is no such process in the original Bitcoin blockchain there you don't need any trust there so the really weird thing is that if you're

going to use the public Bitcoin blockchain for that type of use case you were um you you're really creating an enormous overhead you've got this proof-of-work algorithm that only exists because everything's purely digital if you have an off chain agent who's saying I say that this is Steve Wilson's passport and I'm vouching for Steve Wilson's passport number that person is the single point of failure in the system there's absolutely no point of then you know farming out outsourcing consensus to ten thousand computers on a

public blockchain to crank away computing something about you know Steve Wilson whose passport when there's a single point of failure off train now so you're absolutely right that the newer algorithms um you know they don't have enormous networks of nodes that are cranking away establishing consensus because really what matters is that you had an agent of change was vouching for Steve Wilson's passport so what's what's important is that we have some sort of robust decentralized distributed ledger that is secure and resilient and highly available to store those attributes and the attribute metadata but the type of

algorithms some of the covers is really radically different from the old proof of work and also maybe den what's different is the promise of what a blockchain really is right I feel yeah you know the the original blockchain was all about an immutable permanent ledger of every single currency movement and you needed that because you needed an R in the sky but the identity applications are quite different than the promise that you're looking for is really is it really quite different so I think that the modern algorithms are on and maybe this is the generation for we're hearing less about trusts we're hearing a lot less about immutability these things have certainly got to be decentralized

and highly available and those are good properties but you know the promises are different now we mentioned your daughter's know what are the new promises well the a lot of this gets wrapped up in the new governance so I'm seeing these fourth generation you're arguably fourth generation maybe it's too early to make that call that um the sovereign network is made up of a number of stewards so-called sovereign stewards that have a role in the the good housekeeping and the management processes that are occurring off chain as well as the software that keeps the chain itself together so the sovereign steward Network and the much newer algorithm again the hash

graph algorithm has now been commercialized by a company called hadera these things are also got networks of governance agents and governance participants that are looking after the housekeeping of the network and you know keeping keeping the network honest if you like and instead of having tens of thousands of volunteer miners that are really in it for the money in the Bitcoin network these newer networks that the newer distributed ledger networks much more tightly governed by organizations that are perhaps going through a different economic model too so it's early days but as I understand hadera the stewards and the the

gatekeepers let's call them in hadera are being remunerated for the services that they provide so instead of having a random mining bounty the the stewards and the gatekeepers of the new networks are being being paid for the work that they do and that should you know the theory is that should produce they're much better behaved less chaotic set of fluctuations and performance metrics as well interesting but what these block chains you're describing there are permissioned blockchain absolutely yes and also then you have a network of you know private agents that are for-profit companies maybe that basically maintain the function of functioning of these

block chains correct that's why it's emerging that's right interesting when you look at what has happened there have you may be revised some of your views you know that you had originally on innovation if you want to call it that in the field being somewhat misguided have you updated maybe some of your your views on this recently I think at the at the upper end of the scale there's a lot of really good work being done by some very smart people who know exactly what's going on and they're still continuing to engineer government systems and algorithms that are really interesting for much broader application than just cryptocurrency at the same time there's an enormous number of you know

entrepreneurs that are still absolutely using the public blockchains Bitcoin and aetherium for a whole range of use cases and I continue to say that the vast majority of those use cases are misguided mm-hmm you just you just don't put on a public immutable ledger the sorts of stuff that normally belongs in a database yeah right health records an entity and when physical asset Ledger's just don't belong on that type of data structure so look um I absolutely salute the really good work that's been done by our three hyper ledger Microsoft IBM hadera hash graph digital Bazaar even in

brilliant people doing good work and most of them are still very modest about where this is heading you took that the big professional services firms and they will say that roughly 80% of blockchain pilots or distributed ledger pilots they're going to UM end without you know they're gonna end and go on and do something else yeah I'm trying not to say fail but you know we by some measure you can pull them or fail you if you think the blockchain is a good idea and you do a pilot and it turns out to not be a good idea then I don't know what you call that maybe people are failing fast and there's nothing wrong with failure there's nothing wrong with Barrowman tation if you learn from it absolutely so that the figure I keep

hearing is 80% if you look at if you look at cross sum all of the the proofs of concept and so on 80% of them will turn out to UM change their mind about the distributed ledger and that's because interesting isn't it it's because this is a special purpose technology yeah it's very interesting hmm cool so basically they'd end up using just database and encryption and that will do just fine instead of using a blockchain you mean yeah exactly if you know if you're in a use case which is highly administered and there's a lot of off chain processes a lot of off train reliance occurring then the sort of promise that you get out of a distributed ledger er out of a blockchain it's just not adding a lot of

value yeah you know let me talk about health records from interim consensus I saw a demonstration of a health record on a blockchain and you know the people demonstrating it we're not fools and they were not you know to be fair keeping health information on a blockchain they were they were keeping hashes of of a health record on a blockchain and the purpose of the blockchain in their case I think was to store some metadata about the life cycle of the patient's consent so the patient's it sound the doctor and they do some tests the doctor says would you like your record to be kept in this new technology and bla bla bla a hash of the encounter is produced and digitally

signed and popped on the blockchain now I was interrogating the engineers and saying you know why are you using a public blockchain what's the consensus mechanism or what's the consensus objective and they said well we've got the consensus between the doctor and the patient that this particular thing happened at a particular time and we're putting that on the blockchain and I said so this is a public blockchain with it with a number of you know nodes all reaching consensus about that event they said absolutely you know we're using your theorem and the etherium network is reaching consensus about the event and I said but hang on the event occurred between the doctor and the patient

there's no mystery about the keys you know these people have got keys it's property management the doctor and the patient are in the same room they know each other they're using definite keys why do you need consensus about that hmm and you know what the engineer said well because the patient has given consent to have their record on the blockchain oh okay and I had this horrible sinking feeling that these people were confusing the words consent and consensus right and I've got kidding there was that level of confusion about what the promise of the blockchain is versus the promise that's that occurs between a doctor and the patient and in that particular scenario I can't imagine for the life of me I can't imagine what value is added by having a

thousand computers all voting and reaching consensus about the fact the doctor said yes to the patient like what is going on there that requires a blockchain what require what is required is that the doctor and the patient probably both have a smart card will they both got keys and secure elements and their mobile phones and you know they look at each other across the disk and they agree that this event is going to go into a database and that event is digitally signed and time-stamped you know at the point of the medical service it's it's kind of a it's not the sort of scenario that to me speaks of consensus and distribution and a whole bunch of computers trying to work out what's going on right here's no one certainly

was there to start up it was not a start up and and I'm not gonna say who it was I think it's going to turn out to be one of the 80% mm-hmm it's a proof of concept that turns it be maybe it delivers some learning and I you know these are these are smart people doing the work I just hope that they come through it after a few months of work and realize what's going on yeah well you know I think and we spoke about this in the past as well there's there's this whole blockchain phenomenon happening and I think it captured a lot of people's imagination I mean definitely started a few years ago where it just kind of I mean even though you said some people don't know about it and I think

most people don't know much about blockchain that all that they even exist but there is a community there that's where so much energy is concentrating on doing something with blockchains that changes the world why do you think that this technology you know still now ten years after this white paper is capturing people's imagination in the way it does look I think the white paper was very sexy it came at a really crucial point in the tech cycle as well as the economic cycle with the with the financial crisis coming up to ten years it'll be ten years and then I think since the Bitcoin white paper

was published it's very romantic it's very sexy you know Nakamoto is a is a tragic figure still nobody knows who it was and there's a there's a good idea that Nakamoto might actually be dead and so you know there's some tragedy and some romance attached to that but um and there's also there's a whole wave of people and you know you may have heard this yourself over at multiple times I've heard entrepreneurs 50 year old entrepreneurs say to me I miss the internet wave I'm not missing blockchain now that's a it's still a crapshoot it's um it's it's a gambling kind of um philosophy that says that that I'm gonna

um I'm gonna catch this wave now I'm not gonna miss out again interesting point I mean what I've heard just a few days ago is Internet entrepreneurs who were quite successful saying dot-com was interesting but blockchain technology is even more interesting and ten times faster yeah look certainly faster we've seen an amazing amount of activity occur in a matter of months whereas you know the internet took took a couple of decades to build that does not speak of success though I mean that is not the the rapid dumping of billions of dollars of so-called investment into this is not

a predictor of success you know people people had FOMO you yeah you know we we think that our thirteen-year-old kids have FOMO because they you know they have to go to bed and they're not allowed to keep cruising you know Facebook but there's nothing like the FOMO of a of a you know a 50 year old entrepreneur or a whole bunch of you know standard bricks and mortar companies who have been told that the future of retail or the future of supply chain is the blockchain and you better get onto it Wow you know the FOMO is astonishing and it's still quite difficult to be exactly clear about why that's the case you know I've been in technology for for 30 years and I have been told repeatedly that I

need to speak business I need to not talk about encryption and key lengths and technology but we need to talk about business outcomes that's absolutely correct but I look at the blockchain phenomenon and you know I'm astonished that people can can get so far and spend so much money based on something that's really not properly explained I've never seen anything like it you know there is a real lack of critical thinking and there isn't desperation to believe now I think the belief is really important blockchain solved this unsolvable problem it's very much like the Wright brothers fire you see something with your own eyes that you've been told is

impossible what happened for 10 years after the Wright brothers flyer was that everyone and their dog ran off to their to their garages and their sheds and they started building their own aeroplanes they copied the Wright brothers flyer and if you have a look at the first generation of airplanes through through 1904 to about 1914 again 80% of them were just farcical most of them crashed so the parallel is really strong it takes about 10 years to really do some proper engineering and we're seeing that you know we've we've traversed that that the examples of third generation alleges that are doing

quite well it's it's still early days but you know it's it's also interesting because I mean that whole theme of flying I mean that was the theme of my block chain film and I think it's it's a good analogy that you made and other people I spoke to as well where they said it is really like airplanes that you know the Wright brothers came up with something that nobody thought is possible in the Bitcoin white paper satoshi nakamoto came up with a solution that many people thought was impossible and then they wanted to get involved in it it created an energy where they thought I also want to be part of this very special thing that is happening

here but of course nobody knew with the airplane that it would end up where we are today right where it's totally normal to board plane and fly across the globe and you know there's hundreds of thousands of people in the air at any second during the day yeah but still right I mean the dream of flying for four people that's obviously impossible to conceive for maybe thousands of years and all of sudden it seemed possible and I feel here there's something very similar and so I believe you're right it is it can be fear of missing out but still there is something deeper there it's it's not just a business interest I feel it there something else - yeah the deep thing is

probably the freedom of decentralization and you know amongst computer scientists and amongst the early internet libertarians there was a realization that people could for the first time exercise a great deal of freedom in cyberspace they they were free to adopt their own personas they were free to connect in ways that were that were frictionless and not mediated by by parents or teachers or now banks you know it appears with Bitcoin you can done it kandi couple yourself from your banks and the financial system and there's a whole lot of freedom in that now the sad thing is that the freedom of Bitcoin is very qualified the freedom of

Bitcoin is that you can move Bitcoin between Alice and Bob without an intermediary and it appears that Bitcoin created decentralization so you know decentralization has been a holy cow of computer science for a long time or distributed networks truly distributed networks but I think that we need to remember that Nakamoto started with decentralization as a design point he didn't invent and say it was there already it was a it was a styling assumption that we wanted to find a way doing cryptocurrency without an intermediary now if you gave Nakamoto the design problem of saying let's do digital cache with an intermediary they would have

come up with something quite radically different let's assume that Nakamoto was a genius architect and they would have come up with something that that was quite different in a god a hell of a lot more efficient then um in proof of work so you need to remember that the block stone network that the Bitcoin and the public blockchain networks don't just deliver decentralization in any general sense they they only decentralize the supervision of cryptocurrency comes back to this off chain thing if you think that you can now do decentralized electronic health records I'm not even sure why you'd want to do that you know you're not going to decentralize a doctor and I don't want to crowdsource medicine you know I want

to go to a board-certified surgeon when I'm going to have an operation but if in some sense you think that you're going to decentralize medicine will disintermediate the power structure of medicine the Bitcoin network is not going to do it for you because it does not cope with that analog-to-digital on brain presence yes I get the point with the centralization that is probably one of the things that inspires people people are yearning for that freedom and you know the freedom of flight and in the freedom of decentralized computing decentralized competing on these block chains is really is really a qualified

property and it's just not quite what people imagine and hope it to be it's interesting though decentralization as a main motivator and then people at banks try to work on this on this topic on the banks money and time Nakamoto it must must roll in their grave the idea that I'm you know stock exchanges and big settlement banks are now running blockchain type of algorithms but you know that's the story of the evolution of tech are three noted that the idea of being able to share some banking information amongst competing banks not a lot of information but to compare and

share some information and you know richard brown from r3 put it really nicely a couple of years ago said you know you've got five banks sharing some data and they all know that you know that I know that we all see the same thing and that there's that radical transparency in some of these distributed Ledger's that means that a lot of information when it gets onto the ledger is already like pre audited you don't need to reconcile this stuff because the process of getting data well the process of creating the ledger entries means that everybody knows that the data is agreed to now that's that's a pretty powerful thing that means that you can settle things a lot faster you don't need a t plus one day you don't need a whole day

of reconciling databases mm-hmm because the the algorithm itself pre reconciles the day before it gets in the ledger so it's kind of a very qualified form of decentralization and again it's it's quite different from what the libertarian Nakamoto or the anarchist Nakamoto thought that the algorithm was going to was going to deliver so you know I really hope that Nakamoto wherever they are has a sense of humor and yeah it's it's a good point I mean speaking of sense of humor do you do you often get attacked from people in the crypto and blocked in space when you

criticize your projects or approaches oh yeah sure and you know I can be provocative and I think I can be a bit strident but some of the people out there deserve stridency you know there are there are some people out there that say the most preposterous things about this technology is going to change democracy this technology is going to change voting me you know voting on a blockchain is a is a bad idea and it's not just me you know nobody no less a figure than Ron Rivest siz that block trends are bad idea for voting and in my words you know voting democratic voting one person one vote you need to have one

person one key one vote and there's no blockchain out there that is even concerned with the key management problem of one person one key one vote it's not what blockchain does and so I am strident about that and you know some people take umbrage at that they're sacred blockchain being being I'm dismissed and I'd you know some things you can dismiss out of hand but you know you it's like it's like any technology why if there are some really good people out there that that that are working hard and and and I've got enormous respect for an enormous number of people that are working on this and and you know I think that we all get along quite fine you know I'm just one voice and um and if it always upsets

some people then that that's you know so be it that's that's certainly what's been happening in the last year's well it's also part of an evolution I think right I mean not everybody can agree and if we don't all agreed and hopefully something good comes out of it how did you I'm wondering how did you originally get into science into science well I was a I was a geeky kiddos I'm playing with chemistry sets and um and playing with maths and playing with sort of Pascal's triangle and stuff when I was a kid and you know I've always loved that I've always the practical computing to it I did a lot of you know learned a

lot of languages that in college but the stuff I really liked was embedded systems and um and programming I cut my teeth writing code for the world's first implantable defibrillators in the 1990s oh cool and no that was fantastic you know microcontroller 8-bit some measuring cardiac signals and generating pacing pulses and generating defibrillator waveforms and you know writing the operating system software for these for these implantable devices and playing with bread boards and so the software actually made things happen and and there was that was fantastic my journey

in identity and my journey and in in cyberspace and cybersecurity is really all of it has really been about the practical application of cryptography I I fell into digital identity quite accidentally in 1995 I had been working at that defibrillator company I spoke about working in the US and I had to it was a forced move the company was in trouble my family wanted to return to Australia and I found a job working for a little startup company doing PKI public-key infrastructure and I remembered a little bit of

cryptography from my undergraduate maths but became fascinated by by public key and what a lot of people now call zero knowledge proof so public key is a way of doing things with your private key that is easily verifiable by anybody out in the public now the original pic our ideas were that we it would be pretty cool to have a digital certificate that encapsulated everything that you needed to know about somebody and wouldn't be great if you had a certificate that proved that you weren't a dog and that proved that you had a particular bank account and you lived in Australia and everything you possibly need to know was in that certificate and I worked for a couple of companies that had that vision and it

dawned on me very early on that it was more about attributes it was more about watch than who like it's not who you are that matters in business it's it's what you are that matters you know what is your credit card number in fact I've got five different credit card numbers right so how do you know that any of them are true you know I've got five different credit personas but how do you know that it's really a patient how do you know it's really a doctor you know some people are patients and doctors at the same time but when a doctor goes to hospital and becomes a patient you do not want to know that it's a doctor in fact hospitals go to a lot of pain and a lot of process to treat a doctor as a

patient and not to treat it up there as a doctor so you know as soon as you get into digital identity management it becomes painfully obvious early on that you need to set aside the personal and you need to Zone in on paradoxically these sort of impersonal attributes and I found really early on that public key certificates were actually much better at proving the water than the who and so now I've been on this sort of 20 year plus journey of trying to leverage public key certificates and leverage their zero knowledge proof stew um to establish claims and attributes I guess because I've been doing that for some time that when when blockchain

identity came along three or four years ago it just you know just didn't really make sense it takes it takes a lot of discipline to separate the personal from the attributes and not many of those identity startups blockchain identity startups really had that discipline they were sort of waiting in boots and all trying to solve the trust problem it's a it's a strange category error that people make with blockchain um you know that the Economist magazine called it the trust machine with that mm-hmm cover article three or four years ago and you still see people very carelessly very loosely equating blockchain with trust and hmm this is not a matter of

semantics or philosophy you've got to remember that the blockchain was for moving money between people who didn't trust each other didn't want to trust each other didn't even question whether or not they were trustworthy they just want to move those those Bitcoin and blockchain is insanely good at doing that it doesn't deliver trust it delivers an amazing outcome with zero trust and the idea that that world that that bit of algorithm would deliver trust as well is a really serious category right all right I like the old Italian I think it's Italian there's a there's an old proverb that says you know it's nice to trust but it's better not to and it it's kind of Machiavellian and it goes back to a Renaissance

thinking about how do you do business with people and mmm how do you how do you decouple trust like how do you make things happen in a civilized society without having to question each other all the time and I think that you know the less said about the trust the better I've got to a point in my career where I really really deliberately wanted want to stop using the word identity and I think that we've really got to do the same thing with trust and a lot of sort of a huge amount of society is around dealing with people without trusting them and I think that's really important and I think again maybe there's that maybe that thinking is a

bit clinical and it D personalizes things and it leaves people with a bit of a gap and and that they are yearning for something that Surrey personalizes the Internet and puts a bit of magic back into it like breathe fire back into the internet and I think that you can explain a lot of the blockchain excitement around that that you need to breathe some fire back into the back into the network and you know blockchain certainly does at the metaphorical level let's take a quick break for a message from our sponsors the cart finance take tradition into the future harnessing a combination of cutting-edge technology and personal advice in the service of

your personal interests the card cuts through the financial noise and focuses exclusively on scientific and evidence based investing to give investors a better understanding of how to view the financial markets and provide them with the respective investment strategies to learn more please visit www.dsucc.org - finance calm that yuning - breathe some fire back into the back into the network and you know blockchain certainly does at the metaphorical level yeah I guess I mean that's definitely something I heard from people where they

said blockchain technology cryptocurrencies are a new kind of Internet and they enable the original vision of the internet that people had and you know can somehow swing back this network that we have now that's full of advertising and data problems either to something that's controlled by the people I think that's really a fascination and I I am 110% behind that it reminds me of the self sovereign identity movement which is a real calling for a repowering of the internet or rebalancing there's been the vendor relationship management movement vrm

which is the inverse of customer relationship management and it's powered by a real resentment of the digital divide the power that digital companies have have got the way that established businesses have leveraged networking to just maintain their the disadvantage that they have over us and look I get that a lot of what happens in social media and digital companies and the advertising field internet it just sucks and we've got to do something about it but you you don't actually have a lot of success rebalancing the internet by reclaiming identity because it's not identity that matters that identity is

like the lightning rod and it it certainly appears as though Google and Facebook and Twitter they identify us and then they take advantage of us but that identity is just a it's just the handle it's just the convenience if if it was possible to have self sovereign identity and if it was possible for Steve Wilson to say to the world I am Steve and I will tell you who I am and I will define my identity if that was possible you would still have Facebook with its cookies and it's and it's multiple signals still working out where I shop and what I like to drink and who I hang with and they would still be profiling me in and making a ridiculous

amount of money from big data so I think you've got to define the problem and frame the problem the problem with the internet and with the with the surveillance capitalism is that people are making unreasonable amounts of money behind our backs by surveilling and monitoring what we do and you know I've got I've got one word to say to you GDP our the the the the European style of privacy power that that is sweeping the world now it's just the beginning I think of a new order in the digital economy I think that yes I think that we are we are seeing and you know Ginni PR

is not all that new it's really a hardening and a refinement of privacy laws that have been around in Europe for 40 years and you know we've had them in Australia for 30 years and over a hundred countries around the world for at least 10 years have had privacy laws gbbr is getting a lot of attention because of the fines but really it's a it's it's it's the logical progression of data protection laws that try and put limits on how people exploit data in exactly the same way that we had new laws in the 1800's that controlled the way that crude oil was dug up and refined and shipped around the place so yeah when we have these massive new

revolution around data at the moment it's still Wild West like if data is this superb raw material that will feel the New York ahna me then you just can't have social media companies doing what they like with this stuff and making you know billion-dollar fortunes you need to have some sort of rebalance so I what I'm saying is that the the the the yearning for a fairer internet is very reasonable and is long overdue and it's coming anyway through um through GDP our and that's coming through the you know Americans will have their homegrown approach to privacy they'll do it their own way it it it will just mean that the people in the

street the individual is going to get a better deal out of this new economy and you know I think that we're going to achieve this without self sovereign identity and and without certainly without block train you know I think the block train will be an important niche in this it will be a it'll be another sort of database technology that it's going to be very important in some transactions but I just still remain unconvinced that blockchain is the type of thing that can you know that can revolutionize the Internet good point yeah no I think so you know it's funny very good friends that are trying to UM that are trying to achieve these outcomes but I think that the you know I think that we're going to get there you know you know in a more

complicated way and in I think we're going to get there through governments and regulation more than we are through any particular technology right see for me this is really about exploring new areas where people push technology to the forefront and and hope they can really make an impact with it and they may achieve that or they may not and thumb may fail fall you know flat on their faces and and lose their investors money but others may push the envelope a little I should say that I understand the cryptocurrency philosophy I understand the need that some people feel for anonymous or unregulated peer-to-peer money and it's just not my

world you know I'm sympathetic to it I think I understand it and and I hope it happens my first exposure to the Bitcoin white paper probably came in about 2012 there abouts it crossed my desk you know Bitcoin dot PDF and and I read it and found it absolutely amazing and what Nakamoto did was very surprising to me because you know I worked around digi cash in 1995 so I I had an idea how hard the problem was and and I thought wow this is fantastic but then I set it aside because cryptocurrency to me is just not my world

I don't I don't need it myself I don't think it's gonna change the world I think that we're gonna have fiat currency as the dominant thing forever but when I took real attention to Bitcoin and blockchain was when people started doing blockchain identity and I think I've told this story before I was at the 20th 2015 cloud identity summit you know in a crowd of about 700 people the creme de la creme of identity professionals and a keynote speaker mentioned blockchain is something to keep an eye on and said by the way who's doing anything with blockchain and and I counted about six hands went up in an

auditorium with 700 people and that's when I thought wow this is interesting I knew that there were 30 different box a an identity startups but the identity community itself was not embracing blockchain so you know as an analyst I thought that that indicated that there was a really interesting sort of disruption occurring and that I should get on to that so now now you've had that bifurcation now where cryptocurrency is a big thing and this you know there's hundreds of the things around there and there is this idea that there will be a you know a community money forever it's got to be said though that you know the vast majority of cryptocurrency that's out there now is

speculative and it's not really from currents absolutely to make money and it's kind of again I think that Nick moto would probably roll in their grave but just I think that it's it's abhorrent to the original intention of having a peer-to-peer community based non fiat currency meanwhile it was to really rub salt into the wounds the properties of having very very low friction cryptocurrency and a hybrid fiat cryptocurrency kind of model which people are exploring in places like Singapore you know that that again ISM is going to create some allergic reactions amongst the libertarians but you know let's be clear about what

problems which I solve them if there is going to be pure digital money instead of this silly paper stuff that we've got and if it's going to be not controlled by credit card companies then it's pretty predictable that the fiat currencies in them and the central reserve banks are going to see what this technology can do for them and and why not you know I don't I don't think the cryptocurrency people can object to that they've sort of let the genie out of the bottle and the possibility of doing things that are better less administered is now out there in the public domain so you know I don't think you can really be surprised by the fact that central banks are trying to get into that absolutely I

think that's what many of the proponents wanted for the longest time that the banks are getting into it and take it seriously only now what happened is that they came up with their own version yeah off it exactly Steve what's your view on smart contracts oh well you know I think we're back to the beginning again if the original blockchain just didn't do what people thought it did then I've got the same new about smart contracts I'm afraid it seems to me now I'm not a lawyer but I've been around lawyers long enough to know that the the essence of a contract is that two people are going to get together and they want something to happen they're going to agree on the

tubes of a contract there's going to be an offer there's going to be consideration and there's going to be some sort of settlement where they can agree that that something happened and they walk away happy the idea of a smart contract appears to be that most of the important things they can be codified or mechanized and put onto a blockchain now depending on who you talk to sort of magic happens some of the claims for smart contracts are really you know that let's call it it's frankly preposterous the idea that you codify everything and stick that on a ledger and then the idea that code is law some people say that

these my contracts will not just make a legal processes more efficient so let's come back to that but some people say that it will eliminate legal processes it will eliminate court cases you will not go to court anymore because the blockchain is perfect and the smart contract will be unassailable and there's so many problems with that I mean to begin with smart contracts of code and code is buggy and if people agree to use a piece of code but the code is buggy and therefore it doesn't do what you agreed it would do then whatever that thing is it becomes kind of invalid yeah it's the most employment or I think it's just you know

self-evidently ridiculous who sent it whose words were those the code is law I mean it's a hashtag on Twitter there's a lot of people take it seriously and I have argued with people at big consulting firms who have adopted this idea that that the smart contract will stand no matter what and you won't good water well I'm afraid that you do go to court in matters of contract law or because if the contract isn't what you thought it was something's happened you know in blockchain parlance something has happened off chain yeah the most amazing you know the most interesting thing to me about a smart contract is how the people agree to use the smart contract technology in the first place

so you and I might say we're going to execute some sort of um you know property transaction using the smart contract you know when are you going to agree that something happening in aetherium will represent my car and you'll you'll take delivery of the car and when you're happy with it you'll get paid in ether the really interesting thing to me was that you and I agreed to use the smart contract somewhere in meatspace you know off chain we thought that this would be a cool thing to do now we did that based on an understanding of what the smart contract is and that understanding can't be in the smart contract it has to be off chain or it has to be outside the contract and so there's a there's a you know there's a confusion of levels I

don't think a smart contract is going to be anything other than a than a a script like a piece of embedded software that makes things happen now if it's done in a decentralized distributed computing environment and maybe there's an agreement between multiple parties where elements of that agreement occur around the world like in shipping or something like that then that becomes really interesting that if you need different things to happen in a coordinated way the different points in the planet and everybody agrees that that's going to somehow be in synchrony and I think this smart contract on technology might be useful but we've we've got a demystified we've got to get away from this code as lawmen show and

we've got to realize that the really interesting thing about any contract occurs off chain and that I think that that's in itself that realization will help people temper their expectations of them you know the magic of the smart contract yeah right I mean often I read and hear also from speaking with people that they say well you know there's no need for smart contracts just for normal agreements that you and I would do if if we just you know if we buy or sell a car then it's not necessary but what if there are autonomous vehicles you know negotiating rights of way or things like this then that may make more sense

the shipping example you said I mean they are also see it yes certainly and the some of the best financially strongest use cases for distributed Ledger's are coming out of shipping where if you can help construct a shipping manifest in a way that the information in the manifest is sort of pre audited or pre reconciled and the state of the cargo is is known and agreed to and then it turns out that something is missing in the cargo you know the famously the avocado has never made it onto the ship because there was a you know flat tire and the lorry on the way to the port and somebody's disappointed they they they they look at

what's arrived at the destination they're missing something they're disappointed they get into a dispute the most of the prosaic business case that I've seen so far is that this comes from ibn that a a complicated shipping dispute could be resolved in five days instead of 60 days and if you can really streamline dispute resolution because people will agree on the set of the data and they'll be able to rewind or or unwind what's on the ship will unwind what's in a supply chain if you can do that quicker then you know time is money and there's some very prosaic efficiency calculations that are done that says that you know there's billions of

dollars of costs but simply in in in in the delay that occurs in these complicated transactions so that's great whether or not you know the idea of a smart contract comes along and adds a lot of magic to them I'm just not convinced the term smart contract is adopted sort of a life of its own and smart contracts are intrinsic to the etherium platform in in ways that that aren't actually terribly clear if you take a bit of embedded software and you know I explained before that I cut my teeth in defibrilator software there's you know there's nothing smarter I guess than an algorithm that sits inside your chest for five years and waits for you to have a heart attack and directs a 600

volt shock to them to save your life that's an autonomous incredibly complicated piece of software we're at 40,000 lines of software with with with three bugs Wow in the entire system and and you know that that's kind of smart but we didn't run around giving it any magical properties it was just well-designed real-time software that looked out for signals and responded to them in a you know in an autonomous way there's no magic there I think that a lot of the idea that smart contract is somehow more powerful than just a piece of automatic software that is responding to the environment and making things happen baby

yeah forgive my cynicism but but as a real-time systems engineer from the past I don't see that the smart contract is doing anything that we haven't been doing for a long time already except you know I do accept that having the same smoke contract running in in a number of different modes around the world in synchrony and if people agree that they they agree that it's going to do something for their collective benefit then I think there's some goodness in that but again let's let's just be quite qualified about what we expect the cinder to do you think it's maybe just a glorified script a smart

contract yeah I would put it that way I think it is a glorified script if what you said you mentioned the shipping example before is that an application though where you know smart contract would make sense or do you think are there do you see other applications too I think that's the classic supply chain and shipping we've got a lot of complicated inputs occurring to a shared ledger and that ledger is important at a number of different points around the supply chain around the world and you want to reach agreement really quickly about the state of that data then yes I just don't know that coin yet smart contract helps I really bought with the

word contract because I think that the you know all of the shipping companies and freight forwarders and import/export agents are all going to have to agree off chain that this technology is going to suit their purposes and they're going to pay their money and they're going to install the code and they go to press buttons and stuff will happen and you know like you say it's a script and the computer software will make things happen and the computer software might direct a payment you know if the ship gets unloaded and everybody's happy then direct payment instructions all around the world well you know I don't even know why those payment instructions would be cryptocurrency

I don't think it would necessarily be ether I think it would be standard bank transfers so absolutely there's some goodness there and and having a new scripting language that makes sure that all of these distributed nodes are in synchrony and they're all behaving the same way then that's great and that is goodness but at I call it a contract because you know the actual contract is formed of China yeah I see that point do you do you think that platform for that script or for that piece of code exists already or is there still work to be done to create a good one look I think I'm I think that some computer science is

required and I think the work that Butera and has done in the theory and platform probably has helped now I'm not a distributed computing expert and I do know some experts that find all of this mildly irritating because it was there were ways in the 1980s of making sure that distributed computers were all doing the same thing so distributed computing as a field is not new I think that that I think the etherion platform has created some new efficiencies and some new ways of you know making lease accessible more quickly some of the things that bother me though about aetherium is that I don't know why you

necessarily had to come up with a new language to make this happen so the solidity language is a little problematic it's brand new there are bugs in the language there are certainly bugs in the smart contract and it's a strange added level of complexity that if you're going to come up with a platform to do let's say distributed scripting and decentralized script England why you'd go and throw a new language at that at the same time no I've sometimes said that I think that that Bertrand was trying to do two or three PhDs all at once you know he was trying yeah I heard you say that yes

yeah you know take the Bitcoin blockchain and do it better and come up with smart contracts and inventive use programming language all of this stuff is on now forgive me for being a bit conservative but I'm a security guy and you need to take baby steps and they need to be really careful especially in cryptography you know it takes famously it takes 20 years for a new cryptography algorithm to be bedded in and accepted by the community and you actually don't want things to happen much more quickly than that you know insecurity and gotta be careful what you ask for in case you get it and the idea of frictionless cryptographic development and new

languages and and new scripts that are themselves buggy you know some auditors have come back and said that they're finding much more than one bug per hundred lines of software when they look at smart contracts you know you you you you you um you make haste at your own peril in security and I I mean that's maybe one thing right when I asked before what the crypto and blockchain space needs to to get to the next level maybe it's slowing down a little bit oh definitely you know you got to be careful what you ask for in security and all of this lack of friction in heist I think is is really perilous I think you

can certainly lay a lot of blame for the strife that we're in at things um you know frankly it at the agile movement and the MVP movement you know but I know that in the right hands agile is a good thing and I know that we need more artful real-world development methodologies I know all that but I also see time and time again the agile movement and the MVP movement being used to cut corners you can't you can't go around saying to people design security in at the same time is calling for Minimum Viable products it just licenses people to cut corners and by the time

you release an MVP and start making money off of it there's just no incentive left for people to go back in and do a lot of non-productive work hardening the security of these things so yeah times oblem isn't it I've blogged about this it's not a popular view but time and time again you can you can clearly see that really serious bugs out there have occurred because people are writing code too quickly I had a you know when I was running pacemaker software at this American company in the 1990s yeah I had a team of thirty people designing software that you know it had to be pretty cool it had to be pretty robust for pacemaker software and one of the innovations that we had now methodology was that we

actually asked people to turn their computers off for one day a week and design with pencil and paper and to get around whiteboards and to explain each other's software in English using using pen and paper and it's a it's a discipline that I think just is lacking now people tend to think with their fingers and think their keyboards and we we're losing the ability to think critically and we we're just rushing you know I think that I think this haste is something that is not always helpful so sure in all things in moderation but if we were to slow down a little bit and try and think more clearly about what

we're doing and to you know remind ourselves what the block plan was originally for I think that that would I think that that would help yes do you think dis haste and this I mean some other people would call it speed do you think that comes because there is so much money to be made into space or without a doubt the Stormo is about Tim it's about getting in quick and some of its sort of crazy you know the dogecoin that was created by a young guy who just wanted to see that it could be done and now he's a on paper or whatever you call it these days you know on on cyber he's

a billionaire off a dogecoin there's not a lot of rationality behind that and I've seen the guy himself laugh about it but he laughs very awkwardly because he's in a pretty good position and why not what what to say we live in such strange term then I just hope that you know you need a sense of humor about this but you also need to back your own critical thinking and look at that and say that's absurd it's unsustainable a lot of this is going to fall into a stinking heap pretty quick and and we're gonna return to some sort of normality mm-hmm have you seen that happen a little bit

maybe I mean more and more people are getting critical you know and when I when I made these interviews for the blockchain film it was hard to find people who had a qualified criticism you know there were a lot of ranting critics of everything including the Central Bank and paper money and and and you know the state and the governments and that is just not qualified criticism of blockchain technology there is some sanity you know I feel quite alone 18 months ago but there's a lot of people that have been quite harsh now about blockchain there's a lot of there is a lot of just outright cynicism now that says you know this is no more than a

database now I actually find myself not that extreme but I absolutely acknowledge that doctrine is not a database it's more clever than that but it it's much more specialized than any database you've ever seen but you know I was at the RSA conference last month and the famous cryptographers panel and it's not just famous because of the cryptographers but the panel itself is famous it's been a centerpiece of RSA now for 20 years then you get the absolute gods of this of this field who do we have this year Ron Rivest Adi Shamir with Diffie Moxie Marlinspike brilliant people and across the board

there was a very sober assessment that blockchain really wasn't something terribly special and in particular there are some things that you just don't want to do on a blockchain you don't want to one put health records on a blockchain you don't would have vote on a blockchain not yet now you know I think the cryptographers need to be listened to because they're sober they absolutely know what they're talking about but they've also good experience of patience and and you know they know that it takes 10 or 20 years you had Ron Rivest on the panel in particularly you know this is a diversion that we're talking about quantum we'll post quantum and quantum say Belcher things now it could take 20

years to come up with a quantum safe algorithm but Ron Rivest himself pointed out that it took ten or fifteen years for the RSA algorithm to take off and so this these things these things take time and I think that you you take that experience and and it tells you that it's very unlikely that something like blockchain could take off in a couple of years and change the world you know the world doesn't change at that rate especially when it comes to cryptography and and nit so we tend to think that that cyberspace happens quickly and we tend to think that you can write code quickly and create businesses and you know my god Facebook is what only ten years old so some things do happen quickly but you're seeing you seeing

that in another 10 years of Facebook might look really different and it might just look like noise it might look like these fabulous businesses and come and go ever so quickly but meanwhile the actual rate of change of security is and there's a bit slower and a bit more circumspect and maybe the ability for some crypto magic to fundamentally change the internet you know maybe that's wishful thinking is it or maybe I'm I'm reserving judgment you know we talked about this before I think that blockchain will lead to things that are very important but even so you know distributed ledger technologies that

transform shipping and transform the supply chain these are these are quite prosaic things and you might you know in another 10 years time you might still not see the internet looking looking radically different you know I don't think we're you know but I think we need to radically change computing to fix some of the horrible problems we've got you know we've got digital companies they're taking advantage of us they're shafting us they're using our own data behind our backs you know it's there's a horrible exploitation it's not right that the richest people in the world have made their billions purely out of data it's not right but I don't see blockchain and I don't see self sovereign identity

changing that I see gdpr and I see data protection laws around the world even in the US producing a new order and and sort of writing the ship and producing producing a fair playing field and I you know don't think that this is going to be a technological revolution I think it's going to be a regulatory revolution which is not as sexy as blockchain and it's not as sexy a sort of a new sort of libertarian computing decentralized network but you know the lesson is that society really changes I think the lesson is that society changes through regulation you know we saw it after the oil the oil

rush we saw it after the first Industrial Revolution you know steam power came along and sweatshops came along and child slavery and you know children living in coal mines chain came along but the the pendulum swung back to a fair playing field not through any new technology but through through governance and social movements and people voting for what was reasonable so I am it's not sexy but I think the truth is that the the the IT revolution is going to get corrected and it's going to be moderated and mollified by by social change and social institutions and new laws you know I

think that we're going to get an enormous wave of legal innovation in the next few years when when when the importance of data becomes so clear data is a really really weird stuff you know it's it's intangible it's difficult to regulate but I know that there are there there are libertarians out there that say you're never going to regulate data well no I'm sorry we regulate intangibles like intellectual property and we even regulate electromagnetic spectrum there's nothing more to me there's nothing more intangible than spectrum and it's tightly regulated and we buy and sell the stuff and fortunes are made off spectrum so I'm not anti-capitalist I'm not anti on

Berner ship I think that people should be making a lot of money out of data as long as you know that that bargain is Thera and as long as people making money aren't exploiting others so when I do think that the next 10 or 15 years will be really interesting I think that the let's call it the reaction to the to the Internet is still forming and the reaction to the data economy is still forming and I think it's going to be you know the the the the the action is going to be regulatory more than technological and and maybe also did that reaction is forming with or without blockchain technology Oh without you know the GD P R has got nothing to do with look Traynham again I use the GD P R is a sign of

things to come it's a sign of a new a new order a new one a new making the digital economy orderly and that's that's that's been a long time coming I think the guts of self sovereign identity has been a long time coming and I just think that the idea that that some the better civil rights online is will come from reshaping identity I think that that's just idealistic I don't I don't think it's going to play out that way I think that the asymmetries that we have in the power imbalances that we have in the digital economy will get rectified I'm not through reimagining identity but just through through saying them there should be controls on the way that

personal information flows there should be controls on the way that people monetize personal information that these these are not new ideas we've had we fed on data protection laws for decades and they're just becoming more important now because of the transgressions of Facebook and the transgressions indeed of surveillance society people have had enough they've had a gutful in them yeah well we spoke about that in in Silicon Valley last year I mean when you said most people have no idea what happens with their data and I yeah that's true it's absolutely true do you know the it was a very interesting case and you know comes back to Facebook yet yet again a

Facebook example but Facebook has got this weird and wonderful feature for people you may know and every now and again the people you may know facility throws up some absolute shockers so about some 5 or 6 years ago a bigamist two wives was outed on Facebook because the two wives but friend-request saying you you probably know Alice because she's a friend of Bob and Carol got this thing you know and then Alice got something saying you probably know Carol because she's a friend of Bob well it turned out that our lists and Carol were both married to the same guy the Facebook algorithm discovered this I wrote about it at the time I felt that

it was only a matter of time before I'm this algorithm started introducing and patience to each other you know mental health patients and psychiatrist patients and indeed that's what happened now most recently a sex worker in the United States who apparently led a very respectable double life sex worker and a normal business person of some sort ran a very careful normal mainstream life and she was a very smart digitally literate person who for years had maintained the sort of second persona nothing illegal about it was it pains to keep her different walks of life super on Facebook well she got outed on

Facebook despite her best efforts friends of her started getting people you may know suggestions that were revealing her secret life now I'm telling the story because it was broken by and Kashmir Hill a famous IT journalist and probably one of the sharpest people in all matters cyber that you could possibly come across and cache Hill looked at this case looked at it hard for months and months and and she could not work out where the signals were that the people you mayn't know algorithm absorbed to work out the sex workers double life now this three is really important because the very finest

investigative journalists in the world can't figure it out and yet the Facebook's of the world tell us that you know the world is full of this digitally sophisticated and digerati who are very happy with the way that Facebook works and they're very happy with the with the air driven economy and we're supposedly very happy with the bargain that we have you know free services free Facebook in return for data and and Mark Zuckerberg will tell you that people happy with that it's manifestly untrue people have got no idea what's happening with data the very best tech journalists in the world can't figure out how Facebook works and so I think that there's a you know I'm

going to call it as a lie there's a really deep dark lie in social media that overestimates the sophistication of the people now we've seen this before we've seen it in Big Tobacco when you know the Big Tobacco slogan was that people know that smoking is bad for you they make smoking a free choice and that idea that people smoke happily was the rationale for Big Tobacco people saying we're not responsible for cancer well I'm you know not trying to make social media as bad as cancer I'm not making that point but I am saying that social media companies know that people are not

as smart as they think they are and I think that there's an exploitation of that ignorance so I think that people are ignorant of how Facebook manages personal information and if you are running a business that that takes advantage of people's ignorance then I think that that's really wrong and and I think I think under consumer protection laws it's it's more than wrong mm-hmm and that could be another really interesting legal battle in the next 10 years will be to work out whether or not people are being taken advantage of and and I'm positive but I think what you said there your Facebook example is perfect because that opens the discussion for all these people rushing in and saying yeah but you know you can

use blockchain technology to to switch on certain parts of your digital persona and and you know only these persons can see it and then the other persons can see that part you could maybe monetize part of your data I mean what do you think of that of that promise there's been some interesting thinking for a long time about actually producing some new economic incentives and some direct payback for people to UM to do a number of things so you know to even up the playing field and to also produce some better behaviors at the moment of course people's privacy behaviors are famously counterproductive and we give away a lot of data and we don't seem to have any inhibition or any

friction about that and I personally think it's because we're still finding our bearings online I think that you know being online is such fun you know let's make no bones about it social media Twitter Facebook it's insane fun and it and it's it's it's important at every level and we've rushed into that we we just don't have our bearings in cyberspace we don't have any reliable intuitions and again I think that Facebook exploits that so there's been some thinking along the way that if you could produce some economic incentives in that it might produce better behavior I think that's important you know another missing analytical frame in all of this is simply change and another

missing analytical frame is is change behavior management and this is something that public health people know really well so shouldn't Big Tobacco before but certainly public health people know how hard it is to get people to look after their own health they know it's really hard to get people to give up smoking or even to do easier things like to eat properly into exercise more you know yeah right this is really hard and in security and with social media people do bad things they they seem to become addicted to to Facebook and they seem to give away too much information and they seem to pick bad passwords and they seem to take these ridiculous risks online now I

think we need to understand that through sort of frame with human nature and we we pick bad passwords we eat too much we don't exercise the knife and we drink too much you know humans do do stupid things and uh my brothers and sisters in security spend a lot of time shaking their heads at how dumb people are with their passwords and how dumb they are with Facebook but we can't blame the victim we can't keep blaming people for bad behaviour online because you know people have bad behaviors in every walk of life so there's a new there's a missing analytical frame there about how to produce better behaviors online well but then again this whole argument of the

companies should police themselves I mean no debts no you know we we're gonna get market failure we would get market failure and safety all the time one of the best voices on that issue is actually Bruce Schneier who's looked you know very cleanly and calmly at UM at cybersecurity is the safety matter and he points out you know very reasonably that we don't let auto safety be dictated by market forces when we know from bitter experience that safety will lead to market failures if it's not regulated so you know even the United States accepts quite willingly that some

things do need to be subject to enforceable rules and standards and I think that will come to that realization about cyber security and krishna is called for this you know before we get into the internet of things we need to be really especially careful and indeed self-driving cars we need to be really careful about security and whether or not we think that the companies can self-regulate the internet of things software quality in the internet of things it's we need to have some just just as we do with product safety and you know on the safety of children's toys and the safety of food you know we regulate food ingredients we regulate

restaurants we regulate public transport and I think that we're going to have to do the same thing with cyber security and privacy for sure yeah so I mean the the biggest challenge is moving ahead you think they're not technological but the regulatory psychological social well yeah let's have a balance of these things look absolutely we have technological challenges I just say that we're not going to fix these problems with new technologies so the idea that blockchain is going to change society is just it's utopian it's it's really bizarre we've and it it's unbefitting you know 50 years of technology experience we've learned the hard way that you know that you know you could say the computers

change society will will only in a very qualified kind of measured sense we've learned there and yet people come along the utopians come along they say that blockchain is going to revolutionize democracy well no it's not but you know it is important it's gonna is going to create some really good outcomes but I think the overall thing that's going to be required to make a better digital economy is going to be more about change management more about understanding human nature online making that analog to digital conversion this this is really fascinating for me there's so much work still got to be done on the analog to digital conversion and how has the internet changed human nature you

know Susan Greenfield and in the UK says that on people's brains are already changing because of the way that they absorb information digitally I think there are some really important outstanding questions that I haven't made up my own mind about that one yet but it seems plausible and you've got to respect Greenfield so you know how has the internet changed the other funny dynamic is that whenever whenever something really good happens in relation to the internet then the Arab Spring and you know that didn't turn out to be an unqualified success but the Arab Spring was attributed to Twitter

and you know the internet was yet again shown to be a revolutionary force for good whenever something bad and dark happens on the internet like the Silk Road or child pornography or or terrorism the defendants of the internet will then fall back in a really kind of Placid way and say you know the Internet's just a communication mechanism and terrorists communicate on cellphones and child pornographers always plied their evil trade so don't burn the internet and I think there's a really funny double standard it's well it's a very awkward sort of an idealism that goes with the good things that the

Internet does because of the Internet and the bad things that the Internet does do to people and I think that's a real sign of immaturity and I think we've quite found out now our bearings again on you know how how important is this communication technology we haven't we haven't sorted that out yet so I would yeah but that's gonna be super interesting yeah well I think a lot of people are researching that you know um I'm sure you know this is famous sherry Turkle yeah she's great yeah alone together and and I think it's also a little older already but yeah it's I think now's years later people understand and see themselves in these

books right it's not just game addicts who you know sit in in a gaming parlor for 72 hours in diapers who are addicted to these things it's no it's many many normal people too I mean have you have you found yourself made make a conscious effort to move more of your life off digital or from time to time for sure and you know I love going off grid I love keeping we're going on a long trek you know a couple of months time it'll be completely off grid I love it I certainly try and spend more time in with paper books and um yeah more time again I mean where you moved into e-books and now you're moving back into

paper books I was never into ebooks personally I'm a moment I'm gonna inveterate scribbler I'll show you the books that I'm reading and I'm writing in the margins all the time and I've just never found a way that just thatís actually do that with an e-book because things get lost in drives crash and stuff so I don't relate to ebooks in a in a dynamic kind of way I really I love I love paper books of I love my library I love my my magazine subscriptions there's a couple of different titles that I read voraciously every week or every fortnight and you know I think that that's important this sort of like you know say I never went to ebooks but I look at them things that

that some of my kids and young people are sort of returning to an analog aren't they they're they're listening to vinyl records and they they're buying books and they bike stationary and they're having picnics and there's a there seems to be a real arts and crafts or paradigm value in in the old-fashioned stuff which I think you know it's I'm pretty optimistic about this I also don't know people it's fashionable now to to decry people that are wandering around glued to their screens and you know this famous Banksy cartoon is a you know robot people the screens are turning us into machines and we're wandering around fixated to the

screens well I'm actually a bit more generous and then I think we most of those people staring at screens that in a sense of staring at each other you know they're connecting they're on social media is social you know I love it it's clearly problematic you know and I wish that social media wasn't actually profit driven and I wish the richest people that history is ever known weren't um weren't making their money in a way that they do but that they will correct itself by and large I'm I'm real fan of this stuff you know and I see people on the bus you know I commute many days and I see people glued to their screens but I think what they're doing is they're connecting with other people and it's not it's not an unmitigated disaster by any means yeah

yeah it's not I mean I see many people play a game many people laugh right maybe there's so a funny picture of something online yeah yeah it it can't be all bad but you're absolutely right there are definitely externalities that people aren't aware of where do you think all of this is leading in the next few years Oh God look please don't ask me that I'm not a futurist I think the futurists have got the best job in the world you know because they never help Hilde account for their own through their predictions and I and I do like you know it was it's attributed to Bill Gates that we tend to overestimate what will happen in one year and will will

underestimate what happens in 10 okay let me let me phrase it differently where would you where would you like to see it go let that's um I'd love to see a digital economy be a lot more orderly I'd love to see these fabulous things that we get through social media and free search and and free Maps you know we know that these things are not free we know that there's an externalized cost and I'd love to find I'd love there to be models where we can still get these things that are reasonable price what's funny is that most of us pay a ridiculous amount of money for our cell

phones you know Mike my plan is like a hundred dollars a month or something and it's expensive even if it's $50 a month or $20 a month there's a lot of money there's a lot of headroom in that see for us to actually be paying for the things that we currently ostensibly get for free so we don't you know I think that there's a lot of room for us to come up with new economic models and treat some of these things as a utility you know clearly social media is a utility it's almost as important as power and water and light so it'll be a long term maybe maybe 20 or 30 years away and

we'll figure out a way of making cyberspace like that yeah I am beginning to think about critical infrastructure for cyberspace so I am you know I blogged about how identity is dead and I think the Identity Management has really sharpened our thinking around provenance of identity in provenance of attributes and I'm beginning to think that this is not even about attributes anymore but it it's really about all data and the provenance of all data and we we've got a society at the moment that's basically built on petrochemicals and the processing of crude oil and we've got supply chains that mmm

pardon me we've got supply chains that run petrochemical raw material and byproducts all around the world on ships and pardon mines and we've got standards and rules and laws for distributing that stuff you know this distribution supply chains for for chemicals and I but I think that we we need to start thinking about what does supply chains look like the data in information and how do we make sure that if I'm going to move data from one place to another and be paid for it how do we have to ensure the quality of that data or the provenance of the data so in identity management we've been thinking about the provenance of attributes for a long time I I just want to generalize that discussion and start thinking about the provenance of

all data and then that would lead to a better imagination for critical infrastructure for data here's a here's a wild thought I mean poor old Equifax people are running around saying these data brokers are you know the days the numbered but I actually think that data brokers may be more important than ever in the next 10 or 20 years and it's not that they're too big to fail they're too important to fail we've got to figure out a way of cleaning data seriously enough that that we just don't have those breaches or the breaches are less catastrophic so there's two things happening there if data is as valuable as you know Facebook knows how valuable

it is well it's about time that that society and regulators knew the money value of data and actually made people invest in proper security you know security is run on the smell of an oily rag these days we if you know that what's a good example the Yahoo bridge with emails and passwords a conservative estimate is that that data on the black market is worth several billion dollars you know just a couple of bucks per record with a billion records breach now what was your Yahoo security budget it's a very very big company and they've got

a good security budget but it wasn't a billion dollars the security budget is tiny compared to the value of the assets so there's something wrong with security and there's something wrong with regulators expectations of what a good security budget is so you know my response to the Equifax problem was is one the security budget clearly wasn't enough or it wasn't smart enough and we need to do something better about that we also need to protect data so that if and when it does breach we can clean it up or we can we can neutralize it or we can make data less valuable to thieves and so all that thinking to me very loosely goes to critical infrastructure and what what does critical infrastructure in the

data economy look like when will we start sort of sketching that out so I that's where my vision is for the next slew 10 years regulatory approaches and better attention to data supply chains mm-hmm cool yeah I think it's a it's a very important infrastructure that's just emerging still Steve's youth do you think you'll still work with blockchain technology in three to five years look I think I'll still be looking at it as an analyst and so on I think it's all gonna die down I am but I don't think that it's going to be as interesting in three

to five years time i am i just recently um sort of engaged with somebody on twitter who said that he said that blockchain in the next hundred and fifty years will be as important as the internal combustion engine has been for the last hundred and fifty years and and I equipped on Twitter that I think the next 150 weeks is going to be very interesting from blockchain which is to say about three years I think that a lot of things that we're seeing now we're going to disappear in the next three years I think that that experience of 80% of blockchain ideas turn out to be better done with conventional technology I think that that means that um I think I think that people will really calm down and the

outcome will be will be generally positive you know there is a lot of reform and a lot of you know smarter use of technology that block trains inspiring and there will be these distributed ledger technologies that are much more efficient than what we've got now I think there'll be new ways of reconciling databases and keeping keeping databases in sync and um you know that's plumbing incredibly important plumbing and maybe critical infrastructure so one but you know I really sincerely hope that we don't have hundreds and hundreds of you know I CEOs in three to five years time and people still you know this insane sort of money grabbing that's happening with icos it's just it's just a borin and um you know

it's not sustainable I think that that'll calm down yeah well there will be natural selection yep mmm-hmm good um Steve this has been really really interesting again I always love speaking with you thank you Mike but thanks a lot for taking so much time today man well really appreciate appreciate your time and energy for this project tourism it's just fascinating thanks so much for joining us today more info on our guests and our sponsors isn't the show notes of this episode and on the podcast website the blockchain and ask.com to help people find this podcast it's

important that you download subscribe and give it a top rating and review on iTunes or on the podcast platform of your choice I'm Manuel stackers and I thank you very much for listening [Music]