Gary, would you mind telling readers a little about yourself and your journey prior to Distlytics?

The strand that has remained central to my career has been business intelligence and analytics – using data to improve business processes and enabling better informed decision making.

The original focus therefore was to identify how an analytics layer could be introduced, what the best architecture would be, were there suitable existing technologies or would something unique need to be developed etc. All very interesting stuff and right up my street as it involved new and emerging technology, business improvement and BI.

It quickly became clear however that I was ahead of the game and that many organisations were only just at the “what’s blockchain and how can we use it?” phase. Therefore I started with providing consultancy and running Proof of Concepts to explore the technology and its suitability in the London Commercial Insurance Market.

Before talking to us about how you have seen blockchain used, can you try to provide a brief business-centric overview of what a blockchain is and how it works?

Part of what I do as a consultant is to get people excited about what the technology enables, not how it does it. Fundamentally, blockchain is a protocol (it describes how something is done). In the 1980s there was a protocol introduced called TCP with the IP layer added to give us TCP/IP. Most non-technical people haven’t heard of TCP/IP and techie people would struggle to explain how it works. However, everyone agrees that “The Internet” has changed the World and that’s what TCP/IP is used for. I usually try to move conversations on from what it is/how it works to what it enables and what benefits it brings (more of which later).

In your experience, are there any key facts, examples of usage, or even just anecdotes that help the penny to drop?

So, some attention grabbing numbers about the potential. Nobody has, Bitcoin aside, actually implemented anything at scale and delivered the magnitude of benefits proposed.

At one extreme, if the problem is around maintaining a central master list that teams within a single organisation can use then something like Master Data Services (or for a small firm, a central spreadsheet!) suffices. At the other end of the spectrum, if there’s a need for multiple parties to access a common data repository that is write-only (thereby providing good in-built audit), is distributed (and so cyber resilient), cryptographically stored (so cyber resistant), and would benefit from multiple parties having access to “their” data then a blockchain begins to look like a potential solution.

There are however two notable exceptions. First, Everledger is putting diamonds on a blockchain to prove origination and authenticity as so reduce fraud and blood diamond trade. Second, Estonia, as a nation, is the first to put many of its digital services onto blockchain and it already provides a global digital identity scheme. There’s likely to be a big change in 2017 as projects move out of stealth mode (several financial trading exchanges are moving from PoC to pilot). Watch this space.

Privacy is going to be interesting with the upcoming EU GDPR. I’m writing a paper on this as there’s a range of issues to address (how do you delete a record from a write-only database?) As mentioned earlier, people don’t really need to understand how the technology works, they need to understand how it can be used. Likewise the regulators will need to develop their awareness. Kudos to the FCA who are running their Innovation Sandbox with 14 companies pushing the regulatory boundaries – of which eight of the projects are blockchain-based.

Miner monopolisation really depends upon which protocol is being used and whether the implementation is a public or private blockchain. Bitcoin is currently dominated by the computing power controlled by Chinese miners – and that’s making some people (and Governments) nervous.

Time taken to mine is, again, protocol dependent. Bitcoin takes around 10 minutes for a transaction to be confirmed, Ethereum is at least twice as fast, so neither are suited for low latency volume processing. By comparison, Symbiont claims 87,000 transactions per second and that should suffice for most processing requirements. Ethereum is working on its Raiden Network to offer very high speed processing too.

For those who have concerns about legality and performance I’d say that this is a rapidly evolving technology. In just a few years we’ve seen orders of magnitude performance improvements. On the legal side, there remains uncertainty and that’s why I suspect there’ll be a blend of old and new ways run in parallel until new precedents have been established in law.

Given this less than propitious environment, how do you provide an alternative and more positive message?

As for Bitcoin’s associated with Dark Web and drug dealing and other illicit activities, it’s true! However, dollars and pounds have been used to fund illicit activities too but that doesn’t erode people’s confidence in traditional currencies. Interestingly, crime prevention agencies actually like cryptocurrencies such as Bitcoin! Don’t tell the criminals but cryptocurrencies such as Bitcoin aren’t completely anonymous. In fact a complete ledger of every transaction is publicly available. This means the lineage of payments is easily traceable. As recent convictions of Danish drug dealers has proved!

Brokers talk about removing the need for Underwriters and Underwriters question the need for Brokers in a future model. Blockchain enables both approaches and we could see radical changes in operating models as well as new products and services being developed. It’s possible that insurance may be augmented (or replaced) by alternative financial instruments that can be developed using blockchain. As an example, think of an insurance contract sliced into individual components that can then be traded in a marketplace – a new derivatives marketplace. Other financial sectors have Swaps, Options, etc. and this could extend to insurance as alternative mechanisms for risk mitigation.

I’ll be monitoring how long the blockchain wave continues to grow and provide opportunities whilst watching the other waves. Of course, the really exciting stuff is when big waves converge and technology is no different – Blockchain, AI and IoT all provide massive opportunities. Now if we link them together then the opportunities become paradigm shifting.