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Blockchain: What is it good for?

Technology Untangled

41:21 min | 4 months ago

Blockchain: What is it good for?

"Since its inception in two thousand eight blockchain has been touted as the future of money. The answer to sustainability problems the toughest tool in the security ass. No but critics think waste every use case for blockchain can be achieved through easier and cheaper means some people believe in blockchain and really think it will change the it and other people say it's exactly the opposite it won't change anything. It doesn't add any real value to it. I believe it will grow tremendously if there is a need for these features in blockchain is not the answer for every use case in today's episode. We investigate the block. Kiss of all the chains the most distributed of all the letters that is blockchain. We find out won't get some people excited about well. It's just like a flashy database. Why so many organizations blockchain projects never make it past the planning stage. And who is the mysterious creator of blockchain. Okay we manage that last some of that and so much more on michael bird and this is technology untangled. Thanks the perfect storm of slain. You saw big marketing budgets and elon musk's tweets blockchain has been hyped beyond belief. And it's also been made more complicated than it leads to be. More i could up angolan go. My name's ingram go. I'm senior vice. President and chief technology officer for a special intelligence at hewlett packard enterprise. So first question. What exactly is a blockchain. Let's start with a public blockchain first. Let's use an example of a analogy of a of a ring binder. You've got this notebook with many blank pages bound by a ring ring binder on page one the record number of transactions. You know. maybe. Jim pays john two bitcoins and sarah pays jim ten bitcoins and so on and so on then on the next page You have the same again. Set of transactions being written down on it and the knicks page and then expansion so on so if if you imagine each page is a block and all the pages of bound by the ring bind up being the chain. You actually have a a blockchain there right. So that's what blockchain is except for the fact that in a public blockchain this ledger or this record. Write this chain of pages. Chain of blocks is digital and is distributed to everyone publicly equally publicly with no central custodian. Why you want to use a blockchain. There are two major reasons. Why you want us a blockchain right first and foremost this when you wanna keep record of an entire sequence of transactions especially if you want to go all the way to genesis the beginning and secondly you won that record to be transparent that is you want the decentralize it by distributing copies of the same sequence records to everyone equally with no central custodian and within that de fall. How'd you than the fact that with everyone having a copy how to have any tempering capability and his swear you would apply a cryptographic hash and finely within transparency. How do make decisions if everyone is equal in the sense right in a public blockchain they have heavy cryptographic puzzle to solve and if the application has a need for any one of these capabilities. This is where you would use a public blockchain. Now you might use the phrase public blockchain in fact also a private blockchain and the as but we'll get to that in just a minute first to understand why people are so excited by blockchain. There's no better example than the world's most famous use case cryptocurrency and the world's most famous crypto currency bitcoin. In two thousand eight the white paper. Could bitcoin appear to peer. Electronic cash system was published by an elusive person or persons under the pseudonym satochi nakamoto people was published in two thousand eight and then a solution mine the first block the genesis blocked right right to the beginning call blocks zero in two thousand nine and after mining that block he was awarded the very first and therefore created the very first fifty bitcoins and then in twenty ten december. Twelve thirteen he. She evaded when quiet and he has been quiet for more than ten years. Now so that's how. That was always thought that i'm what was so revolutionary in the way that bitcoin was setup it is applying the idea of public blockchain to financial transactions and the implications. That comes with it right. If you look back at the two points is a record of enticed and sex and sequence going back to genesis imagine now having financial transactions that you can trace back all the way to the very beginning timestamped botching forward in time and it is transparent meaning everyone can have a copy to look at all the transactions albeit debt. There is privacy associated with the entities making those transactions and there is no central custodian and in order to make decisions as to what transactions are valid. There is this competition why because there is no central custodian to make that call therefore you need a consensus to be reached as to what transactions are valid. You have to have a competition to solve that problem. You hear the cryptographic competition referred to as proof of work offer bitcoin. It's most common. Monica bitcoin mining now minus. Oh compete by using their compute power to try and solve a complex hashing problem and for bitcoin. They get paid in bitcoin. Sweet what's the problem. As solved the transaction or block is added to the blockchain and then finally because get a copy. How do you make sure like in financial transaction that no-one tempest with it. If everyone has a copy of it right the answer is the cryptographic hash right. If you go back to the analogy of the ring bound notebook with all the transaction on each patient therefore each block at every page you can use a cryptographic hash to consume the entire page of tax transaction on that page right and then produce you a sixty four digit Number cryptographic hash is what makes blockchain impossible to tamper with or immutable. And if anyone changes the information of the block the hash that is out will be outed. But it doesn't stop after that you take the cryptographic hash of each block and then hash them again to get overall hashtag mba sixty four digit heche number so that if anyone touches any block in history changed at blocks hash therefore it will also change the overall hash and you will know it. This is how the ensure that in a public blockchain where everyone has a copy of that entire chain and tie history that ensure that This anti-tampering capability in so for quick tally of some of the main benefits of this public. Blockchain number one it's immutable. It can't really be tampered with modified or manipulated. Therefore it's really secure number two. It's totally decentralized. There's no central authority or sink. Who central platform to maintains network. Every user has a copy of the block chain ledger making it totally transparent number three. It can scale. Just look bitcoin. It's the best known version of a public blockchain and its popularity kind of comes down to being the earliest and most trusted and thanks the way it's taken off. We've seen just how well a public blockchain can work scale all right so with that in mind. What's all this public private business. What i've talked about is what the public blockchain is in a private blockchain. You still have the record of the entire sequence of transactions going back to genesis if you want to the in the second pot about transparency where in the public blockchain you decentralized by distributing copies to everyone equally in private blockchain. Is where is different here. You decentralized by distributing copies do every member in that private club so to speak. Yeah that's why it's called the private blockchain so what you have is an one additional layer. Where is being approved. And those who are part of the membership will be given copies of their blockchain. That's the key difference way in public blockchain. everyone can have a copy of that chain and a private blockchain. only cert members are given a copy of the chain of blocks do industries who are using blockchain. They mainly private or public. Blockchain's most of what i've seen Private blockchain mainly because in industry they typically transact with known members like in a supply chain or like in financial institutions to financial institutions with knew. Clearly who the other party is if they won some of the other features of a blockchain that we use a private one because they want to keep the records amongst themselves around amongst at membership so profit. Blockchain is more common one in industry. So whether you use a public or a private blockchain really depends on the type of transparency or looking for do you need it to be transparent to everybody the times in your application. You may not want that the times where you want a little bit more privacy where you say i would only want the transparency to decertify members are even times way. You want to go even further privacy to say. I don't want even members to see it. I want only a central custodian to see and control access to it. And therefore you wouldn't even have a Blockchain there you'll end up with centralized ledger like Traditionally what we have before blockchain came along and therefore given transparency whether you need full partial totally opaque or transparent custodian you bring in the needful anti-tampering capability and also bring in the need for decision making but the more centralized and more private ugo right. The less of an overhead required for anti-tampering because if you have a central custodian at the extreme the central custodian is really for keeping the records integrity intact and a few have a central custodian at the other extreme decisions can be made without having to have competition like the opposite. Extreme where in a public blockchain. You need competition. The reason why cryptocurrencies energy consumption raking he makes headlines because pref- work according to the university of cambridge. Bitcoin mining uses more electricity annually the whole of argentina. What and get this. Some estimates suggest that one bitcoin transaction uses the same of energy as one hundred thousand visa transactions. Let me tell you. Energy efficient it is not and because of that. Alternatives are already being looked at there are coming up with Variations of this Proof of work right. There is also the proof of stake and other matters where the energy consumption is not as high by still necessary but of course if there is not a need for having public blockchain for the features it has gone private with a private blockchain and as a result You would solve the energy consumption problem. Okay so bitcoin asides then the skeptics. Reckon the law of the use cases. We see her. Blockchain could be achieved quicker and more easily by using our solutions and england says that they're not exactly rope. Blockchain is not the answer for every use case. Use it to where your needs right. A met by the key features of what a blockchain is number one again record of entire sequence of transactions. Going back to genesis. Do you need that. And secondly do need transparency either among everyone in public or amongst members in private blockchain. Do need that. But if you don't in terms of transparency where you want the opposite right where you would like a centralized custodian to take care of the records and want central custodian to control access to those records. Then blockchain is is not the one for it because it is the opposite of what you need so industries are here opting blockchain the ones we work with summa in proof of concept and some are in early production and some are working for regulatory acceptance and the three in the streets. That comes to mind immediately. That worked with is Healthcare supply chain and finance and the reason for this is Back to that same thing right. Where especially you need a high integrity record of sequence of transactions. Going back to the beginning so that if there are any issues you can always do all the way back in supply chain. Well guess what the. What chain is there right. supply chain blockchain. You can see the connection here. Same medical record straight going back to the beginning and financial transactions where between you sending a payment from point a to point. B you get lots of intimidators in between while blockchain allows you to go direct more directly. Especially if you use a public blockchain everyone gets a copy and therefore your transactions get verified. Point eight point so now. We've got an idea of what blockchain's actually good for. I wanted to explore some of the use cases for myself. So many blockchain projects are amounts with great fanfare. Oh leads of peter out quietly alone later but use cases in the supply. Chain beaming is spoke to somebody. Who's actually using this. Toni acosta chief information officer for bumblebee foods storm responsible for the global. It operations of our company then with the company for over fifteen years in this capacity bumble bee foods for those of you not in the now are the largest shelf stable seafood company in north america. Thanks to our ever expanding global market the modern supply chain is more complicated now than epa and that certainly applies to fish and sea feet biggest challenges obviously is the availability gracious information. Trotter supply chain. We deal with some of the most remote locations in the world dealing with a variety of sophisticated non sophisticated suppliers. So the challenge for us is always. How do you build those relationships but also start to integrate your collective businesses. So why did you towards blockchain and not just a really big excel spreadsheet started as a supply chain optimization project like many do right we we all wanna dry officiency and integration but for me it's equally important to figure out what's the business drivers values that we're trying to do accomplish your Very hands on and engaged so four flights later two hour ferry ride and the next thing. I know standing in the middle of the remote fishing village of indonesia. It wasn't till then when i went through the supply chain and met our supply partners and our production facilities where it kinda had to a moment that it was bigger than just a supply chain project. It was building on that notion of not only supply chain optimization. But how do we use technology as an enabler. Not only for us but also for our supply chain partners all the way from the fisher to the finish good processor quickly realized that when we were doing this project. It's as much about partnership and communication and alignment than it is about blockchain. And don't get me wrong. Because we're huge proponent of blockchain. I'm a technologist at heart right and so i want to. You know drive our company in a direction that embraces innovation and technology but i also want to provide value and finding value is equally important to me than pushing any technology agenda wants to achieve a high integrity supply chain tamper-proof record of each step from ocean to plates on his trip to indonesia. Tony understood the kind of value that data sharing would offer to their partners throughout the supply chain. And even though it's a private blockchain. They also saw the value of sharing the data in the ledger with customers. All these products end up with a qr code and so that qr code. You can scan with your phone. And it tells the story of the journey of the fish right and we'll tell you where it was caught how it was caught fair trade certified and then through this website. Actually we educate the consumer we tell them about. What's a typical indonesian hand. Line fishing journey look like we also educate the consumer on our sustainability programs. And how we this is fair. Trade certified fish which means we pay more for this and that extra money goes into funding schools and different things within these fisher communities so it comes full circle and this is all just supported through a foundation called blockchain to what kind of training upscaling new tech was required for this to work. Well blockchain dog was all new so on the technology level. They think that was a challenge for myself. And my direct eighteen pence the partnership. But i tell you. Bigger challenges just communicating with our business partners and even my business peers internally the value proposition blockchain. And you know. I take when people try to explain it very confusing and complicated so we learned our lesson that we didn't want to get too into the weeds. When we talk about blockchain you know the way i describe it as all about trust and in a secure location of information and it's immutable so no one can tamper with it and change it and we leave it at that. Our solution that we're providing here it resonates with consumers. They want to know where the fish came from. They wanna know it was sustainably caught. They wanna to know what's got high quality and save so for us. All of that. Kind of came into purview. And that we had to to route the supply chain. Explain to the what's the value proposition. And what we did as well as we brought technology to these different locations. That didn't have technology. We work closely to help the ngo develop a fish processing system and now through their funding. They're able to go out to these. These smaller fish processing locations. They provide them with technology with these small investment to allow them a computer system to receive this tracks. Dish produce fish and all those kind of things and that system fully integrated into our blockchain. So now you can see where blockchain great it's an enabler and it's a conduit of information and it provides trust and a variety of different things to our consumer but it also affords us that ability to go and work at that level with people that don't have the technology. What's the future of. This project is in fun with relation or is there is a grand plan float on the nation. Yeah tell you. I i would argue. We're just scratching the surface. We capture so much information we also test all the fish that we produce out of this out of the supply chain and they we have a link to all of the lab results of those tests and a lot of cases. We work very closely with our retailers to provide them insights into the testing and so forth and just expanding our partnerships throughout the world. In the collaboration we're here to be good stewards of the ocean and of the environment and that includes our supply chain partners competitors On a number of industry panels that we are working collaboratively to like. I said figure out the interoperability of information. Because we're all sharing a similar supply. Chain thanks tony. So it sounds like blockchain with his immutable records and transparency is a seats. Fit for a supply. Chain use case and the sustainability unwind a partnership benefits of the project that tony has described. Really exemplify tech. forget now. it's pretty well known that lavar oganizations are producing more data than before. An artificial intelligence is on the rise to and so that we're seeing an emerging way of using blockchain alongside artificial intelligence. Something called swarm learning. Let's say i've got a hospital where i'm training machine. Learning model recognized signs of stroke in brain imaging but perhaps my hospital is in scotland. Where according to the last census. The population is ninety. Six percent white my motto risks being pretty biased audible memo to have access to patient data from around the world to make you better. But i want wanna keep patient data. Private sounds like a an impossible task. But england go is working on a project. That is figured out exactly how to do that. So what we did was to use a blockchain to do this firstly hospital a would train on your own data. Only no sharing of data but periodically a blockchain comes in and collects the learnings not that data but the learnings. Right collect the learnings. From all the hospitals combined them and then return the combined results to each hospitals so the hospitals are not only sharing the learning's and not in a private patient data after a few cycles of this would effectively be light as though they actually shared data and achieve. Good accuracy across the ball. This is One actual application of blockchain that we implemented together with customer a healthcare custom. And is this what they call swarm learning. Yes precisely they learn as a swamp right. Yeah you can look at this as another example where we are in the future right drones flying i as a swan and each drone today is given instructions as how to respond to make decisions by in the future. They won't just be given instructions. They will be able to learn on their own. Imagine that right. And imagine as they fly each drone flies it sees things is senseless things and it learns from It's an environment but you don't want drones to share the are what The data they have collected across to other drones and a swamp. But you would like each join swum to share learnings. Yeah so that. The swamp becomes intelligent on one hand. You wanna keep. The data sensed by each drawn private but on the other. Hand you on those learnings from that local data to be shared across as swamp. That's how he came up with. The swarm learning right the picture of a swarm of drones but it is applicable in hospital environment. Right instead off jones. You you have hospitals. That are collecting private patient data but at the same time hospitals want to shed the learnings. I believe i was told in the hippocratic oath. Sharing of learnings teaching the next generation is part of that off but at the same time to keep patient data private so this is one way off of meeting. That need absolutely incredible stuff. So we swarm. Leading blockchain is being used to share what has been learned and not the data and it does without compromising privacy and it doesn't just apply to hospitals. The approach has also found plenty of applications in the automotive and manufacturing industries. That i could. Hp's flurry and i'm fluorine for the green lake virtual portfolio team as a solution architect of cloud data ecosystems. So you've been working for while to developed use cases for blockchain in the automotive industry. So can you briefly. Tell us about some of the different areas that you've explored. You can basically categorize the areas in automotive manufacturing and connected car for connected car. We have looked into applying blockchain vehicle to vehicle and be for everything solutions and the automotive manufacturing. This mostly vowed improving production efficiency and quality on the shop floor of manufacturers and suppliers. There is also the combination of both categories for example traceability life cycle of parts and components and tarrant where analysis use cases where secure an immediate bill protocol. Space blockchain can be useful the use cases. We have to explore at are still exploring in more detail include decentralized automotive digital eco-systems in general and based on this more specifically swarm learning to accelerate autonomous drive and driver assistance development as well as form learning to improve productivity quality and manufacturing vehicle. And victor anything. We'll we'll slap. That is connecting out of vehicles. Different vehicles directly together or vehicles where everything basically means connecting vehicle to grid for example like a smart city with namic traffic guidance systems or automatic lightings. There's there's lots of stuff you can actually use for fecal to everything connectivity to basically looking at the vehicle as data center rather than just a vehicle to go from a to b. What would you need. Blood type flat. Why couldn't you just do tonight. Bluetooth blockchain basically you for a lot of things but we use it as a community manager so a smart city and all its vehicles is basically a community or participants of community and delivered the trust in order to enable connecting and communicating together in a secure way. This is what we use blockchain for another reason why you would use blockchain here is for example especially if you connect things together you need software which enables you to do pro assessing of data or doing the connectivity. Actually that adds that could be little. Api's or other things and blockchain enables you to to Realize an automation of deployment of this software in a decentralized way you enter a smart city except that hey i entered a smart city. I'd like to participate in the whole process of connectivity and digitalization as a driver you know and with this driver consent you actually execute a smart contract and smart city. Specific suffer can be deployed and skew away. And the connectivity can happen in a secure way and this is basically what what you could use blockchain for now for good use case flurry fluorine. Says you need an achievable goal with one of his customers. A laser machine vendor they settled on the objective of reducing the scrap rates of one of their production. Steps could be a weld. It could be a laser cutting. It could be different. Precision stops which just result in a higher amount of scrap could be for example forty percent because of a production quality protection circumstances and the actual production step just does not fit perfectly together and in order to improve that he could basically apply machine learning auditor to learn better. What are the different circumstances. What are all these variances. You have to deal with. And that basically helps the machine vendor first of all to create better machines eventually or actually in the production process to either help machine operators to adjust parameters better to the circumstances but potentially also to automatically just machine parameters so this is basically you could enable with that so the manufacturers machines they wanna learn more these machines so do they just have one big centralized database where all of these machines doll home and they can send software updates out to all these different companies that these machines is that what they have is how they know that it's not how they do. Actually what the way the how they have to do. It is basically currently most of them create lab environment so she vander rates its own lab environment and tries to simulate the real will production but that means that this is only simulated data. It's no real data and it's a limited data set trae young machine learning models on the reason why they have to do it. This way is because generally manufacturers do not share their data either because it's very sensitive to them it is intellectual property is telling too much about their production pro with sas and stuff like that or if not even and or it is their competitive advantage compared to other manufacturers using the same welding machine or the same cutting machine. Just let the patient data in the hospital. These manufacturers don't want to share it's another case for the psalm. Learning is basically bringing the machine learning model to the data and not the other way round so basically we keep the data where it is. So if you have. I mean if you're a machine vendor five ten or twenty or i don't know how many customers all using the shit same machine model you basically bring the machine learning model for the trading on the real world production data to their shop floors and not the data from the shop floor so central place where you learn train. The machine learning model on so the difference basically is that they did not have to be moved and he does not have to be duplicated. Basically you move the logic. You moved to compute to the data and that is very beneficial because it really breaks open traditional silos based on data maintaining today to privacy and data sovereignty of the manufacturers so from from i've kind of customer and for my customers customer perspective is lots of work they have to kind of keep this up and running and to maintain their loss of computing overhead for the people operating it. How does it look. Well start with the last one. You said i computing over hat for the machine. Itself will certainly be there so a machine always have to do its production process. I so this is why we used things like digital twins so that we do not use compute capacity off the machine and take this compute capacity away from direct action process. So that's one thing. everything else. Is there from the customer experience. A large amount of effort now to achieve a high level of automation so if a machine is posed to join this warm or if a customer wants joined a war with all its machines. We basically try to do the whole deployment of the software of the hp while learning library software as well as all the software which basically enables the decentralization participating in a certain swarm for certain steve learning model for certain machine. Model that we do this based on smart contracts on blockchain mechanisms in highly automated way so that it operations is hardly involved at all often book. Shame projects they get announced and they seem to disappear into obscurity. Why don't you think as it's just my personal opinion. But i think that many blockchain projects are now for the sake of using blockchain. We started with architecture goals and objectives and then derived design decisions and implementation decisions as implications to achieve these goals. So as a matter of fact you don't come in with an implementation decision. Let's use blockchain. I but you try to basically identify. What do i want to achieve and dan. Blockchain can or cannot be of a functional purpose and that resulted a real world and in the working implementation rather than in an implementation which once you have basically brought it up to an idea now prototype state and then you install it you find out. It won't work it won't scale or won't four and that is basically the difference white. We are perfectly confident that our solution well it works and that it will scale and that may or may not be the reason why other blockchain projects never see. They liked a lot of kind of using technology sake. Absolutely absolutely some people believe in blockchain and really think it will change the it and other people say it's exactly the opposite it won't change anything it doesn't add any real value to it and you basically have two different parties the believers and skeptics and i'm an agnostic. I don't believe in either war. I look at from an architectural point of view and from a methodology point of view start with value proposition and based on the value proposition. You will find out with the blockchain can or cannot be a pain reliever or a gain trader for your value chain. It might very well be the case that blockchain does not make any sense for. You've thanks for in so blockchain and some learning it's another good a use case and more importantly it's an appropriate case. Blockchain isn't roy for everything and that's certainly something that englund go. Despite being a blockchain believer also agrees with the quick answer to your question is one where what are your needs right. Not every problem needs to be solved by a public blockchain in the same way Mea cto at hp. I always tell customers and work with not every problem needs to be solved by a machine learning to be artificially intelligent if rules and analytics work which stick with roosen analytics until you think that in a long run or now it doesn't work and you wouldn't use the appropriate tool for your needs and blockchain has a very specific capability. And if you need those capabilities use it in many records of sequence of transactions. You would like to be able to trace it back to the origin. Different levels of transparency. A public blockchain full transparency and in financial certain financial transactions like in bitcoin and ethereal. You like that you want that. And of course if you don't need it at all you go. With the central custodian approach and also gives you a one level one degree lesser transparency. And that is with the private blockchain where membership is required. And you see that in supply chain in other financial transactions and in healthcare. And if you don't need to even that extent you use what we traditionally use which is a centralized ledger. Okay so how do you think. Blockchain will mature over the next decade or say. I believe it will grow tremendously. I believe there are many transactions does going on out there that will find these features valuable and as such i believe the use of blockchain will grow the key thing is is is that it takes some time to go from something that is proof of concept they've proven as a works to production and ultimately especially in transactions that are regulated to get acceptance at direct regulatory level. And that's what many of the customers are working on right now which industries g think. We'll see more widespread adoption over the next few years. I think the general answer is s the edge computing and internet. things grow. You will see the need for this more. and more. By the attorney twenty-five they'll be fifty five billion connected devices out there now when you have so many devices is becoming more and more insurmountable to have central control of all these all the time. It may have to figure out a way to do high rockall control in the hierarchy but But allows you to an even more decentralized way so as such i believe in general internet of things will be the key to the proliferation of blockchain decentralize banking supply chain traceability the possibility of international collaborative healthcare projects. The sky is the limit. Blockchain has the potential to be really revolutionary. At least if it's the right fit fuel use case. It's easy to get swept up in the hype. Using tech for tech sake is pointless app best and is definitely a waste of money isn't a waste of money. The hottest new crypto car. The sea bird koi now offering incredible returns. You better get those dimon hands out on hold. Its the moon. Terms and conditions apply. Birth takes no responsibility for partial or full losses incurred coins subject to protections or insurance provided by the federal deposit insurance corporation impressing retain. Either fossils. You have been listening to technology ontai. Good i'm michael bird and a huge thanks to today's guests england. Go tony kosta. I'm floor and beer and you can find more information in the show notes. This episode was written produced and edited by isabel pollard. With sound design and mixing alex bennett's an production support from harry morton aleks pothole and tom clock. Technology untangled is the lowest rate production for hewlett packard. Enterprise thank you so much for tuning in.

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