All aboard the blockchain

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We might just be about to witness the next ‘industrial’ revolution; one where societal interactions on all levels become completely decentralised (or peer-to-peer, as the saying goes). What does this really mean? It means cutting out the middleman so that people (and machines) can transact with each other in full trust and with high degrees of privacy. Doing so lowers cost, increases efficiency, and opens up lots of opportunities.

BlockchainThis might sound like an iterative change with little impact, and when I first started to look into this I wasn’t particularly impressed with the hype. But, take a step back to look at the bigger picture and indeed the full potential, and it becomes apparent there might just be something disruptive and paradigm-shifting in it all.

The most cited example (and perhaps easiest situation to relate to) is that involving money. Blockchain is almost synonymous with Bitcoin, the virtual currency that most people have heard of but relatively few have dared buy or spend. Ironically it is Bitcoin’s encrypted virtual autonomous being that seems to deter people from adopting it; can it be trusted? Will it just evaporate from my virtual wallet? Does it really have any value?

Yet it is designed precisely to allay these fears. It is also a way to send and receive money with someone directly anywhere in the world without involving a bank, a clearing house, or any one specific third party. It’s like paying for cash without the need of a government regulated mint or central bank to issue and manage the currency.

Blockchain2But Bitcoin is more than this.  It relies on multiple copies of a decentralised record book (a distributed ledger; the blockchain) to encrypt and record the transactions thus creating an immutable audit trail. It is this aspect that will very likely be incredibly disruptive. This is because the blockchain does not have to be limited to transacting Bitcoins. It can form the backbone for exchanging contracts and credentials; like any database or record book only with added security and in many ways greater transparency. Moreover, the contracts can be smart so that actions can follow automatically based on a set of software rules without human interference. An example is that the Bitcoin could be loaned automatically to a business, the business could pay interest automatically to the lender, and the loan could be repaid automatically when the business meets a set of agreed criteria. And if you are a bank, then you are no longer in the loop. And if you are a government, you may find it rather difficult to regulate. And if you are tax authority, you may well be avoided.

Looking into the details there are a few surprises along the way. The ledger is getting bigger by the second, and so as I write this, the blockchain associated with Bitcoins stands at just over 56Gb. It takes a while to fully transact a Bitcoin (around about 10 minutes; considerably slower than a credit card payment, significantly faster than an international telegraphic transfer). It also requires a fair amount of energy; the bitcoin and associated transactions require cryptography and consensus by many parties, and the system has built in this number-crunching cost to ascribe some value and rarity to the currency.  There are other technical challenges as well around limitations and levels of security of the current blockchain, not to mention the issue of standardisation and the existence of alternative blockchains, other virtual currencies and a growing range of  protocols.

But one thing is almost certain. The blockchain will start to creep into our everyday lives just as personal computers, the Internet and social networks have. Currently there are bits and pieces about you dispersed around the global network and before long some of these will become attached to blockchains. You may not ever understand the inner workings, but you’ll probably wonder how you ever functioned without them.

Join us at the Malvern Festival of Innovation to find out more about cyber security, the Internet of Things and where blockchains fit into all of this. And when we go live with our Formal Dinner tickets, as in previous years you will be able to pay with Bitcoins…

Adrian Burden, Festival Founder

 

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Cyber Security: Can we innovate fast enough?

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Some sectors seem to develop faster than others. The computer industry has always been a fast-track innovator fuelled by miniaturisation, a hunger for speed, and a creative community that has brought us the Internet, phone apps, tablets and now the promise of the Internet of Things.  How many other industries have delivered so much and consistently managed to lower the price for a given level of performance in the way the IT industry has?

But in parallel we have had to deal with a darker side of innovation: viruses, hackers, phishers and fraud. Our reliance on all things silcon from running our business to running our social lives is now under threat from others who can defraud our business and take over our lives.

The question is, can we keep up? The first challenge is that the industry needs to constantly develop new defences against cyber attacks, new algorithms to encrypt passwords, and new processes to plug vulnerabilities.  Then we, as the users, have to keep up too. We now have numerous accounts, numerous profiles, and a proliferation of data in cloud services and on devices. All of these are protected by our passwords that ideally need to be growing in complexity, changed frequently, and different for each service we use.  And as this trend continues, we start to feel the fatigue of staying abreast of it all and wondering if we can continue to function in this fast-paced world.

Interestingly, as a species, we have probably been here before. I’m sure the Stone Age man wondered how he could live in a world as bronze tools emerged and accelerated the pace of change in all walks of life he was accustomed to; hunting, gathering, farming, and crafting. And at the same time he no doubt feared the bronze weapons being unleashed on his world and wondered if he could develop defences against them as they became sharper, longer, heavier and more accurate.

More recently we had the industrial revolution in which people feared the speed and capability of the motorcar, train, plane and robotic production line. As these new inventions allowed us to travel at high speeds across land and water, so too they enabled nations to engage in warfare and espionage. As a race, though, we pulled through again.

Cyber does offer its own new challenges however.  In a way, it allows numerous layers of reality (or virtual reality) to be created, so things become very much more abstract. It is harder for our brains to rationalise abstract things like data. Is it valuable? how does it really affect our privacy and those around us? is it dangerous? and so forth.

The good news is that so far it looks like we can innovate fast enough. Our systems haven’t melted down yet, and there are plenty of new services and interesting new defences emerging each day.  We’ll hear about some of these at the Festival this year: the Internet of Things, cyber security, Big Data, assurance of complex systems, new approaches to passwords and encryption, etc. Assuming of course we’re not out-paced in the next few weeks and everything starts to unravel…

Adrian Burden, Festival Founder