Please believe my database

I was reading Matt Levine’s Money stuff today and was struck by a thought. He writes:

“A national customs agency, for instance, might be happier approving shipments on an auditable open blockchain than in the proprietary database of a particular shipping company.”

This is interesting, but I want to take it one step further.  Blockchain or not, a record of events that have been cryptographically digitally signed, with references to previous transactions could be very useful.

If you are a company, and a regulator or agency asks you for your view on what happened, and you give the regulator an Excel spreadsheet or a normal database extract saying “Here’s what happened, I promise”, this is very weak evidence and can be tampered easily by deleting rows, or removing key words like the names of sanctioned countries, etc.

However, if you give the regulators a list of recorded events that have been digitally signed by the parties involved (with the authentication, integrity, and non-repudiation guarantees that come with digital signatures), and with timestamps that have been agreed, or validated by more than one party, then this is a stronger form of proof and the regulator or agency should be more willing to believe that that this was in fact the course of events, and the data hasn’t been “sanitised”.  And if the events link to each other, forming some sort of chain of events, then the regulator can be confident that you haven’t deleted any events, else the chain would be obviously broken.

This data doesn’t need to have been widely replicated and validated by thousands of computers like with public blockchains, it just needs a couple of ingredients:

  • Digital signatures (preferably a transaction or event is signed by all relevant parties eg both the sender and receiver, if it’s a financial transaction, rather than just the sender, which is the case in Bitcoin and Ethereum); and
  • Chains where events (transactions) refer to previous events (transactions) so that you can prove that this is the complete list of events and nothing has been removed

R3’s Corda (note: I work at R3 and I think Corda is good) meets these criteria and perhaps this is why Corda is being increasingly explored for non-financial use cases, as well as the financial use cases it was originally designed for.

So, just something to think about.  What else could this be used for?  In what other situations is it useful to be able to prove beyond a doubt that the data you are providing hasn’t been tampered?  Any what new business models or processes might this unlock?


In a nutshell: Ian Grigg’s Ricardian contracts and digital assets prehistory

In a nutshell: Ian Grigg’s Ricardian contracts and digital assets prehistory

I enjoyed listening to Episode 151 of the podcast “Epicenter” (previously “Epicenter Bitcoin”) featuring Ian Grigg, inventor of Ricardian Contracts and blogger at Financial Cryptography. Here are my notes – part transcription, with some edits. This one is a goldmine and covers many topics: bonds, contracts, cash, Chaumian e-cash, DigiCash, financial cryptography, Ricardian contracts, digital signatures, smart contracts, dispute resolution, Ethereum, triple entry book-keeping, oh my!

Misunderstandings and paraphrasing errors are entirely mine.

This gets fairly technical; if this is hard to follow, it may be helpful to read my introduction to smart contracts first.  Hmm, if it’s still hard to follow, also read about blockchains and bitcoin and Ethereum, and digital tokens.

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On KYC and blockchains


It’s official: Blockchains for everything!

KYC is a challenge that blockchains are being thrown at (see here, here, here). The premise is “KYC is a headache and blockchains are trendy”. However there is rarely much detail on the problem and insight as to why a blockchain might or might not be a good idea. I aim to explore this use-case more fully in this post.

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The pros and cons of internal blockchains

The pros and cons of internal blockchains

I am often forwarded news articles of blockchain experiments run by banks or large companies, questioning “Why are they using a blockchain for this internal use-case?”.

Given that a blockchain is meant to replace a trusted external third party, or is meant to create trust between entities who don’t fully trust each other, an internal blockchain seems a contradiction in terms.

However, many of the publicly declared experiments, pilots and proof of concepts have focused on blockchains for internal use cases, ie a blockchain where there may be one or more nodes, but all under control of the same organisation, often within one department.

Although there has been much recent discussion about public (permissionless) vs private (permissioned) consortium blockchains, there has not been much debate on the virtues of internal blockchains.

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A gentle introduction to blockchain technology

A gentle introduction to blockchain technology

Important note: If you own more than $1,000 worth of cryptocurrency then you should definitely be using a hardware wallet instead of keeping coins on exchanges.  I recommend a Trezor which you can buy for €89 directly from their website.

This article is a gentle introduction to blockchain technology and assumes minimal technical knowledge.  It attempts to describe what it is rather than why should I care, which is something for a future post.

Shorter companion pieces to this are:

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