I want to thank you all for coming I'm
going to just give you a idea of what
the agenda for the event is and once I'm
done with that we'll have Jonathan Askin
who has been critical for helping us get
this venue and also in the the general
Brooklyn Technology and entrepreneur
community give a little bit of an intro
and just an explanation of what he's up
to these days so you know overall we'll
do that I'm gonna give you a little bit
of an overview of what the meetup is
some of you may be new we certainly want
to thank everyone who's helped out from
the venue to the volunteers up front of
help people sign in and and allowed me
to do other things
and of course to Melanie who's been
generous enough to donate her time
tonight and we're hoping not only is
this talk enlightening but you'll have
an opportunity to have some questions
for her that she can address at the end
after that then I'll do a book giveaway
which will just be randomly from
business cards that have been left off
and that'll be that and then you're free
to hang out for a little while longer
and mingle so Jonathan do you want to
tell us what you're up to just just one
minute of your time I'm a professor here
at Brooklyn Law School this is the wrong
law audience to say this to because I
suspect two years ago all of you had
heard of blockchain about two years ago
I decided I was gonna take a leave go to
MIT and teach blockchain my students my
colleagues with possibly one exception
didn't know what the hell I was talking
about two years later you can't say
blockchain without everyone in the room
knowing what you're talking about and
being excited and interested that's the
curve it's taken over the past two years
my sigh all I want to say to the folks
in this room is my students and I give
free legal support for bootstrapped
adventures usually pursuing either
socially virtuous missions or activities
that the law hasn't quite anticipated as
a result this semester we find our plate
filled with blockchain ventures so my
ask for you all is if any of you are
pursuing interesting blockchain or other
new technology ventures and your
bootstrapped you need creative legal
support I got an army of law students
most of whom are in the back of the room
take
attendance here we're excited by
blockchain we're excited by the novel
issues we're also very excited about the
policy implications of blockchain if you
want free earned media planning in the
policy arena and using law students as
your drafts people as your scribes it's
a nice way to go you get yourself on the
map you now are perceived as a leader in
the blockchain movement that's of mine
so I only asked I want to collaborate
with you all and with that back to Mike
I love everything that Mike touches the
Brooklyn future always has a home here
whenever he needs it the Brooklyn Law
School has been really essential to our
growth when this was an existing group
and I'll go into that a little more but
I had about a thousand twelve hundred
members who was well-run and then the
founder running a tech company got
bought out by Facebook and went on to
bigger things I think you can kind of
understand it and then it was dormant
for a year and then I took it over and
I've grown it to its current level so I
want to give the volunteers who have
helped us mostly sitting in upfront just
maybe you guys want to come up and tell
us what you're up to and and if there's
any kinds of announcements you want to
make or queries who want to put out
there yeah so guys come on up just so
that everyone can hear you who's who's
new here by the way in in the meetup
first timers Wow
great and most are you guys involved
with blockchain sort of outside of work
with work your own businesses or outside
of work okay all right so yeah hi
everyone I'm Chris Aaron Aaron I'm a 3l
here so I'll be graduating in May I'm
mainly here because my undergraduates in
computer science of watching Big Love of
mine because it's a good mix between law
and computer science as it starts to
sort of infiltrate the legal sphere and
cause real world change so I'm excited
to see
how that turns out as we go into the
future and I'll be starting a job in May
as a lawyer but not not doing blockchain
work unfortunately but maybe maybe in
the future and thanks for coming out
everybody yeah I'm Martin Sante yeah I
got I got interested in blockchain a
couple months ago mostly through the
enthusiasm of Professor Askin but I got
really interested in finding and through
the blip at school I'm gonna be trying
to working with a couple of blockchain
companies yeah I just think it's a
really interesting technology I think
it's the future I I'm Lucy Smith I used
to do digital art before arthritis
robbed me of that ability
I'm Clinic and the thing that interests
me most about blockchain is how it can
protect Internet internationally
intellectual property as a former artist
and a person who has many friends who
are artists both writers and digital
works of art and film and stuff I'm
really interested in that out watching
can apply to that hello everyone I'm Tom
freaking son I'm also graduating I'm a
3l I'm graduating after this semester
and uh I've been interested in
blockchain like everyone else probably
like the last couple of at the last
couple of months but on and off
throughout the past few years in do
develop clinic I'm working with startups
with that's interesting that's working
with with the blockchain technology and
uh yeah I'm just excited about in
I learned about it so thanks for coming
out and I'm looking forward to great if
you want to get in touch with any of
these folks you know you could either
contact Jonathan or contact me and I can
share a contact information or connect
you guys so if you'll indulge me I'm
just gonna give you an overview of the
group I'm the organizer I'm not gonna
recite every bullet point but you get an
idea of the scale we've been in some
other venues but Brooklyn Law School has
been predominant and really our most
reliable I do produce these events with
help from volunteers like this but I
also book professional speakers is for a
living so that that helps me a little
bit as well there are a couple of other
futures meetups around the world that
are comparable two of them are larger
one in London I believe actually both of
them in London and I would encourage you
you know they do a lot of webinars and
and very active if you're ever they are
probably every couple of weeks one of
them is running something we've been
covered here and there through some
local newspapers even mainstream
newspapers sponsors of course I want to
get good credit to Brooklyn Law School
and there are affiliated organizations
Joly MacFie and his wife are regular
videographers for us and we appreciate
that because that gets us on to the
YouTube channel it expands our reach my
company again booked speakers and so
futurists are one aspect of that but I
also work in a lot of other endeavors
I've given you the the self promotional
stuff you can check out that website if
you're interested in even just finding
out about other futurist speakers these
are some of the people that I've worked
with Martha Stewart Marcus lemonis some
famous chefs some folks that have run
very large companies maybe not household
names in general we're looking for
topics that have their they're not just
a trend for this year or a fad but
something that has legs and we're the
speaker
can really stretch and you might call it
speculate and look out five ten fifteen
twenty years ago that was the nature of
the group when it started and for the
most part that the presenters here have
had that that sort of attitude of just
looking out pretty far out we're not
limited doesn't have to be technology it
often has been but it could be I've done
things on the ocean
chocolate women and innovation it just
anything that has some sort of long-term
outlook who's in the audience I mean it
does vary depending on the the nature of
the event but it's it's usually folks
that are in technology media a little
more entrepreneurial and I also run a
network of other futures meetups that I
like this in other cities maybe if
you're going there you might look them
up and sometimes we collaborate in terms
of just sharing ideas on talent that
those are some of the cities there are
some others as well and I've gotten to
meet those folks as well these are some
of the authors that we've had here all
have done very well and most of them are
professional speakers including Melanie
and I would encourage you to to look
into what they're doing those are some
of the people that we've had a few of
them are members again like like Melanie
David roses a member I believe Gary
Marcus as well coming up I'll give a
teaser I'm working I'm trying to get the
guy who wrote the screenplay for Blade
Runner and you know that that that the
new one is coming out in about a month
and he happens to live around here so
it's there's a possibility he's a very
interesting guy there's I mean there's I
could fill 20 pages with all the
resources that are out there on futurism
technically is is an interesting group
that sort of conglomerate's various
meetups together they have a publishing
arm global net
21 in London futurists of the two very
large and active futurist meetups
and based in London but they do have you
know webcasts and live streams that you
can even catch as well and I would
highly recommend it the Internet Society
has been a big supporter through Joly
MacFie and they also have a pretty
fertile website a lot of features top
on that and I'm just giving credit to
some of the the you could say the
blockchain oriented entities that have
promoted this event so we appreciate
that if you're just looking for weekly
event listings in technology and
entrepreneurship
Gary's guide Charlie O'Donnell's
newsletter and Digital New York are good
places to see I could always use help
promoting this getting new members even
getting ideas for speakers just the the
tactical production of this and just
come to me later or contact me I'm
always happy to work with new people and
so I guess I am gonna give you a little
bit of a introduction to Melanie one
thing is we'll do some Q&A at the end
and I'm sure a lot of you you know
there's a lot of engagement in this
topic I would just ask please ask the
question not no long self-promotional no
tirades just ask the question so that we
can indulge as many of those questions
as possible that's sort of my pet peeve
about these meetups so and this will be
videotaped as well just so you know so
Melanie swan is a philosopher and
economic theorist at the new school in
New York City she's an author of
Blockchain: Blueprint for a New Economy
and has published many articles papers
and blue book chapters on this topic if
you go to her site melanieswan.com
you'll see some great links for that she
leads the Institute for Blockchain
Studies an independent nonprofit
research institute examining the
theoretical philosophical and societal
implications of blockchain technology
and that's what I found appealing is
that this wasn't someone who's just
going to maybe they're not selling a
certain platform they're sort of
agnostic they have a very holistic and
long term view and so it would be a much
more credible and objective overview so
our education includes an MBA in finance
from the Wharton School at the
University of Pennsylvania and a BA in
French and economics from Georgetown
University and she's affect the faculty
member at singularity University which
is also another great resource if you're
interested in futurism check out
melanieswan.com
or on Twitter @lablogga
and please welcome Melanie is it okay
the volume if I'm just speaking like
this yep well thank you very much Mike I
really appreciate that kind introduction
and I am very happy to be with you today
a group of forward-thinking futurists
like yourselves
I enjoy supporting the futurist
community and talking about one of my
favorite topics blockchain the as we're
getting started here how many people
have Bitcoin with them today about
either more even maybe more exciting at
the moment i dot e th domain name owners
few people
what about ICO investors few ICO
investors ICO issuers future or current
offering if you're in the US and what
about ledger X options traders anybody
doing this this week or last week okay
great and even if you've never heard of
Bitcoin this talk is for you too the
slides are posted on the event site and
also online at slideshare.net /local got
my bio so i wrote a book called
blockchain and O'Reilly book and the
reason I wrote the book is to inspire us
to build this world the talk is about 45
minutes long and covers an introduction
a technical overview lakhtin igoe's
blockchain economic theory why do we
need blockchain smart network
convergence and a conclusion
so blockchain and distributed ledger I
use the terms interchangeably keyword is
protocol blockchain conceptually is a
software protocol just as SMTP is a
network protocol for sending email
blockchain is a network protocol for
sending money on the Internet more
technically blockchain is the tamper
resistant distributed ledger software
underlying crypto currencies like
Bitcoin for recording and transferring
data and assets such as financial
transactions and real estate titles via
the internet without needing a third
party intermediary now ditch distributed
ledger is the general form of the
technology and blockchain is a little
bit more specific the terms are most
often used almost interchangeably a
ledger is just a file that keeps track
of who owns what a distributed ledger
has the four properties that we're
familiar with a shared transaction
database among network members updated
by consensus records timestamps in a
unique cryptographic signature in a
tamper proof audit history available for
all transactions then blockchain is just
another technical detail added to that
of the sequential updating of database
records / chained cryptographic hash
linked blocks another big distinction is
public and private Ledger's public is
just like it sounds it's open to anybody
the Bitcoin block chain or the etherium
blockchain anybody can join the internet
get an address and book transactions
your identity is unknown or pseudonymous
and if you're really concerned about
privacy you might use Z cache and there
are zero knowledge proof s--
public chains on the other hand are what
industry and government is
using users have logins and credentials
and access to just certain kinds of
blockchains the bigger context of the
blockchain revolution is that blockchain
is fundamentally the next phase of the
internet it's not just a FinTech it
applies to every industry just like the
internet we could think of there having
been to fundamental eras of network
computing one everything so far has a
been about transferring information over
simple networks and now we're entering a
new phase of transferring value over
smart networks blockchain is for every
industry and there are four types of
applications those involving money
property contracts and identity money is
cash real-time payments clearing of
securities and other assets smart
property is the idea of making an
inventory a record of all kinds of hard
assets like auto titles in a
cryptographic asset registry and then
transferring property with these
Ledger's
smart contracts is the idea of
instantiating any kind of contractual
arrangement between parties on a
blockchain probably for some portion of
automated execution and this could
include wills partnership agreements
registering trademarks and copyrights
fourth is identity the registration and
confirmation of entity on blockchains
for example a birth registry or driver's
licenses blockchain is the internet all
over again but because it involves money
and property it could take longer it's
more sensitive we saw with the
information internet the graph on the
left that growth has been steady over
the last twenty years but still in the
graph on the right only half of the
world is online corporate email alone
was the killer app for 15 years
so the money internet could take a lot
longer but its impact could be more
profound as a computationally based
society has less need for a
brick-and-mortar institutional footprint
what is at stake in the blockchain
economy is the only sectors not yet
reinvented for the Internet era
economics law and government can be
redesigned we did a really great job on
the first part of the renaissance
enlightenment in scientific information
but as Emanuel caught encouraged us to
think autonomously free of the dictates
of external authority perhaps in the
crypto enlightenment we could really
challenge ourselves to think about what
is authority and what kind of
relationship we would like with it in
our lives technical overview so we have
some Bitcoin holders here with a wallets
so you're you all it holds keys not
money keys that you control the access
to your money when you want to execute a
transaction you open up your e-wallet
app scan the QR code or address of
whomever you'd like to send some funds
to and submit it on the blockchain if
you have funds in your account at that
address
they'll be transferred automatically by
the software the Bitcoin network is
peer-to-peer and so you might wonder how
robust is it right now there are
approximately 10,000 nodes worldwide
with the full database of transactions
of Bitcoin and you can host it a node
yourself if you would like just download
the software Bitcoin mining is the
accounting function to record
transactions the way it works is that
mining chips do what's called find new
blocks with the proof-of-work algorithm
the network regularly issues random
32-bit and nonces or numbers
per specified cryptographic parameters
the mining software constantly makes
guesses at this knots at the rate of 4
billion guesses per second one machine
at random guesses correctly the winning
machine then confirms and records all of
the transactions and collects the
rewards because it's a peer-to-peer
network then all the other nodes also
confirm the transactions and append the
new block to their copy of the
distributed ledger this wasteful effort
is purposely designed to deter hacking
or malicious players blockchain echoes
have been in the news a lot and that's
because these initial coin offerings or
token sales have raised almost two
billion dollars cumulatively and ICO is
analogous to an IPO but instead of
investing in the equity of the company
you invest in a specific project and
that's more liquid for both the company
receiving the funds and for you as an
investor
ICO's received more than four times the
size of VC fundings
in 2017 so far and as you probably saw
in the news some of these ICA's were
pretty high-profile bats
receiving thirty five million dollars in
just 30 seconds for example it's a
real-time advertising bidding company
and so unsurprisingly the SEC issued
guidance in July they investigated
initial coin offerings and found that in
many cases they behaved like a stock and
therefore are like a security and are
regulated and need to be registered in
the U.S. not just ICO's are behaving
like stocks and would need to be
registered but also the exchanges they
trade on the SEC hasn't said anything
specific about smart contracts yet and
when they look at a security they apply
the Howey test to test different aspects
of it as to whether it's a security or
not
so what's safest in the U.S. if
are wanting to issue a B and ICO issuer
is to have a regulated offering likely
qualifying for a reg d exemption but
that's the way to proceed in the US the
UK earlier than the US has guidance said
that they are not going to regulate i
codes and what that means is that
they're not illegal but they're not safe
so the UK said it's not safe for
investors we're not even going to look
at it China this week as you probably
saw in many ways banned
ICO's and the exchanges so already
today some of the exchanges are making
announcements about closing Russia said
they'll probably have some regulation by
year-end and interestingly analogous to
the Delaware C Corp there's the
Gibraltar DLT regulated entities
initiative which is positioning ICO
registrations as a specialization that
they're offering I think that we should
see echoes in the bigger context of the
crypto market becoming more
institutional even though the current
market cap of cryptocurrencies is 125
billion which usually doesn't get a lot
of attention in the institutional market
it is an asset class that has arrived
and therefore all international asset
allocators need some kind of exposure
and they're looking for how to get it
three ways that they are starting to get
exposure is by investing in regulated
IKOS through ledger X cryptocurrency
options and through the growing
institutional exchanges that allow large
customer orders which is over 20 million
dollars to put the size of the crypto
market cap in perspective it's 125
billion dollars which compares to the
S&P 500 22 trillion and the US GDP is 18
trillion so it's tiny
but on the other hand 125 billion is a
world top 60th country and it's expected
to grow over time even if not
immediate future so I did want to talk
about ledger X because I think this is
an extremely important development it's
a New York company that's trading has
approval to trade cryptocurrency options
and they began trading last week this is
significant because this is an
institutional product to acquire this
crypto asset exposure and in and if they
become listed on SIBO and large
exchanges that could be extremely
important indeed on their website they
may have a note that we're throttling
participation due to outsized demand so
this is an indication of the
institutional market developing I'd like
to talk about two investment risks first
is immature infrastructure the key word
is protocol blockchain is a software
protocol the protocol layer is not the
shiny application layer that everybody
wants to invest in so we could be
putting the cart before the horse in the
sense that we can see the obvious
applications but they aren't going to
work until the network infrastructure is
in place and we might expect different
cycles of boom and bust just like we saw
with the dot-com economy that the
network was not in place in the early
days and so we need to wait for that for
the benefits the other risk is visa
class processing though visa processes
2,000 transactions per second and
blockchain Bitcoin right now seven
transactions per second so how are we
going to reach visa class processing one
way is through the consensus algorithm
that's used what we would expect is that
different in the ecology of blockchain
every different industry might have
different kinds of chains with different
kinds of consensus mechanisms so already
factum has a Health Care billing chain
they do batch processing to the Bitcoin
blockchain the supply chain industry has
a way of using
as receivables financing so every
different industry will have very
specific business practices that dictate
the kinds of blockchain that would be
relevant plus different levels of
operations imply different kinds of
security so when I'm just confirming
information on a supply chain supply
chain shipment that's a lot different
than when I'm transferring money the
Consensus algorithms meaning the way
they infer the network execute the
transactions right now involve
proof-of-work
which is how the Bitcoin blockchain runs
and that may not scale to visa class
processing the other main method is
proof of stake proof of stake is a
complicated scheme of tiered voting by
staked participants and the worry here
is are we recreating agent based power
structures that we're trying to avoid
there could be other kinds of proof of
algorithms and development perhaps those
based on computational completeness the
economic transformation story so how
many people remember a micro or macro
economics class somewhere in your
background lots of people so you know
that economics is the study of the
production distribution and consumption
of goods and services economics concerns
individual and group decision making
about goods and services and the
consequences the fundamental dynamics of
economics don't change no matter what
kind of economy were in wants are always
bigger than available resources there
are costs to decision making and there's
scarcity whether material inputs or
intangible inputs like time and
attention so it doesn't matter what kind
of economy were in the dynamics are the
same in a classical economy of material
goods in a digital economy of digital
goods such as Spotify or in a smart
network economy where there are
automated smart contracts exchanging
cryptographic asset
one of the big current economic drivers
is technological unemployment
outsourcing jobs to technology and the
key challenge is an orderly transition
to the automation economy some
economists warn that over 50% of jobs
are on the risk of being automated in
the next 20 years other economists
wonder what's taking so long when we
could be automating much more quickly
what is clear is that we're in a multi
agent computational economy with an
increasing presence of computational
agents there might be three different
domains in the economy human to human
economic transactions human machine
collaborations and the machine to
machine economy one challenge is trying
to model the behavior of computational
agents because we not might not be able
to apply the same kinds of ideas like
rational actor theory that we do to
humans it's also clear that economics
has become a set of general design
principles extending well beyond the
traditional setting of markets this book
money and the early Greek mind discusses
the idea that the concept of money
was what inspired Plato to his general
ideal theory of ideal forms a key
challenge in front of us is reinventing
economics and government how many people
have heard of the longtail almost
everybody so the traditional idea was
that markets behaved per the 80/20 rule
80% of sales come from the 20%
top-selling products but we find this
isn't the case in digital markets here
we can sell more of less and focus on
the long tail itself as a market
researchers have found that 37% of
Amazon's sales come from niche books
and that probably digital markets have a
behavior more like a power-law than a
normal distribution the key point is
that delivering to personal preferences
is a marketing strategy that works
therefore this idea of longtail
personalization might be applied to
digital marketplaces for financial and
government services one size no longer
has to fit all as any two parties can
meet on a blockchain and transact in an
eBay for money so to speak and this is
behind discussion question three about
whether you might prefer a cookie-cutter
mortgage or personalized mortgage with
long tail financial services we might
start to rethink societal problems like
debt with a smaller chunk capital we can
rethink debt and also Financial
Inclusion blockchain could be the next
leapfrog technology inviting the two
billion underbanked into in the world
into the market as well as the 70% that
lack access to land registries we need
decentralized networks because hierarchy
doesn't scale it doesn't make sense to
build out brick-and-mortar bank branches
and medical clinics to every last world
every last mile in a world of digital
services so like cell phones digital
solutions with wallets and deep learning
diagnostic apps could be the solution
who's heard of scenario planning
scenario planning is a classic futurist
technique to put a framework around
uncertain futures the idea is that it's
very difficult to make a point forecast
about the future but we can say what
kinds of future worlds might show up the
way to do this is to identify the two
key drivers in any market so in
blockchain it could be government
regulation and the rate of adoption of
the technology then you map the extremes
of the two drivers into a quadrant so on
the x axis we see slow adoption
as one of the technology on one extreme
and rapid adoption on the other side on
the y-axis an unregulated market - a
highly regulated market and then we have
four different states of the future
world now as news comes in we can
evaluate where we are and so this is
discussion question number two where we
have some news so this recent news the
first item is sprint and Softbank have a
new blockchain telecom consortium is
this good news this sounds like good
news more like good news than bad news
is Sprint and Softbank
in a blockchain consortium is that an
indication of regulated markets maybe a
little bit not not hugely because
telecom is a regulated market but it's
not really about regulation what about
adoption though when we hear is this
good news for adoption yes this is
definitely good news for adoption and so
I put this this news announcement here
in support of adoption and some degree
of regulation so let's look at our
second news item which is ripple and r3
file contract dispute lawsuits is this
good news this might be it depends on
who you are and this could be it sounds
like bad news maybe in the short term
but possibly good news on a longer term
basis is it an indication of regulation
yes definitely because as a legal
industry is involved and precedents may
be set what about is it indicating that
adoption might be fast or slow might
slow adoption in the short term but
clarify it in the longer term and so I
put for me it's definitely indication
that we're in some kind of higher
regulated market environment and so this
scenario planning is just a way of
mitigating risk when we think about
different kinds of future worlds
economics and finance our systems that
we have thought about for organizing
access to resources economics mainly
deals with the present timeframe and
measuring the past and finance deals
with the future capital debt investment
one analogy is that cryptocurrencies are
to the spot market as smart contracts
are to the futures and options market in
the cash market the economist Hayek
thought that each financial institution
would issue its own currency as a way to
compete for customer business and
indicate its financial strength what we
actually see is that not just
cryptocurrencies but every company
starting to issue its own coin the
website coin market cap reads like a
who's who list of the new economy there
are firms ranging from storage to
banking to financial services to
healthcare to technology platforms we're
rethinking cash and we're also
rethinking assets there could be in the
future
securities as a service just as we've
moved away from having to own hard
assets in CDs and DVDs this and autos
and homes with services like Spotify
Netflix Uber and AirBnB in the future we
might be able to have securities offered
as a service the idea is the liquidity
or the availability of the consumable
benefits of the asset so that we don't
have to own the underlying the future of
institutions is certainly a question in
the blockchain economy so I ask you to
consider what are institutions what is
the role of institutions one thing we
think about the role of institutions is
that they are here to organize life and
manage contention this is not likely to
go away so the influence of
institutions could persist even while
there could be more choice about which
ones we belong to and the form of
institutions they may be shifting from
buildings to websites to credentials
historically there were two kinds of
institutions the crown and the church if
you were a Christopher Columbus you went
to King Ferdinand and Queen Isabella for
your venture capital financing and that
was the way the world was then now in
the contemporary world we're familiar
with many different kinds of
institutions touching almost every area
of our lives and we wonder if a lot of
them may be failing and how to reinvent
them in the farther future web
institutions might continue to direct a
large portion of our lives but again we
might have more choice about which ones
we belong to and they might be powered
by credential as opposed to buildings
the future of nation-states is also a
question where also they are not likely
to go away but there are many kinds of
reinvention going on the one thing that
we see is nation-states trying to
specialize and engage in regulatory
arbitrage in the new world so it just
says we have Delaware based C
corporations and Swiss and Cayman
banking laws different nation-states are
aligning themselves up for different
kinds of cryptographic regulatory
arbitrage this includes estonia's a
residency program gibraltars digital
ledger technology registered entity
program to be launched next year as an
eco response and Malta having their
online casinos now accepting Bitcoin so
nation-states are trying to sort out
their own identity and specialization in
the wake of these trends now
influences summary summary of blockchain
economic theory is that the production
distribution and consumption of goods
and services in a blockchain economy is
the same as that of a classical economy
in some ways and different in others
it's the same in terms of the underlying
dynamics not changing once exceed
resources there's a cost to decision
making and scarcity is still present
institutions especially money and
nation-states persist but their form may
change and over time their role may
change assets identity and information
are still quantities in the economy but
they become increasingly cryptographic
what's different than a classical
economy is that we are seeing this issue
of technological unemployment and the
presence of more computational agents in
the economy there is the leapfrog
technology of digital Ledger's for
financial inclusion and new economic
design principles like the long tail and
assets as a service this is a chart just
going through every element of
blockchain economic theory specifically
so why do we need blockchain so I argue
that the reason we need blockchain is to
work on the next tier of large scale
challenges the key features of
blockchain technology are secure value
transfer automation and track ability so
the first and most obvious application
domain for this is big health data what
we've learned from artificial
intelligence is that in the cases of say
machine translation and alphago that
what makes a difference is finally
having a large enough database data
corpora that we could run fairly
straightforward algorithms over but in
in health because the information is
sensitive we've lacked a way to share
secure information for research purposes
and we don't have big health data yet
just as an indication is that Illumina
the biggest genome sequencer in the
world is very proud to announce that
they've sequenced 18,000 humans so far
and indeed that is quite an
accomplishment but where we need to go
is genome data banks of a hundred
thousand or a million people to get to
big health data this is one reason we
need watch-chain another reason is for
global energy market modeling now that
we can start to store energy plan and
transmit it much broader means of
looking at this vast market for securely
coordinating access to energy resources
will be important likewise for global
risk modeling reducing the risk and loss
from hurricanes for example or global
financial meltdowns also in smart city
modeling this is New York
uber pick up in 2014 smart city
initiatives are another important domain
for blockchain as well as our reach to
space blockchain is exactly a secure
automation technology for the mining
energy production and settlement that we
want to do in space so smart network
convergence a new technology is not only
a better horse it's a new car so let's
think about the concept of blockchain
and extend it to smart networks smart
networks are computing networks with
intelligence built in such that
identification and transfer is performed
by the network itself through protocols
that automatically identify with deep
learning and validate confirm and route
transactions with blockchain on the
network we have the two fundamental eras
of network computing in mind where
initially all we did was transfer
information on simple networks but now
on smart networks were transferring
value
and that's with more Network
intelligence baked in with blockchains
to transfer value and confirm
authenticity and deep learning
algorithms for predictive identification
conceptually deep learning is a computer
program that can identify what something
is is that a cat or dog is it a face
technically deep learning is a neural
net with layers of processing nodes that
extract features from data and make
predictive guesses about new data the
next phase is putting deep learning Nets
online so we're going to need a secure
technology like blockchain to register
deep learning nets and AI thinkers such
that they can be tracked and that we can
have security around them an immediate
application of this is autonomous
driving where with smart networks the
deep learning technology can identify
what things are and the blockchain
technology can provide the secure
automation concluding so let's talk
about some practical opportunity
what's the lone low-hanging fruit here I
think one idea might be to concentrate
on information confirmation kinds of
applications as opposed to money
transfer that might be easier and I've
identified five different areas of this
kind of low-hanging fruit cryptographic
asset registries investor information
services supply chain and logistics CRM
and business logic applications and
energy quoting the idea would be just
like any business process automation
project to identify which steps have
human decision-making that needs to be
part of them and which tier of
operations can be automated with
blockchain specifically cryptographic
asset registries is a domain indicated
by many municipalities that they're open
to exploring this this would be putting
land and auto titles on
public documents like voter registration
and driver's licenses and there's an
opportunity to develop a leadership edge
in your industry this would be by
starting or joining an industry
consortium developing and implementing
digital Ledger's identifying the key
parts that are important for our
industry and offering on the revenue
generating side offering applications to
customers or on the cost-saving side
implementing QA regulatory compliance
type Ledger's internally concluding the
first point is that blockchain is a
fundamental information technology for
secure value transfer over networks for
any red asset registered on a
cryptographic ledger the Internet
becomes a VPN for its transfer and
confirmation second point is that we're
reinventing economics and government for
the digital age and the long tail
structure of digital marketplaces is
allowing the possibility of personalized
services third point a technology like
blockchain is needed for next generation
challenges including financial inclusion
big health data global energy markets
and space fourth point smart networks a
new form of automated global
infrastructure includes the ability to
identify what things are with deep
learning algorithms and validate confirm
and route transactions with blockchain
since we're futurists I will make a very
long term conjecture on the order of 50
years and this is a theory of
computation the idea is that basic
physics discovery drives computational
paradigms Newton inspired the difference
engine Einstein and quantum mechanics
inspired the transistor and now quantum
computing quantum gravity experimental
evidence from last year
is causing us to rearrange the furniture
of how we think about the universe again
space-time geometry and dynamics and I
suggest that this can lead to a new
computing paradigm at the Planck scale
in the on the timeframe of 40 to 50
years thank you for your attention
[Applause]
surround I'll hand you the mic just so
that it can be recorded and we'll go
from there
this guy question nobody oh my goodness
I thought it would be every other person
here thank you
Melanie the question of principal-agent
problems any thoughts
you mean with smart contracts or humans
for example no no I don't care about
humans they're too complicated to
understand so what about software is
easy you can understand yeah I think
it's I think if we consider a
computational agents the risk is that
they modify their algorithms and develop
much more quickly than we can understand
a recent example could be Facebook
shutting down the AI chat bots that
develop their own language that it's not
clear of Facebook shut them down because
they developed they were lying they
developed deception as property or
because they were not understandable to
humans so I think we have a lot of fear
about what kinds of behavior
computational agents on their own out in
the wild may get into and so the agency
problem I think we'll see other kinds of
the agency problem develop in the
computational domain certainly any any
max self-maximizing agent will try to
act to do
so I see I think we'll see a different
kind of agency problem than with humans
but I think we'll certainly see acting
and self-interest and I think this will
be completely a domain for future
research okay anyone else Melanie you
refer to personalization and you know
just briefly and so there are two ways I
could read that one is it's a driver in
that consumers will be attracted to that
aspect but the other is and I think this
might be what you're saying you could
elaborate is that personalization is
happening in our marketplace whether or
not it's a selling point you don't feel
like that it's just a trend and what
would be driving that if not just our
sort of Anglo preference for
individuality yes and before I answer
that this is actually a perfect segue
into the discussion question so let's do
a quick poll about I think the the
question is has a lot of complexities
and so let's just find out what people
thought about question three here would
you and people you know prefer a
mortgage that corresponds to your
specific needs or one that's just cookie
cutter
so that's who wants a personalized
mortgage okay fifty to sixty percent who
wants a cookie cutter mortgage okay uh
five percent okay very interesting would
anybody like to tell us why from either
group
I want the cookie cutter one because
that has a federal subsidy
okay so incentives are our portion of
your decision and somebody from the
personalized camp anybody I want
personalized mortgage because I'm
self-employed and it's really hard to
get traditional mortgages I'm stable
income great the market doesn't doesn't
meet your needs okay okay great thank
you so I this question is tricky like
this gentleman suggested and so on the
one hand cookie Carter cutter mortgages
might be they are designed to suit the
mass-market and that might suit you and
it might have incentives with it
and on and it might be too complicated
to build in a personalized product on
the other hand personalized products
suit as well and so this is a Starbucks
of mortgages we want some greater degree
of personalization and I argue that the
blockchain can now finally support some
of this granularity in a way that
traditional banking institutions cannot
and you were your point is maybe we see
what's driving this in the market I
think I don't see any other driver other
than economics they're driving this so I
think we'll start to see more
personalization more kinds of products
that correspond like this gentleman was
saying I'm a business owner cookie
cutter mortgages don't support my
situation so we can easily start to fill
out new categories of the market that
aren't supported now in a world of
finance and government services that's
more supportive I think government
services is quite interesting too
because you can track who is consuming
what and who wants to pay for what and
so there's a community bond company
called neighborly neighbor ly and San
Francisco and they offer community micro
bonds so you can invest in the bond
issue you care about in your community
and so this is an interesting experiment
because on the one hand if only people
with money pay for things they care
about we don't have
maybe a full suite of services and this
has been one of the arguments for
large-scale government but on the other
hand if there are ways that we could
invest in the things that large groups
of people in communities care about that
might support quality of life for
everybody so thank you I think I think
it's a complicated question but what
amount of personalization is right in
person in financial and government
services and it's certainly more than
now which is when one approach fits all
but it's not over choice and so finding
where that is will be a multidecadal
kind of project you talked about a lot
of different versions of blockchain also
kind of a proliferation of coins and
crypto currencies in the future of
blockchain how do you see kind of the
consolidation winners and losers or I
guess where do you see kind of block the
future of it going and ending up and
what will eventually be essentially the
Internet that would be locked in and
everything will be built on No thank you
I think it's impossible to make a
prediction about that but I think we can
think about it in three tiers so Bitcoin
might not be the final cryptocurrency
it's the biggest one right now all of
these alt coins could eventually shake
out blockchain might not be the final
protocol but it's a first stab but the
the principle of what's going on
decentralization is probably something
that's not going away that was already
proven with the Internet so just because
hierarchy doesn't scale we have to reach
more people more entities more ways so
decentralization is not going away
blockchain could morph certainly and
especially these consensus algorithms I
think need to be a lot more baked into
the computational infrastructure and the
coins I mean who knows that being a
Bitcoin it might be like I don't know
all those web companies that CompuServe
you know as Bitcoin CompuServe or
so alright but AOL is still around a
little bit yes so I think it's hard and
it's hard to see what might shake out
and so I think if you're an investor you
might follow a Black Swan kind of
strategy which is minimize downside risk
by keeping most pets in in non crypto
exposure and just picking a few
bluebirds that might have a significant
upside I think it would be crazy to
think that a lot of these current ICO's
are going anywhere
and then the other principle would be
focus on value creation not money making
so who which companies are really
creating value to contribute to the
network and that's going to be the clue
for long-term benefit I think of all of
this stuff yes
oh I see oh oh those kinds of detriments
well I think the biggest one is nobody
understands it and so it has to be I
mean oh this so this is a really stick
question one which is when it becomes
like an ATM or Twitter Instagram that
everybody there's some consumer
packaging there's a usable consumer
front-end on it it doesn't get usable
before then on a mainstream basis the
mining yes computationally wasteful and
energy consumption but then but then one
of the other arguments is while it still
uses far less energy and resources than
human based brick-and-mortar bank
branches so the entire financial
apparatus could be outsourced to the
mining operation and that would be more
efficient so I think we're still in
early days of figuring these things out
I think we're really scratching our
heads about I think government
regulation is one of the biggest risks
that we kill it before it gets started
because we don't it's so big and
amorphous and octopus arm like we don't
know how to regulate it so maybe we just
stamp it out and it becomes more like
the Silk Road again but yeah I think the
I think people don't understand it and
we're developed or sandboxing new models
and government really regulation is a
big risk at several points you noticed a
sort of parallel development between
consumer and business technology do you
think that they will be comparable the
way our PCs are comparable at home at
work or do you think that they will be
very different the consumer and
enterprise changed that they would be
like pcs did you say well the to the
extent that I have a PC at home that is
not like that different from my PC at
work with the blockchain that I might
use at home for my personal transactions
be far less sophisticated or less secure
or oh yeah
um I don't think it's a business
consumer question as much as an
application question so I think tier
depends on the application so if we're
having information confirmations in an
enterprise setting we'll be having all
kinds of secure information
confirmations did the shipment arrived
at the quote arrived and so as opposed
to consumers may not be as concerned
about information confirmations but for
money transfer and so there'll be money
transfer in consumer applications as
well as in enterprise applications and I
can't imagine they wouldn't have
analogous security levels mm-hmm so I
think that's not that's not the split
and I think I think it'll be just like
the internet once we start to seem in
all kinds of investment from the
enterprise side and applications really
developed and established ah then now
that I use it at work I can see how I
can use it at home and so I think the
bigger investor and that's what we
already see for example in the financial
institutions are three the ECMs the
global banking initiatives ripple we see
the big corporate investment on the
enterprise side first working out the
kinks and we see Jamie Dimon saying
forget it there's no you know he
answered question one so we might have
to ask about HSBC instead of Chase but
the consumer wallet question is far out
as far as Chase might be concerned
great so if people are trying to learn
more about the ICO is not just the
currencies how it was the best way that
they can MVP testing ideas or building
structures because with the early
internet you were able to learn how to
code and build a website pretty easily
what's that path outside of the
currencies a bit more on building on the
blockchain mmm thank you I would say go
to meetups go to the Bitcoin and
aetherium and blockchain meetups and
there's consensus meetup right here in
Brooklyn is having hackathon right now
and that's a great way to and they buy
they have a really great identity
interface that's well documented and
easy to use I've used in a hackathon
it's called Newports so that would
certainly be one path to sandboxing so
the all of this software is open-source
you just go to github and download it
there are many YouTube videos for trying
to trying to use smart contracts on a
theory and for example and you can email
me and I have two specific links for
that if you're interested and then the
other way is so not just in the ICO so
there are some different websites that
try it there are consolidated listings
of ICO's and they try to tell you a
little bit about it sort of like a
securities analysis website like the
Moody RS Moody's and S&P ease of ICO's
but it doesn't really give you what you
were looking for in terms of hey let me
go sandbox the code myself so you would
I would try the developer route for that
Melanie you spoke about proof of work
and proof of stake just as far as proof
of stake and the bitcoins go I
understand they're a finite amount of
bitcoins that will be released in the
next I think ten years they say it'll
run out and my question is as it gets
harder and harder to mine bitcoins
essentially the value of mining goes
down what what kind of risk is there for
you know it not paying off to actually
mine in the near future thank you so
most of these cryptocurrencies have a
fixed unlike fiat currencies like the
dollar have a fixed money supplies you
can find out what's the max that there
will ever be of this currency so that's
a great
great attribute to the currency as
opposed to you know you might be in
Venezuela or the US and you just print
more money when you need it so that's an
important an important parameter of
almost all cryptocurrencies is you can
know a lot more about the structure of
the monetary policy and what happens
over time is initially there are a few
coins issued and then over at some
moment all of the possible money supply
will be fully issued and so the worry is
well miners are incentivized by making
by discovering new blocks and getting
the trend the fees from that but the
fees have two components and one is
discovering new blocks and one is
transaction fees and so over time as the
overall use of Bitcoin grows then
presumably the transaction fees that I
pay every time I have a Bitcoin
transaction start to go up and comprise
a bigger portion of the minor rewards
over time such that once all of the
money supply is issued it's all
transaction fees that are made by the
miners and it's enough it's a small
transaction fee it's enough to
incentivize to make economic sense such
that mining can continue
have you submitted any Bitcoin
transactions
okay okay so when you submit a Bitcoin
transaction there's a transaction fee
and you can certainly leave that blank
but if you do the your might your
transaction may not be picked up in the
block and ever confirmed and so your
wallet automatically specifies suggest a
certain amount that's a very small
percentage and you include that in your
transaction and that's an incentive to
the that's paying the minor for the
accounting function of confirming and
recording the transaction I have a
two-part question one is um with the
rise of more private blockchains yeah
that you see in terms of companies um
for example like the DTCC and
investigating or testing out about
trying to settle the derivative
transactions you can counterparties do
you see do you see a problem perhaps in
the future where hackers or in
particular state actors with enough
computational power could get in and
actually be able to recompute all of the
old transactions since they would have
enough power to get to do the proof of
work for all new house transactions and
the second part to that is do you see
perhaps block chains could be running to
some sort of almost like an outside
context problem where once quantum
computing becomes scalable then the
cryptographic hashing that has to be
part of the the proof of work becomes
almost instantaneous for a quantum
computer so do you see that as basically
running into almost like a brick wall
and that may not be something you could
plan for or how would you plan for that
so first part of the questions of DT
private chains like the DT VCC so
private chains would likely be taking
using the same Bitcoin blockchain or any
kind of whatever the current standard is
they aren't going to be having their own
in they may be having a private chain
but they're not using decremented
technology compared to the state of the
art and so they're not at any greater
risk for their chain being hacked than
anybody else and so that is sort of an
interesting scenario
that wants all kinds of different
agencies have their own chains and then
cyberattacks from malicious parties and
other including other countries the
North Korea chain gets on board so I
think cybersecurity in the future and it
particularly with blockchain entities is
a very big deal and an opportunity for
market businesses but I don't see that
it's it's not that certain changes would
be more hackable than others ever every
change should be using this state of the
art and it could all and then your
second question is about the on-site
I'll say contract contact contract
problem so what about quantum computing
and the evolution of Krypton
cryptography so right now what's
interesting is quantum computing is just
not interested at all in the boxing
world they're interesting an adiabatic
computing and energy conservation and
many other kinds of things but the
moment so as computational algorithms
keep advancing and we start to hit sha-3
and so on then these have to be
implemented in blockchain you have to
it's a it's a Red Queen problem you have
to or a I have to run faster than my
friend to outrun the line I don't have
to outrun the line and I need to run
faster than my friend so everybody just
needs to be going as fast as the latest
technology but the moment that and sha
3.1 or
quantum computing can factor the next
tier scale larger numbers everybody has
to upgrade so certainly if you are a law
looking at a long term strategic
planning project for you and your CTO of
a large compute cryptocurrency company
you would be imagining that you will be
needing to keep upgrading for these
different cryptography advances
certainly
you mentioned debt by David Graeber I
was nobody just expand on your thoughts
about kind of like his thesis and how
you see blockchain playing into that
yeah I see I think I think we have to
really rethink debt completely so right
now there's one uniform monolithic
structure it's very costly to go out and
fundraise then you get disgorged a huge
chunk of lump sum capital and it's very
painful to pay it back over time so we
need much more ambient real-time models
that have say a time lock smart contract
payment structure such that as long as
I'm keeping up with certain behaviors
I'm getting disgorged periodically new
capital inflow to support my project and
so we have much more real-time flexible
structures of money being discouraged
and money being in used by individuals
furthermore I think that we can have the
idea of automatic capital so like auto
funding for Kickstarter projects that
are in a much broader sense capital
sources automatically fund worthy
projects and this is all taken care of
computationally so I think it's a huge
problem for individuals medical debt
student debt and for governments so we
definitely didn't figure out how to do
debt right I think we would need to
extend graters thesis into with these
crypto models that target personalized
situations which exactly like you
mentioned small business owners somehow
don't fit in the way we've thought about
risk and been able to provide capital
before but this is arguably one of the
biggest so what if we provide a value
what if we provide a debt based on value
creation possibilities some business
owners might be able to receive capital
to test these ideas much more easily and
including an smaller chunk capital that
doesn't carry this huge cost of
fundraising effort thank you one more
question
okay
thank you so coming back to the quantum
question he said everybody are great and
we're good but what about the past
transactions does that protect the past
transactions yeah that's a good point um
I don't have a good technical answer for
that but we need to think about archival
and protecting we already had this issue
with the hard fork so we didn't we
didn't really we haven't really thought
about a good solution for our archival
and we would need some way how and so
more furthermore what capital can be
used to support the retaining the
integrity of those past transactions
that they don't get hacked in and there
is like you know King Tut's grave just
just pillaged so I think I think problem
another risk with blockchains we didn't
think about any kinds of things like
like archival and full lifecycle
solutions per these radical technology
upgrades and so on the other hand we
could just say that's an opportunity to
think about that kind of eventualities
you may not want to have to your medical
data become visible 21 10 years from now
absolutely yep
[Music]
wide-ranging and objective and non Sun
non self promotional and especially
Melanie for coming by and sharing her
her extensive knowledge in this area
which has just become it's amazing how
its jump from the fringes eight seven or
eight years ago to really front-page
news in almost any mainstream
publication even outside of business so
I appreciate it I don't have anything
planned coming up but you never know and
sometimes I announced in three or four
weeks ahead of time sometimes have a
little bit more lead time certainly open
to any ideas that you have if you know
somebody or if you just have an idea
now no I can't get him out and Gladwell
he's well over a hundred thousand
dollars and he doesn't do free gigs but
you'd be surprised be able to get some
really good talent some whether they're
passing through here promoting a book or
they just have something that that fits
into long term futurist rubric I'm just
gonna quickly give away books some of
these are futurist folks some of them
are just more some business tomes that
I've come across in my speaking business
so I'm gonna just announce people's
names you just come up and pick the one
that you want those of my eyes
Michael mitts min come on down or not
Bob Trojan who I spoke to before
somebody from EisnerAmper Dan King
thank you with her someone from auric
inna or ina life sorry I didn't get that
right
so that choice of two books one from
Joshua link nur who was a great speaker
and talks about innovation sort of a
serial entrepreneurs started out with a
digital promotional agency and as
helping with the trance week let's call
it the re-emergence of Detroit this is a
busy business center
Danny grave from Sanofi okay
all right so thanks once again feel free
to we love getting promotion on Twitter
or whatever other social media platform
you're on and up to you Mellon if you
want to stay or if you have to go if
people want to come and just chat yeah
thank you so much
[Applause]
