DN Salon May 24 with Chris Kirkland: Blockchain - Just Another Database?

Dear members and advisers, another event in our Blockchain series.

We are getting increasingly techno-sceptic!

May 24 7-8.30pm (9pm hard stop)

Location: Edelman Japan, 10th Floor, Izumi Garden Tower (Thank you Ross Rowbury :) 1-6-1 Roppongi Minato-ku, Tokyo 106-6010 (Thank you, Ross Rowbury!)

DN members 2,000yen Non-DN member 4,000yen

The signature DN bar selection will be on display (malt whisky, ancient ports and fine Spanish sherries, as well as new and old world wines)& tasty snacks and sandwiches.

DN members are welcome to bring their spouses/partners.

As digital currencies soar and fall, it has become fashionable to concede that investors may have been too optimistic about their worth.

However, many of these same investors now say that the technology underlying the cryptocurrencies, blockchain, is the “real deal”.

Its strength is that any transaction on its “distributed ledger” system can be simultaneously updated at every point in the network. These updates are unhackable because they are encrypted, and unfalsifiable because they require approval by the other points in the system.

In contrast, a traditional central database is only as good as its own “singular” defences.

Imagine (say these investors) if blockchain could be deployed for non-bitcoin transactions, especially paper heavy ones. Trade finance is notoriously bureaucratic and ripe for digitalisation. So are financial transactions. Or think about revolutionizing healthcare by making patient files easy to share across countries and specializations. Imagine removing the expensive intermediaries and allowing the participants to “validate each other” through simultaneous, real time updates. Transaction costs would plummet. Blockchain’s verification system might even allow low-trust societies to tap the benefits of authenticated ownership: think of the capital that could be released by authenticated land-ownership in developing countries, for example.

Our distinguished speaker, Chris Kirkland, founder of rapidly growing Tokyo Cheapo, tech entrepreneur, digital nomad, hill walker, coder and recently on the board of KYC Chain, a blockchain based fintech start-up, believes that all these goals are desirable - but is sceptical as to whether blockchain technology can deliver the goods. https://www.garudax.id/in/chriskirkland/

“Blockchains are really just a very specific (and very slow) type of database, with some special features. But has to date seen few viable applications,” he warns

Take the high transactions costs. These costs are not optional, they are inevitable. Distributed ledgers operate through the validators agreeing on whether transactions entered into the database are legitimate. Bitcoin’s innovation was that having to demonstrate “proof of work” (by the miners) keeps out the manipulators who might wants to influence the consensus around the data entries. As hackers increase computing power to influence the consensus, the good guys need to counter with their own computing power - driving costs up.

How about trust? The system prides itself on operating on a “zero trust” basis. All the parties can sign off on the data - but they have no idea on how the data was physically collected. Is the data correct “in the real world”? The validators have no way of knowing. Their role is simply to agree to translate a paper data point into an accurate digital data point. Sounds a bit like a standard data base, then! Potentially useful if the inputted information is correct, but not in itself a solution to the underlying problem.

Finally, a basic question: why is everyone not using a common database like blockchain already? After all, the technology has been around for decades and the advantages of smooth interconnection are obvious. Well, that’s because of issues that blockchain is incapable of answering. For example, blockchain is inherently slower, given that each node needs to check every transaction every time. (In contrast, your bank or broker will check your ID once, then take whatever you ask them for on trust - which also makes them vulnerable).

Also, blockchain is radically transparent. In a competitive market place, not everybody wants to reveal the prices at which they buy and sell. And do you want everybody knowing your medical records and personal habits?

In conclusion, we are left with a database which is perhaps more resilient because it’s more spread out, but also slower, and more expensive. Anybody wondering about digital transformation, the future of disintermediation, or a potential investor would enjoy this event!