Ganesh: So the internet of things can be a potential use case of blockchain, yet the adoption far from being mainstream. Would you agree with our observations? What are the obstacles and risks?
Keir: I personally feel that when IoT really starts using blockchain it’s going to be a game changer for IoT. I mean that’s the classic IoT of having computers and sensors in everyday objects and then allowing them to send data and receive commands back. Then you have 5G which gives you an immense amount of bandwidth for all these devices which aren’t basically going to be mobile. Then you have A.I. which is a piece that’s going to allow us to quickly assess what’s going on with that data because with that quantity of data. If then statements are really not going to cut it, we need to have sort of a higher level of data interpretation and then I see blockchain and I posted a video on this on LinkedIn a few days ago as being basically like the money of the IoT system.
If you look at an analogy here is that societies run through money flowing from one party to another. The way we get stuff done is by somebody paying somebody else to do it. For example, The Great Depression where you had farmers and fields and trains and all sorts of infrastructure but there just wasn’t enough money in the system, America’s economy ground to a halt. So money is kind of like that the oil or the lubricant of social functioning and I think the blockchain will provide that for IoT. It’s still at least four or five years off but I can see blockchain providing that you know greasing the axles of functioning of IoT and allowing IoT to actually work as a proper network of things rather than little kind of closed environments where you’re signed up with a particular you know like your Fitbit doesn’t talk to your fridge and your car doesn’t talk to your house. That kind of stuff I can see or rather not even where I’m saying all your stuff and talking other people’s stuff. It’s going to allow different parties to actually trade data and services automatically and pay for it because otherwise why would I allow somebody else to use the data I’ve gathered with my IoT devices. So that’s my kind of take on that. But I know I’m being a bit of a futurist there when I’m sort of putting this forward.
Ganesh: Are you seeing that the shifting is happening in that direction?
Keir: You see little projects here and there. All these things are still very much in the sort of pilot phase where it’s kind of let’s try applying blockchain to one specific supply chain or let’s try using blockchain for identification in this area. We saw this with the Internet or rather with the computer network; it started off with LANs – I don’t need a print on every desk I can have a network printer and everybody can use that. And it was really only when all those little separate islands of local area networks were connected an email came along that the Internet started having a purpose and then the web was the killer app for that and it took time for these islands to get connected with bridges.
I remember when I was an undergrad from 89 to 92 and when we had the Janet- the joint academic network that allowed us to send messages and students were only allowed to send them after 8 PM to not congest the network. You only move on sort of four or five years from that. And I was sitting in Madison Wisconsin chatting with a friend back in Cambridge over IRC. So these things build over time and I think there’s that thing that you’ll always overestimate what will happen in the next year and you always underestimate what will happen in the next 10. So 10 years from now, I think it’s it’s going to look radically different and there’ll be a lot more interconnectivity and it will just creep up on us.
Ganesh: The insurance and real-estate fields have been heavily dependent on escrow. How could smart contracts make life easier in those segments?
Keir: It is a good use case of blockchain because you can basically lock funds up and then release them when certain conditions are met. And smart contracts allow for that and even bitcoin has smart contracts you can future date. They’re very primitive smart contracts but that’s what triggered the idea for Vitalik Buterin and was looking at the scripting language that Nakamoto put in Bitcoin. So there are all sorts of clever stuff you can do there. I mean I look at it as a way of having a programming language to money. The issue you have with outside the blockchain events is that you need an oracle, you need someone feeding in the data to say “yes” I actually got the keys- now you can release the funds to the owner. So there are still some problems there that I think are going to be a bit tricky to solve because ultimately smart contracts only operate properly on data that’s already within the closed system of the blockchain. So they’re great for creating tokens or for automatically moving coins from one address to another. But they’re not great for saying pay out a hundred thousand ether if the temperature in Louisiana rises above forty-two degrees Celsius or something like that because you need to come outside party to feed the data into the blockchain. But they’ll have to have a part in it.
Ganesh: But can IoT come into this picture?
Keir: IoT will provide the data and then you have a question do you trust the data that the IoT devices give you. If I’ve got an I.T. weather station on my roof and it’s feeding data about my local humidity and air pressure temperature onto the blockchain for some smart contract. It does give you trust in certain cases where I can see that if there’s a transaction on the blockchain the sign then it becomes valid in a week’s time. And so I know that I’m going to get paid in a week. The question is will I actually do the work I’m supposed to do during that week. That is harder to ensure.
You may have parties who run these IoT devices and they are building reputations that they don’t want to mess with the system because they’re the value of the companies and the fact that the data coming from their IoT devices are trusted but that’s kind of everyday business. You go and select a plumber because they’ve got a lot of good reviews on the Internet or you don’t choose this other plumber because they’ve got a lot of bad reviews. So reputation is important and we can ever really remove that.
Ganesh: What makes blocking application patent eligible? In addition, with the research report, you shared how are these patents worth defending?
Keir: So the thing with a patent is that it needs to satisfy a number of criteria where it needs to be novel. It can’t be something that somebody else has already put out there either patented or just made publicly available. So, for example, the fundamental building blocks of blockchain cannot be patented because they’re covered in a just paper and that’s in the public domain. But if you come up with a new improvement it doesn’t need to be a massive improvement or a patent to be awarded a slight tweak or a slight improvement can be patented. Now obviously the bigger the improvement and the more value it provides the more valuable that patent will be. But there’s nothing stopping you patenting a slight improvement. And the other thing is that your new idea cannot be an obvious combination of previous ideas.
So that’s covered by the patent office as well if they can take two or three existing inventions and put them together and argue that anybody who is skilled in this particular field, I would immediately on seeing those three inventions think of your invention then you’re not going to get it either. And then finally you’re not allowed to patent laws of nature or things like that. So if you come up with stuff that can just be done with pen and paper can’t be patented if your idea is to do this with a computer instead. That’s also not allowed. But that actually still leaves a huge realm of things that you can patent. And normally as an inventor what happens if you have a sort of “AHA” moment where you’re “Alright I’ve identified this problem and I’m looking for solutions hey this would be a clever way to do it.” Most of the invention I find comes from really identifying what the underlying problem is first. And usually the solution actually then just presents itself. It’s getting to the bottom of the problem. That’s usually the problem.
Ganesh: What are your thoughts on Distributed Autonomous Corporations (DACs). How should startup investors think about companies aiming to build them?
Keir: I looked at the DAO when it first appeared. And of course, it had some serious problems which involved in millions being siphoned off by somebody. When you first become an entrepreneur and you find out about limited liability companies and all the responsibilities you have in terms of auditing, financial reports, and accounting. It came as a bit of a shock to me, I was somebody who put off paying the telephone bills and suddenly there is paperwork to do. Now, I see the blockchain and smart contracts being used to automate all of the auditing requirements, basically self-auditing companies, that is something I see DAOs emerging from – all that admin work is shifted to the blockchain. As for companies that are entirely autonomous, there’s an example of a self-governing forest; where the forest basically own themselves and orders loggers to cut down then pay and look after the ground. And it is supposed to buy more land, but I haven’t seen any reports on that. Maybe in fifty years, there will be companies autonomous; for the moment it sounds a bit like fiction to me. But fiction written in the past has now become a reality but just taken for granted.
If these autonomous companies arise, they will probably be using blockchain.