• AdamHopkinson

Building Transparency Block by Block(chain)

Updated: Dec 30, 2018

A variant of a presentation regularly delivered publishers and advertisers in the UK

What is it, why do we need it how does it work?

  • From conception to today

  • What does it mean for Transparency?

  • Effect on society

  • Real World Example

  • The Future

What is blockchain?

It's a shared ledger for recording the history of transactions - that cannot be altered.

Why is it called a blockchain?

Data is recorded into a block which references the block before. Blocks are encrypted and only permissioned parties can see the content. Need to know basis - I’ll show more in a couple of slides

Why do we need it?

In a financial services business (and digital media), transactions take place every second — orders, payments, account tracking. Often, each participant has his own ledger — and, thus, his own version of the truth.

Having multiple ledgers is a recipe for error, fraud and inefficiencies. The goal is to see a transaction end-to-end and reduce those vulnerabilities. Reliance on intermediaries causes inefficicency - Transactions can create undue workload and potential losses for stakeholders

Blockchain however,

Single shared ledger which is tamper proof and final - once recorded transactions are final

All parties give consensus to transaction before it is recorded to the chain

Speeds up process, disintermediates as there is no third party (bank) verifying transaction, trust is given to the network rather than to a central authority

The blockchain is here to bring trust to transactions and interactions

The blockchain raises a key human question: How much should we pay to trust one another? In the past year, I’ve paid my bank interest and fees, some hidden, to verify accounts and balances so that I could make payments to strangers. I’ve spent thousands of pounds on lawyers to draw up contracts because I am not quite sure how another person will behave (and to sort out a few incidents where trust broke down).

By using blockchain we can create trust out of a trustless network, we could call it the trust economy or the source of the truth.

What does this mean for transparency?

Well let's talk about why it is transparent and what it means

Blocks are connected with each other in a linear fashion.. For a block to be added to the chain it needs to contain encrypted (hashed) data which through Merle tree merging creates security and complexity which we do not have the capability of breaking.

Once a block of transactions is represented, it is broadcast to the network of nodes who verify the execution of the contract or the transaction. Once validated it is added to the blockchain and the transaction occurs

Network adheres to a protocol for validation of new blocks. once recorded the blocks cannot be modified without collusion of the network and Further blocks are added the chain

For transparency then - once consensus is reached, the block is recorded and it can never be changed : but lets not get held up on transparency just yet - it is a requirement in the absesce of trust. - this bakes trust into the journey

Inherently resistant to modification of the data within them

Only those involved in the transactions (and hashing) can access the data. This allows participants to verify and audit transactions cheaply and instantly. Both parties have a clear and transparent view on everything they consent to.

Governance through code

-Blockchain technology has a large potential to transform business operating models in the long term. Blockchain distributed ledger technology is more a foundational technology —with the potential to create new applications for global economic and social systems—than a disruptive technology, which typically "attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly".

By replacing humans with code we can expose and remove corruption, if you take politics as an example, we could have our own identity on the blockchain, preventing identity theft, allowing us to rewrite voting systems that allow us to code political policies and hold politicians to action over their words.

Also with identity comes control of data, your data, your health records, your online profiles (think facebook, google etc), by taking control and only sharing with whom you wish to share will create a different world economy where consumers have more power and control than they have ever had previously.

Aid distribution has already been in testing by the UN to distribute AID to Jordan by way of Jordanian dinars coupons to be redeemed in local shops via blockchain technology with great success, this pilot gave full transparency and ensure the funds were used as intended with no waste. Image how this pilot will change the way AID is collected, managed and distributed in the future?

Blockchain and peer to peer transactions will bring financial products to the poor - currently less people have access to bank accounts than own mobile phones!

Rebuild corporate governance in a similar way, through De-centralised Autonomous Organisation (DAO for short), allowing shareholders voting rights to remove, add, accept proposals from other members on how to run the organisation. Think of Uber without Uber, Think AirBNB without AirBNB

Frameworks and trials such as the one at the Sweden Land Registry aim to demonstrate the effectiveness of the blockchain at speeding land sale deals.The Republic of Georgia is piloting a blockchain-based property registry.The Ethical and Fair Creators Association uses blockchain to help startups protect their authentic ideas.The Government of India is fighting land fraud with the help of a blockchain.

In the first half of 2018, an experiment will be conducted on the use of blocking technology to monitor the reliability of the Unified State Real Estate Register (USRER) data in the territory of Moscow.

Blockchain technology can be used to create a permanent, public, transparent ledger system for compiling data on sales, storing rights data by authenticating copyright registration, and tracking digital use and payments to content creators, such as musicians.

Foundational Change. Genuinely truthful, transparent, immutable and final records.

Is it secure, and why?

Security: The cryptographic hash that is created within blockchain has its roots in government services and is until the emergence of quantum computers unbreakable.

Back in early 2016 a LA based crypto trader lost his hard drive with his bitcoin private keys, he had around 10m in bitcoin at the time. He spent a number of days at the LA dump sifting through trash looking to find his portable server, unsuccessfully. No private key no access.

Immutability: As I’ve said, the premise of blockchain is a series of ‘data blocks’ that are created in sequence to capture any changes in state of that data. Whereby a contract can be captured and post to a blockchain, it is then hashed. The hash ensures that this information can no longer be altered by the parties that have access to this data, but any changes create a brand new block of data.

From a data provenance and audit perspective this capability provides a very efficient method of allowing all parties to track any agreements from inception and any changes agreed by participants.

Lastly the immutability of blockchain has be ruled as a durable legal medium and can be utilised in legal proceeding to ensure participants fulfil their obligations.

Distributed Ledger: Blockchain offers an evolution of how information is shared between participants in a service. The standard model of relational databases, has to date led to reconciliation issues and who is holding the ‘truth’ or Golden Record. A distributed ledger ensures that all participants have access to common datasets in parallel and any changes are shared with all participants in parallel. This does create a issue of latency, but at this time is being resolved with the increasing speed of blockchain networks and having off platform data that is then posted in batches intraday.

This is separate from consensus and how this is formed. Media blockchains will use either a more effective machine to machine model that significantly reduces latency and requires no gas.

Smart Contracts: A Smart Contract is the creation of algorithmic process whereby the need for human input is significantly reduced or removed. It creates the ability to simplify business processes, reduce operational costs and create more effective points of trust within a system. The application of Smart Contracts is often perceived to be an end application, but this is not feasible or practical currently. Therefore these Contracts are segmented and individual contracts applied at key points of interaction between participants to govern trust - to maintain delivery and to record progress. Like between an agency and a DSP, a DSP and an exchange, and exchange and an SSP, a SSP and a publisher

Think about your supply chains.

So imagine this..

Caveat with : Government funding and end to end capabilities need to be built but here’s an application….

A bottle of branded water begins its journey in the factory. It is filled, capped and branded. We are a little past Qr codes now, and this bottle has a unique identifier.

It is batched into a slab, the slab has a reference code

The slab is in turn batched into a palette, which , also has a reference code

The palette is shipped to its destination with its journey recorded at origin and destination

The palette arrives at a superstore and is logged

The palette is broken to slabs, and as each gets taken to the shelves, it is logged

The bottle sits on the shelf

This i imagine is kind of how it works today.

But what if with the record of ownership came the burden of disposal : You buy it, and your transaction is processed. You become the owner and importantly have the burden of disposal.

You eventually drink it and dispose of it in your bin, perhaps scanning it into a rubbish bin which bundles with other ‘smart’ rubbish which is weighted and each piece enters a new bundle and has a new reference.. And onwards until disposal

(These are slow moving transactions across a supply chain, and we have use case for similar applications to the blockchain with diamonds, art, wine and land and more..)

Anyway - nice to know that your rubbish is being taken seriously

But what if the chain stops, and there is no onward process and this is because you lobbed it in the sea. … It has a reference code which could be scanned and the last known owner gets a call and ultimately not rewarded from the disposal mechanic.

What could this mean for you you

-You have a direct relationship with the owner-You can honestly say that you’re committed to delivering good by clearing up the shit in the sea-You have huge ledgers of the pattern of consumption of your brand. Your data lake becomes a tool for internal process improvement-You are at the vanguard of the potential of the blockchain.-Your PR could be phenomenal-David Attenborough will return your calls.

This is how profound it can be

And thats before we even apply the thinking to advertising, creative, copyright, media, workflow...

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