Blockchain: The future of the internet? Featured interview on Westpac IQ with Bluzelle CEO Pavel Bains
This interview article was first published on Westpac IQ.
Anita Kapoor: The volume of data being created and exchanged across the world is growing rapidly, but so is our need for managing that data both securely and efficiently. Today I'm speaking to Pavel Bains. He is the CEO of Bluzelle. And I'm about to find out – is blockchain the holy grail of data management that we've all been waiting for?
Pavel, welcome. You are a futurist and you're an investor in exponential technologies. Your company, Bluzelle, describes blockchain as ‘the new internet’ – that's a really bold statement to make. Is blockchain really that significant?
Pavel Bains: We think so. It's the core infrastructure to build a new internet. And by that we mean the current internet that we have is really centralised and grew too fast, so there are many points of attack, which has brought the internet down. Data has been leaked. With the blockchain being a decentralised technology, it allows us to recreate the internet and make it decentralised so these data breaches and security issues aren't there anymore.
Anita Kapoor: What areas are we going to be seeing blockchain being used in? Can you share some real-world examples from Bluzelle?
Pavel Bains: A good one is supply chain and trade finance. In trade finance it's all about movement of goods, and banks lending manufacturers money to produce something to sell to somebody else. And they want to get paid at certain points. Right now, all that takes a lot of time. If you use the blockchain and smart contracts, the contract is built at the same time. It says that you know this letter of credit was issued to somebody else. All the parties involved can be brought together via the Internet of Things (IoT) and every time a touchpoint is hit, that’s a trigger; the goods have moved from point A to Point B – the person signed off on it, the blockchain recognises it and the smart contract informs everybody at the same time that everything's being done. Once it gets to the end point, everything's been checked off and payment can be issued to the original person.
Anita Kapoor: You've also said that this shift in technology is akin to what happened in the music industry when it went from MP3 to streaming. Is this really that level of disruption?
Pavel Bains: I would say so. What did MP3s really do? It wasn't just music. It changed the entire way we consume content – music, games, movies, television. Everything changed as a result of ‘hey, here's a digital file that I can send quickly and share it and get everything I want from it’. So if you look at blockchain it can do the exact same thing of changing the entire way we consume applications, how the rules are written and how that is governed.
Anita Kapoor: Using that music analogy: Speaking about big companies that actually didn't really get on the technology highway, they've pretty much lost out. So at this moment, given the way technology is actually changing business models, can you say the same will be true with blockchain. Is it quite easy for people to adopt and adapt?
Pavel Bains: Technology historically has always disrupted the incumbents. It's just the nature of the beast. But they can adapt. The music industry could've changed right away and said, ‘hey here's MP3 – let's get on it’. But that transformational change took longer than the technological change. You could see the same thing happening here. I was watching something with Dave Chappelle the other day, and he said: “When was the last time somebody said, 'Oh I wish I had a camera right now’?”. Right. It's in your pocket. So all those Kodaks – everything went out of business. I think it's more about companies that are just so big they can't transform fast enough. It's less about the technology adoption.
Anita Kapoor: I want to ask you this. It's great to have wonderful technologies and it's wonderful to be able to speak about them and explain them. But when it comes to actual use, can a business currently adapt their technology and storage today to fit with blockchain. Is it easy to do?
Pavel Bains: Well, there are two parts to it. When it comes to data management, it's actually a bit easier because Bluzelle itself isn't a blockchain. It uses blockchain principles, like consensus algorithms, that prove that everything that's on it is true and computers verify it. That’s the decentralisation aspect. For data management – for our product using blockchain principles – it's actually pretty easy, because we are writing it, so it can support multiple languages, whether they're blockchain projects or the traditional non-blockchain projects (which are still 99.999% of the world). And so, for us, when we're selling to a customer – whether it's an indie game developer, or an enterprise – their whole thing is whether it's blockchain or not. Why should I care about your database? Because it's decentralised, which means it’s more secure. It's more scalable and it's reliable. The system won't go down like a traditional centralised database model. So, for them, the switch is actually pretty easy, because the pain point is solved.
Bringing on security and control
Anita Kapoor: It all sounds promising. It all sounds secure and it feels very futuristic. But there is this decentralised swarm of data. What I want to understand is, how do we keep it secure?
Pavel Bains: The current system isn't secure because it is centralised. As I said, you can go to one silo where everything is stored, break in, change the encryption and it's done. But because the blockchain is decentralised everything's broken up. Let's take your data, for example. Imagine you have a database of all your friends on one e-mail list and it's written onto a plate. Now I replicate that plate a thousand times. But I smash each plate into little pieces instead of storing just one in one place. Then I scatter the pieces all around in thousands of vaults around the world. For somebody to break in, if they broke into just one vault, all they would get is one piece. There's no context to it. They would have to break into every single vault around the world and put all the pieces back together before they got anything out of it.
Anita Kapoor: The other thing is having to give up control over this information. And I think that's the crux of the matter. We all know that information should be decentralised, but I don't have any control over it anymore. And that's pretty scary.
Pavel Bains: Well, do you have control over it right now? Facebook has all your data and does what they want. Google does too. In this situation what we're doing is giving you back control, because you know that it's securely built. It's now safe out there. A couple of things that we're looking at include creating the concept of a data wallet. Basically what we're saying is that data is a currency. And we are managing it like it's real money. So if I give you a data wallet and all your data is stored on a Bluzelle database and scattered all around the world, you know it's safe and secure. So when Facebook asks you when you sign up to ‘give us rights to use this and this’, you can say ‘OK. But I can limit the time and I can tell you what you have access to’. And then, let's say in the future you want to delete your account on Facebook, currently you have no verifiable proof that they have actually deleted all your data and they're not still reselling it (and you're getting nothing). These are things we’ve got to think about, right? But now, if you had a data wallet, you can say ‘Hey, you know what Facebook? I'm done with it. I'm closing my account’. So they have no access to your wallet and they can't do anything with your data behind it. It's just a whole new way of thinking about how we store this data in a much more efficient way. How can we build new tools that give control back to somebody like yourself?
Transforming financial institutions
Anita Kapoor: How is blockchain going to change the financial industry over the next five to 10 years?
Pavel Bains: In a couple of ways. One is new customers as more people come into the finance industry. Everybody does better because people are able to buy more goods and increase the standards of living. Those are facts. So if you're in finance and you can build a better KYC (Know Your Customer) product that allows you to onboard people faster – which the blockchain can do – now you can onboard more customers, having given them access to blockchain-based payment systems or cryptocurrencies, which allows them to basically use money quicker and consume it quicker, i.e. borrow/lend and all those things. The other part is at the back-end for the finance industry. As we said, trade finance can improve drastically in terms of speed and efficiency by using blockchain and smart contracts and large payment wires. Instead of these taking days to weeks to validate and come through, you can now do it in seconds.
Anita Kapoor: Let's talk about regulatory frameworks. Where does blockchain fit into all of that? Are the current regulatory frameworks going to have to adjust?
Pavel Bains: They definitely will. They had to adjust to the internet and say ‘Hey! Here's a new medium of communication, a new way that businesses are running’. We have to see how that applies to our current world and updated the regulatory tactics too. The same thing will happen with blockchain. How does that change things? For example, how money moves? They're going to have to start figuring out the regulatory rules – are they caught up to the blockchain world, or not? My hope is that because blockchain is decentralised and validated by outside parties it takes a lot of the heavy work out and regulatory bodies can see it's actually a bit self-governing. We actually don't have to do that much work. We just have to change some of the rules around it.
Anita Kapoor: Is using this technology going to give smaller companies the ability to compete with the larger more established players in the financial market?
Pavel Bains: In non-financial industries, I think it will because new companies always have an advantage when it comes to adopting new technologies moving forward. Look at Instagram and Kodak. They destroyed that entire business. When it comes to the finance world I think it's a bit different. And that's where some people have different viewpoints than other people. I think banking and insurance have built up hundreds of years of trust. It's people's livelihood – their money. They're not just going to give that to a startup just like that. It's a whole different ball game. So I see that companies should start to work with banks as partners. If they can go to a bank and say ‘Hey! We've improved the way a product works using the blockchain. Instead of you building it, invest in it by partnering up with us. Let us reach that audience’. Then there's revenue that can be shared.
Anita Kapoor: Pavel Bains thank you very much for talking to us and enlightening us about blockchain.
Pavel Bains: Thank you for letting me come on and talk about these things.
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