Why Blockchain: Daniel Larimer at Virginia Tech


…graduate from Virginia Tech I’ve been in the blockchain industry I actually learned about blockchain shortly after Bitcoin came out back in 2008-2009 time frame Because I wanted to
create new currencies a way to create more
economic freedom, more monetary freedom and blockchain
happened to be the solution So that’s what got me
interested in blockchain Since then I’ve gone on
to create several different projects One of them was
a decentralized exchange so not only can you
do currencies on a blockchain you can implement things
like the stock exchanges companies can issue shares and all those things
can trade on a blockchain So I did that with BitShares but then I went to the other
end of the spectrum and I looked at “Can you do social media on a blockchain
and what does that mean?” and that’s why I created Steemit also based out of New River Valley and Steemit was one of
the most adopted blockchains the first blockchain that was so easy to use
people didn’t know they were using it Both of these were some of the
fastest blockchains in the market, or the fastest Then, about two years ago
I joined Block.one and we set out to create EOSIO EOSIO is designed to
make blockchain development easier Block.one is now one of
the largest blockchain companies We’ve got a hundred people
around the globe and we’re trying to make blockchain accessible to businesses to solve real world problems Now the early blockchain
technologies like Bitcoin they had trouble scaling there are limited use cases they were difficult to use So we’re trying to address all those
different usability issues around blockchain to make it easier for
everyone to adopt blockchain and part of that is to
help educate everyone on the true value that
blockchain provides to businesses So we built EOSIO EOSIO is the fastest,
general-purpose blockchain out there We’ve got a lot of users no transaction fees You can learn more about
EOSIO on our website but the purpose of this talk is
not to just talk about our products but to talk about
blockchain more generally So what you see here is a list of like
a fraction of the small businesses that have started up and
some started building on EOSIO and the EOS blockchain There is tremendous interest and everyone is trying to figure out how can they apply
blockchain in some new way build some new businesses on it but it’s been a very challenging problem because everyone’s looking at
Bitcoin and Ethereum and EOS and they all think about tokens they’re all thinking about new business models When people think about blockchain they think about public networks and proof-of-work and wasting energy None of these things are necessary to achieve value from blockchain Every single business – if you’ve got a database and multiple users – your business can be better off on a blockchain It doesn’t need to be public you can have private blockchains
operated entirely by your business If you’ve got a database
it should be on a blockchain and that’s where the
future of this technology is going The challenge is,
a lot of people don’t understand what value is there
in a private blockchain because after all, Bitcoin was created to be this
completely decentralized platform a database for managing money for transferring tokens from one person to
another without any censorship Well that is absolutely one
use case of blockchain technology and it shows you the
power of the technology if you were to set up an SQL database
using non-blockchain technology and create a token on it and have a little
transfer form that allows you to transfer it from
one person to the other That token would
have almost no value You build that exact same
system on a blockchain and you’re talking about hundreds of
billions of dollars worth of value And the only difference is the security the audit ability the accountability of the system So that’s the power blockchain provides in a public, distributed, decentralized manner But I want to talk about how it applies to every single business you can conceive of If you’ve got a business now or you’re gonna work for a company after you graduate Tech and they’re trying to build infrastructure? You need it to be on a blockchain and there’s a lot of reasons why So if blockchain is not about tokens and it’s not about being
completely decentralized what value is there in
a “centralized” blockchain? Where in this case
I’m talking about a blockchain managed by a single company And for this example I’m going to use
Twitter as an example Why would you want
Twitter on a blockchain? Who benefits from putting
something like that on a blockchain? You can imagine
that if you’re a CEO or an officer in a
publicly-traded company or you’re a politician there are things that you can say that would get not only you in trouble – potentially thrown in jail or fined – but can cause massive
movements in stocks causing people to make
or lose a lot of money Now imagine for a moment that either an employee inside Twitter or a hacker who finds
some hole into their servers logs in modifies someone like Elon Musk’s account to make some statement that is a violation of SEC regulations You’re in a
major predicament because Elon can’t prove
he didn’t say it and Twitter can’t prove
that he did Now if it was on a blockchain… Now Twitter could prove
that they didn’t say it and Elon would be forced to
prove that he was hacked It sort of shifts the burden What’s worse Twitter today would be
unable to do anything Trump or Elon or any of these people
that are using these platforms they’re at the mercy of
the security of these platforms, of Twitter Because there’s nothing
they can do on there and to secure it Yeah, because you have to
rely on the servers you’re logging in
with a password But with blockchain you’re in control of your own security You can use your cell phone with things like Secure Enclave to manage your private key
protected by your fingerprint or your face and now if someone like you
are a CEO of a publicly-traded company and you don’t want to get thrown in jail because someone hacked
your social media account not through your computer
but through their servers now you can actually protect yourself and if you’re a company you can also mitigate your liability you can avoid costly court battles
trying to prove, you know, who said what and that’s a tremendous value
for everyone involved So if that applies to- so that’s one area where
it provides increased security because you now can audit every
single action So I’m going to get a little bit technical here but hopefully not
too technical for this audience You can imagine you’ve got your server room yeah and you got a security guard Yeah, the security guard checks your ID
when you enter the server room then you’re allowed to go in and you can
modify the databases to be whatever you want and then you leave At any time someone could come in
the server room through the back door change those records but no one could prove that
you did the right thing that the security guard
actually checked your ID You’ve probably heard of things
like multi-factor authentication you secure your account by not only
logging in with your password but they send you a
text message or some other app In all those systems
the server is the one that has to verify that you
put the right password in that you responded with
the right code from the text message But how do you know
the server actually did its job? How can you prove to
auditors after the fact that you actually did
authorize that transfer or that post or you actually did log those hours in your time-keeping software or you sign that contract? Those things are not possible
with existing client-server architectures So with a blockchain design every single action that a user takes
when you’re on a website if you’re sending
a request to the server that request is signed The request is then logged in
a database that’s “append only” It means that there’s not modifying data- you’re adding new data And that database is not on one server it’s replicated and managed by
multiple independent IT members of your team,
possibly in different locations So if Block.one were to be operating a private blockchain we’d have servers
managed by people in Blacksburg servers managed by people in Hong Kong servers managed by people in various other countries and we know that there’s not one IT staff that has the ability to
go in and change these things We know that that transaction was
received by all the different servers that they all signed off on it and you now have a permanent record Not only that as a company you can either
publish your entire blockchain so the entire world can see it or you can reveal just
the hash of your blockchain that makes a public commitment
to the rest of the world that you’re not going to
go back and change your records so if you’re an accounting firm
or a bank or a stockbroker or in any timekeeping businesses
for government contracts where they require you to log
your hours every single day and not change things after the fact All of these things you have improved accountability and auditability
of exactly what happened And that just makes
everything more efficient If you’re one business and you want to
communicate with another business today you have to have servers
that talk back and forth on the backend with API,
keys and things like that But with blockchain you can actually
generate cryptographic proof that you transferred something in this bank and this other bank can then do something or that you posted something on social media and that can improve and accelerate business-to-business communication So So blockchains help businesses automate
compliance with regulations So as a bank you need to make sure that different people sign off on transactions in different orders As a business union make sure that purchases are authorized
and travel expenses are logged and all these things There are lots of rules and regulations that governments passed down that businesses want to implement internally Blockchains automate all that Today when you go and
buy stocks through a broker it can take three days for
those things to settle during which time you look at
your account and it says you’ve got negative debt here
and positive stuff there just because things haven’t settled Blockchains can settle
those things instantaneously It removes the human element of it and a lot of the regulations
that we deal with in industry today are all about putting in processes to
manually try to prevent corruption internally and externally Blockchain automates all that
which reduces cost for businesses so much so that it’s my belief that
rather than regulations coming out that are going to try to
suppress blockchain technology I believe it’s going to be mandated I believe that companies that
don’t adopt these standards are going to be like companies that
don’t secure their infrastructure today and cause losses to their customers The liability for not using industry standard
best practices is potentially huge So that’s why I’m confident that blockchain technology is
going to be relatively ubiquitous it’s going to be completely transparent
and no one’s going to know they’re using it Because it’s not going to be
pushed by people directly it’s gonna be by businesses Businesses that looking for
efficiency, security reduced liability,
regulatory compliance It’s going to fundamentally
transform every area of a society from banking to government to
voting you name it So at Block.one, our goal- we’ve got a lot of security challenges
that we need to address not only on the authentication
of the user but you know preventing social engineering,
password phishing These things can be largely eliminated by moving to some of these technologies you gotta look at the whole picture and
the blockchain is at the center of it So with the combination of
hardware keys on your phone blockchain services
and smart contracts and software that make sure that
the user knows what they’re consenting to we can really eliminate the vast majority of
fraud saving trillions of dollars every single year globally So our goal at Block.one is to build software and infrastructure and tools that allow developers to move their applications from existing infrastructure to a
blockchain infrastructure provide the same or better experience
for end users in terms of usability and at a lower cost and eventually developers will realize that not only is blockchain
a more secure technology it’s actually just a better design pattern for building scalable maintainable software and that’s because it forces you to think
about what the users are doing to have unidirectional data flow and follow other best practices so you don’t have database corruption
wiping out all your users’ data You can always recover the data So I’ve talked a lot about security talked a lot about how
it saves money and reduces risk but it’s also just a
better architecture for all software and you’ll find that if you study
the frameworks put out by Facebook they’re all moving towards
this unidirectional data flow And blockchain just formalizes it,
adds signatures, adds identity verification

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