The Future of Blockchain

Posted January 26, 2018

In this episode Armen is joined by Loretta Joseph, Chair of the Advisory Council of the Australian Digital Commerce Association, and Ben Yablon, Executive Vice President and Director of Global Strategy at SALT Lending. They discuss predictions for the intersection between blockchain and digital identity in 2018 and beyond.


Armen:   Hello, and welcome to today’s edition of Digital Identity 360. Today, we have two esteemed guests. And I’d like to start off by introducing Loretta Joseph with the Australian Chamber of Digital Commerce. And also, Ben Yablon with SALT Lending. So Loretta and Ben, could you each do a brief introduction of your own backgrounds. Just to provide a little more color for our audience today.

Loretta:   I am the Advisory Chair of the Australian Digital Chamber of Commerce. I am a former investment banker. I have traded securities for the past 37 years, and in 2012 I became a blockchain enthusiast. So I endorse the technology with governments, industry, and regulators to foster responsible adoption of the technology. I also sit on a number of cybersecurity company boards, and a number of blockchain boards.

Armen:   Excellent! Thank you, and Ben?

Ben:   Thank you. Great to be here. My name is Ben Yablon. I am the Co-founder of SALT Lending. SALT is a platform, that allows holders of digital assets, like Bitcoin, Ethereum and others to use those assets as collateral for loans denominated in national currencies. Prior to co-founding SALT, I was a financial technology attorney: background in Fintech, startup, law. I’ve spent quite a bit of time helping clients with the insolvency process. So I’ve come into the blockchain space with somewhat of a unique lens in terms of how these assets can be held and protected. So there is a very interesting carry-over into the security field, and I think interesting for a discussion with you.

Armen:   Fantastic! Thank you both for joining us, and I think the topic tees itself up really nicely. This whole series is aptly named Digital Identity 360, and what I’d like to do is really focus on the intersection between digital identities or digital identity, as a practice area and blockchain technology. I think there’s a lot we could talk about there, and I’d like to dive into that and have a discussion around that. So Loretta, from where you sit, obviously looking broadly at an industry level, when you think about blockchain and when you think about digital identity. There’s a lot of ways we can approach how a digital identity can enable a blockchain scheme to perhaps operate with a higher sense of integrity or perhaps a higher sense of confidence that the identities and the personas, which are engaging in the transactions are in fact who they say they are. But, I’d love to hear from you about the intersection between the technology sets. Where is that magic moment, which makes this an interesting combination of technologies?

Loretta:   The element of trust. I think the digital ID, and the cybersecurity element come together with trust so that inbounds the security and the accuracy of the blockchain database, the transparency of that database, and the immutability of it. So the technologies aside, we have an immutable, traceable record of when that identification was made.

Armen:   We have talked about this quite a bit internally, where and how ThreatMetrix sort of plays specifically with blockchain strategies, and the one way that we’ve described it is in the absence of having an authenticated digital identity in the blockchain, you’ll have immutable record keeping of transactions that may or may not be the people, who claim to be who they are. So from where I sit, the digital identity will actually authenticate that the person is who they say they are. The blockchain will sort of verify the transactions existed, and all the record keeping which goes along with a distributed ledger. But in my view, the old commercials of Reese’s peanut butter cups:   the chocolate and the peanut butter. Combining the two, I think is really an interesting combination that can work together quite well.

Loretta:   I think the difference between authentication now is that there is a lot of sensitive data. Companies are storing that data, and they have got some honeypots that are open to attack. And this all comes around ID. I think for me, securing that ID and the risk of holding data on me, and the risk of companies holding data on people. It’s an incredible risk, which we haven’t seen before in history and it opens up a lot of issues around cybersecurity. For me, it’s a KYC if we stop duplicating it, how does it work on the database and how do we prove that people on the database are who they say they are.

Armen:   Very good. So Ben, SALT Lending is generally in the online lending space, but you know you approach it differently in terms of embracing distributed ledger capabilities and blockchain capabilities. Help us understand a little bit more about from where you sit, what you’re building. What is the role of the blockchain and where do you see digital identities playing a role in that value chain?

Ben:   Sure, absolutely. As with almost any other entity in the financial services business, we must be focused very heavily on our KYC and AML obligations. One of our main costs is associated with verifying identity. As it stands, we use every available tool and have been looking at other solutions becoming available online very quickly that are using the blockchain to do this in a much, much better way. And my interest from SALT’s perspective is very clear and easy to understand. But there is another blockchain company, which I’ve been working with for a number of years in the health data space. And identity is a vital concern there as well.

Armen:   Absolutely – yep.

Ben:   To move a medical record from one place to another, it’s a cumbersome and challenging proposition. Using the blockchain, we can now store and secure things like our medical records, and ID plays a crucial role there as the foundational element. Once ID is established, you can then have layers of access stacked on top of it with permission access granted to those, who need to see it. So ID is the fundamental piece that blockchain will bring into many other vital service portals and I think that health is going to be one of the major markets in at least the next 12 months.

Armen:   Very interesting. So health certainly big, hot area and obviously there are regulatory concerns and requirements to follow along there. There are other vertical applications as well. When you think about other good applications outside of healthcare and outside of moving large blocks of capital through the system, what other industry applications have you thought through where you see this intersection really applying on a global basis.

Loretta:   For me blockchain identity data when it is on the blockchain it’s immutable. It’s my data, and I guess a web of trust over time and it chronicles a source of truth from the data and I think the identity data still belongs to the individual not the corporations. We give permission to see who gets our data, so I find that in the emerging market up until we have blockchain technology. Adding digital id, which is verifiable on any sort of data record, and why are we as people giving information about who we are to people we probably don’t want to see it. So digital id in that respect is very important, and there’s many other use cases we’re seeing now about people:   voting, land files, people who say they own land or villages, really anything with a registry and a form of identification that ties it back to that registry.

Armen:   One interesting application that we’ve been talking through is in the property and casualty and even life insurance industry space. Health care information aside, and even health care insurance. In the other forms of insurance, with disbursements. There’s certainly a lot of fraud that needs to be managed there, and certainly anti money laundering concerns that need to be accounted for and detecting sophisticated fraud rings with claim stacking etcetera. I think there’s a really interesting application, if you have verifiable identity signals mapped to transaction-level integrity that can be verified against a distributed ledger. I think that’s a really interesting combination. So perhaps one day eliminate any fraudulent activity with respect to claims disbursements and organized crime.

Loretta:   There is also the providence of funds with charities. You have a lot of emerging markets now, you’ve got big companies giving money to a charity and the end-user isn’t getting the money. So there’s a lot of elements involved in that transactional layer, and how does the donor see to where the money goes to the village in South Africa. For me, that’s a really big use case as well because we now track the online providence of goods and the providence of money, and take out the fraudulent activity. And probably we haven’t made our stake, because the data isn’t rich enough or immutable.

Ben:   That’s such a great point, and the fraud element is key, but one of the emerging pieces here is the impact that this self-sovereign id will have on refugees. One of the most vexing problems that compounds as the result of refugees is this loss of identity and the ability to reclaim what was yours from the place that you were displaced from. So when we start looking at self-sovereign id’s from a particular country or even a particular nation, very interesting things begin to happen. So we are seeing this global phenomenon around refugees.

Armen:   I think that it doesn’t just stop with the refugee population, it’s also folks in parts of the world, who don’t have a physical mailing address, not necessarily refugees but a good portion of the Chinese population has no known mailing address or no social security number. So applying a digital identity scheme at the identity level with a distributed ledger, a blockchain, to drive authenticated transactional data will really empower a good chunk of the population, which is either underbanked or underserved or suffering from a refugee situation.

Loretta:   And I think if we take a look at what’s happening in the villages in Africa and India, and if you can start to digitally id people at a village level, you can start to give them the ability to connect, you can start to give them the ability to vote, you can start to give them the ability to have title over their land. There’s a whole lot of ways you can help people financially, but they’re not included in the financial system and if you do that on the blockchain, from the moment that their id is now created on say a 2G phone, can now be taken off the blockchain, then there’s a whole eco-system that’s developing. The paradigm shift for the emerging markets is critically fundamental to the blockchain technology.

Armen:   Very good, so I’m going to close this segment today with a power round, and I’m going to ask a question. This was not pre-planned, for the audience watching. So Ben, we will start with you. What’s your single biggest prediction for 2018 as it relates to the conversation we’re having today? The intersection between blockchain and digital identity.

Ben:   That’s very exciting that you asked me that. We’re going to see a rapid tokenization of nearly every asset class imaginable. I think what that really means is that the way that we interact with value generally is going to reconsidered in 2018. Also, our ability to express ownership over as a result of this sovereign id, asset classes, which were before frozen. So that is what SALT is looking forward to in 2018.

Armen:   And Loretta, what is your prediction?

Loretta:   I think regulators in governments will come together from a collaborative side, not looking at the blockchain or applications of it, like cryptocurrencies, as being particularly negative or nefarious and blockchain applications will be vast and varied. And there will be a very, very large adoption of blockchain technology within governments, within regulators and within the industry that we’re not even seeing at the moment.

Armen:   Okay, so we’re going to check in 11 months from now and see how your predictions hold up, but based on the very credible backgrounds you both have I think you’re both onto something and I suspect your predictions will bear fruit. So with that, I want to thank both of you. Loretta and Ben for joining us on Digital Identity 360. I thought this was a very interesting conversation, and I hope you found a lot of value out of this too. Thanks very much for joining us.

Loretta:   It was an absolute pleasure. Thank you for having us. I look forward to coming back in a year, and seeing how far that we’ve grown.

Ben:   $100,000 bitcoin.

Armen:   There we go. You heard it here first.

Loretta:   And cryptocurrency will send it to a new level.

Armen:   Great. Well alright folks, thanks a lot and I appreciate your time Loretta and Ben. Take care.

Loretta:   Thank you, Armen. See you later.

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