Post-Crypto Distributed Ledger Technology for Business Leaders with Mike Talbot
Mike Talbot is the CTO of Veracity Consulting where he leads their data and emerging technologies practices.
He writes and advises on distributed ledger technology for government and business clients and he’s the author of “A Brief Description of Blockchain,” which aims to break this hot topic into layman’s terms for business decision makers.
In this episode we delve into finance, smart contracts, risk, regulation, asset tracking, supply chain, and more.
Ledge: Mike, thanks for joining us. I’d love to get a little background from you for an introduction.
Mike: I work for Veracity Consulting. I’m the practice lead for both our data and our merging tech areas in the emerging tech space. There’s a lot of buzz around blockchain right now. Over the past couple of years, we’ve had clients ask about it. We’ve been focused on working with clients who want to know what it is and whether to take it seriously or not.
So I got very interested, went real deep on it, read a number of books, watched a lot of videos, and recently finished an MIT course. And I decided to write my own book on the subject and a brief description of blockchain comes out. I started it for, at least, January 8 so I’m trying to break down the whole conversations into bite-size chunks, put it into layman’s terms, help people understand what it is, separate the thinking from Bitcoin and cryptocurrency, talk more from a distributed ledger technology standpoint, and help folks understand why this thing is on top of everybody’s mind in technology and business right now.
Ledge: Totally hot topic! A lot of our clients are either exploring or already in that space. We’ve got the crypto side, the supply chain automation, the cold chain tracking for pharmaceuticals and other people looking at digital asset tracking for digital rights management almost on the ledger.
I’d love to get your feedback on, broadly speaking, what our clients are asking for. Is it the ability to understand and how it applies to the business? What are the questions that should be asked out in the business space?
Mike: Starting with the finance sector, a lot of folks want to understand more about smart contracts and how they can help us with payment servicing and everything in the finance world. What is the risk? How far has it gone as far regulatory…
When you move into the supply chain, it’s a little bit different conversation. Everybody who is tracking this has probably seen all the stuff between IBM and Walmart and all the things happening as far as food safety and tracking of assets from cradle to grave. It’s got a real appeal to supply chain.
I did a speaking engagement last week for Kansas supply management council and some really good questions came up. All these different Walmart, Sam’s Club ─ “Hey, our vendors are getting on blockchain.”
What does it mean when a supplier is being asked to establish a presence on blockchain and how are they going to navigate that? How are they going to hook up their legacy systems?
As we first started getting out into our client base and we started to establish ourselves in the Midwest ─ in this area ─ as kind of the thought leader and penetrating this in a way nobody else has, certainly, we started getting a lot of questions like “What happens if I want to move? When I sign up to get into a particular blockchain service, what happens if I don’t like it? What do I do to move?”
The buzz that is really starting to hit the last couple of weeks is “Are these myriad of blockchains, the big ones being ConsenSys and Hyperledger and Ripple ─ is there going to be some way for them to communicate with each other?”
And there are two very distinct schools of thought. There are people who are supporting the open source consortiums and want to make sure that communication can flow. Then, there are folks who think that that goes against the very grain of what blockchain is trying to establish.
I think our clients are just trying to separate the real message and the reality of what it is and where it’s going to be in a year, where it’s going to be in five years from all the noise and from all the hype in, certainly, the crypto side of it.
We spend a lot of time talking about that with clients in just a dozen different business sectors. It’s really been a lot of fun. It’s just a different thing for our business and it’s been a tremendous amount of fun as we help our clients understand this before we even look at one way to drive revenue from it.
We basically said, “Okay, we’re going to first go out and educate and we’re going to establish a knowledge base and start here in the Midwest. We’re going to learn everything we can about it. We’re going to educate first, and then we’re going to help companies in different business sectors navigate how to get there ─ how to go on the chain, why you need to be on the chain, and why you want to stay from it, those kinds of things.”
Ledge: Do you think it parallels the discussion on what happened in the late nineties or early 2000s where “I’ve got to get my business on the Internet”?
We’ve had other guests and thought leaders describe it as “Five years from now, you’re not going to say you’re on the blockchain. It’s like saying that you’re on the Internet.”
Is it that disruptive? Is it like “Oh, it’s just a protocol. It’s TCIP 3.0”?
Mike: The promise of blockchain is absolutely that disruptive. I like to spend some time separating the promise of what blockchain can be versus what blockchain really is today. There’s a lot of work being done around consensus which is a fundamental characteristic of how blocks of data are approved, if you will, to be added to the chain.
Certainly, the promise of what blockchain can do, the reason why businesses need to take it seriously, and why it is very similar to those conversations back in the nineties is because the businesses don’t want to suddenly wake up and find themselves disrupted and left behind. They don’t want to wake up one day and say, “We can’t compete because we’re on the old architecture now and we’re paying the old fees and we have all the old levels of intermediaries and middle men.”
So the promise of how to reduce all that friction is what, I think, blockchain has the ability to do. And I think businesses are taking that very seriously from a competitive standpoint.
It’s always about taking out expense and increasing profit, removing expense, removing friction; and blockchain, in my opinion, isn’t quite there yet on all levels. But it is moving there quickly. And I think that’s why businesses are taking it very seriously.
Ledge: So you think business leaders now just simply need to focus on the education component and don’t move right into implementation and hire a bunch of developers.
I’m just reading some of the popular press in our space: “Well, blockchain developer demand is up 400% last year.”
I’m just wondering, what are they building? Is it ready for primetime build yet at all?
Mike: I think it’s very close. I think there’s a lot of one-offs right now and I think that’s where it’s all going to begin. That’s the incubation stage, if you will.
You’ve got all these one-offs. You’ve got all these parallel prototypes and proof of concepts running. I think that’s the place you want to be right now and I think businesses want to find a way to be part of that because just having the ability to go out and saying to your clients and to a client base, “Hey, we’re serious at looking at blockchain” or “Hey, we’re testing blockchain,” that resonates right now.
Why does it resonate?
You could give a number of reasons why that resonates. It’s top of mind.
I think from there, it’s a much slower meticulous evaluation of “Okay, I’m going to go ahead and move a complete segment on my business to distribute ledger technology. Where are my hurdles?”
Certainly, those exist. Everything from performance to “How can I have some level of decentralization but have some level of control?”
In my opinion, that’s going to be one of the fundamental business concerns as this thing moves forward ─ businesses signing up for complete decentralization versus some limited level of control. And I think blockchain can get them there.
I don’t typically give short answers, as you’re finding, but I think the short answer is that businesses need to take it seriously. I think there are a lot of technologists, a lot of smart folks in academia and technology right now who truly believe these hurdles are going to get resolved as you take the blockchain and take a particular business sector and fully move it into blockchain. They’re going to get resolved over the next two, three, or four years.
And then, it is going to be a case of businesses left out in the cold on the outside looking in. And that’s where the disruption is truly going to hit because they’re just simply not going to be able to compete, in my opinion, because the businesses on the blockchain ─ if it delivers what it promises ─ are going to be doing business faster at a lower cost with much more transparency; and they’re going to be able to address things like food safety and they’re going to be able to address in a way with assets that they typically have to spend a lot of money today to those kinds of things. They’re going to be operating at a lower cost. At least, that’s the goal.
Ledge: I’m a business that’s just getting started in this. I’m a reasonably technology-enabled business. I’ve got developers on staff already. I know I need to be paying attention.
What are the first steps?
Mike: Talking to an organization like Veracity, what we’re really trying to do is establish the ability to talk to you, assess what your legacy model and your business process model look like and what your use case is. We start there and we take it through a decision matrix that establishes “Is this particular use case well suited to be in a distributed ledger technology platform? What’s the risk?” and all the aspects that you would look at for any technology evaluation.
But there are certain flavors of blockchain with regard to “What kind of consensus model are we going to use? What do your actors look like? Do you have known participants or is it more public and wide open?” so that you can determine what type of blockchain and what direction to take them in.
Are you going to be using smart contracts right out of the gate?
Obviously, you start moving into the Etherium direction. I think Hyperledger is really positioning itself nicely to go after supply chain in a big way.
So, first and foremost, it’s understanding that business operation and the use case that you’re proposing in heading you in the right direction for the right blockchain solution. Then, it’s a matter of connecting your legacy system or your legacy process to that particular blockchain.
We can help build that bridge addressing things like “What type of key storage do you need for your public and private keys? What does your network evolution look like as far as blockchain? Where do you want to start? Do you want to go back in time slightly or do you want to start and Day Zero is tomorrow?”
It’s answering all those questions, helping them determine the right network is and the right blockchain to go on, and then basically wiring things up, starting to connect the systems and the transactions through things as simple as APIs.
We want to be in that place with both our existing clients and future clients. We want to be that go-to company that can help them get started and establish that first proof of concept and that prototype.
Ledge: Fantastic! Let me finish with a question I’m asking of guests. What makes the perfect engineer?
Mike: A good mix of curiosity along with experience. I think best practice is always the way to go but it’s also the ability to have enough curiosity to really know your customer and know your client and to be able to adjust accordingly. It’s the engineer who takes the time to continue to stay fresh which in today’s day and age is a tall order on itself. A good mix of work ethic, curiosity, a solid knowledge base and a decent dose of experience, in my mind, makes a good engineer.
Ledge: How much experience is enough experience?
Mike: I think that’s a million-dollar question. I’m impressed with the talent that I see coming not only out of a typical college but there are some really smart folks coming out of coding school. They’re driven. They’re excited. They’re curious.
You get in the business environment. You run into some things that are obviously a little bit different. But it’s fun if you keep it light and keep it exciting. You get to see that smile on the client’s face when you deliver something for him; and that’s what energizes me and that’s what I’d like to see with new folks coming into the industry.
Make it fun.
Ledge: Awesome, Mike! Thanks so much for your words today and your wisdom. I appreciate it.
Mike: Thank you.