AMA with Steven Pu at LA Blockchain Summit.

October 12, 2020 Blog No Comments »

For those who missed the conference last week, we’ve compiled the highlights of the panel and questions from our community at the post-panel Q&A.

Taraxa is building an innovative layer-1 ledger, but more importantly, we are building Marinate, an application that makes handshake business agreements highly verifiable, helping businesses minimize confusion, disputes, and the risks plus costs associated with them, all without changing users’ current behaviors.

Mainstream adoption to us means that blockchain technologies are being confidently used by people who know nothing about blockchain, or bitcoin. Mainstream adoption will have occurred when blockchain becomes a standard part of the internet’s infrastructure, making enabling functionalities such as data anchoring as simple as enabling a toggle inside an API.

We’ve seen amazing technical, social, and financial innovations in the blockchain space, but they’re still very much restricted to within the small cohort of crypto enthusiasts, which by this time is probably in the tens of millions around the world, but that’s still a tiny drop in the bucket.

One project I highly respect is TruePic. They started out also with a very simple idea, which is to anchor images into the blockchain for verifiability. They were very practical in pushing this idea into mainstream usage, and today has found a very strong foothold within the insurance industry, helping them to validate photographic evidence during claims processing.

But of course, to do that, they listened to the customers and built a lot of functionalities in photographic fraud detection, geolocation, etc. to deliver a full stacked solution. It is an excellent balance of centralized and decentralized technologies, it does not unnecessarily expose blockchain’s complexities, and they took full advantage of the audit logging capabilities of blockchain.

Okay, so here are the three main points:

  • Use decentralized systems to bolster, not replace, centralized systems. Centralized systems are fast and have clear legal accountability, but they can cheat without anyone knowing. Use decentralized systems to keep centralized systems honest, and for that matter, Taraxa has a winning combination of the two.
  • Don’t rely on blockchain for veracity, but for provenance and immutability of data. For data that’s generated off-chain — e.g., any data that’s not cryptocurrencies, you do not get veracity guarantees, but you do still get provenance & immutability, which are very powerful at enabling audit trails and verifiability — this is where 99.9% of the world’s data resides.
  • Hide the complexity from the end-user. Blockchain, private keys, etc. are difficult concepts to understand and very hard to manage. If you want to go mainstream, you gotta improve the user experience. This is where the first principle comes in, using a balanced mix of central plus decentralized systems makes a lot of sense to help reduce the end user’s exposure to the complexities of this technology.

First, our core application Marinate was designed to take advantage of the audit trail property of blockchains when it comes to off-chain data. Through our integrations, business users’ daily casual, handshake agreements are captured, signed by the users’ keys, and their hashes anchored into the blockchain.

Second, we used a mix of centralized vs. decentralized systems. Our app server is centralized, acting as a porter for the user’s signed agreements. The smart contract that holds these hashed records are decentralized, making sure that the central server isn’t faking, omitting, or modifying records.

Third, because we have this central plus decentralized setup, all of the blockchain nitty-gritty is not visible to the end-user, and they don’t need to interact directly with the blockchain or be exposed to its complexities. They enjoy the benefits of decentralization without any hassle.

I think Marinate is a great example of the more generalized data anchoring functionality. At a macro level, all businesses in the world are facing the pressure of “faster, cheaper, better”, but most technologies were created to achieve exactly those goals, but none of them address this idea of trust. More so, making things go faster often exacerbates the problem.

Being able to systematically anchor critical operations data into an immutable audit trail is a huge leap forward to augment trust, between businesses, with regulators, or even within a business organization. Better trust means less time spent on administrative verification and auditing, less cost and friction spent on resolving disputes, and ultimately more time to simply build and ship better products.

By driving the adoption of a business DLT application, we build the solutions ourselves instead of offering naked blockchain technology as a service. We have seen that using blockchain technology to directly engage large enterprises has proven ineffective, almost all such efforts result in abandoned proofs of concepts.

And honestly, the crypto community is tired of hearing “enterprise partnerships”. Fundamentally, this is because large enterprises move slowly, it is just the nature of human organizations — the larger they are, the slower they move, which makes them highly conservative in adopting new technologies. They are far more likely to act more quickly when they see market proof of use cases that have gained rapid traction.

Here’s an analogy that seems to make a lot of sense. Think of Marinate as the notary public, its software system, which is centralized, acts as a witness to and repository of the casual agreement. Think of the blockchain as the county clerk’s office, to which the notary public has submitted a receipt that proves the existence of this agreement

So why have a county clerk’s office? So that anyone can independently verify the existence and provenance of the agreement. Normally this isn’t really that important, but when you get into a dispute, especially a big one, you’ll be very happy that such an independently verifiable record exists.

To give you the idea, it costs 24bn USD annually in the construction sector alone to resolve disputes, most of which are driven by poorly agreed-upon coordination during execution, most of that cost is used to establish — you guessed it, who said/did what when.

We live in a world where everything needs to be done faster, cheaper, better. This places significant strain on every type of work. This pressure is especially poignant in sectors with the following characteristics:

  • Highly complex ecosystems: asset leasing, financial factoring
  • Rapidly changing requirements: construction, supply chain management
  • Heavily regulated sectors: healthcare informatics, contract research.

Construction sites with lots of stakeholders coordinating with each other, and lots of change orders on a daily basis, is a good example here. Most contractors are highly transient — they only work on part of the project and often come in and out many times throughout the project’s lifetime. Everything needs to move forward fast, so no time for niceties of typing up a legal contract every time something needs to get done. Most of the time this is fine, but quite often you get confusion or even disputes around who said what when. The fact is that construction (like all real-world industries) progress is not easily reversible — unlike virtual industries like coding, or SaaS — makes the stakes very high.

Our application adds clarity and verifiability. We are essentially adding an explicit “agree” or “disagree” button into highly casual agreements, leaving no room for confusion around interpreting cryptic exchanges. We make these agreements independently verifiable with no chance of tampering so that we can quickly move on from the “he said / she said” conversation towards a quick resolution.

We will release Marinate MVP this month, so be on the lookout!

 

Comments are closed.