What Mass Media Gets Wrong About Cryptocurrency: Blockchain Beyond Bitcoin (w/ Ash Benington)

Ash Bennington: Over the last few years, the
only thing more impressive than the skyrocketing
surge in cryptocurrency prices is the media
attention they’ve attracted.
But what if in this tsunami of media coverage
of digital currencies, we’re missing the big
What if the real revolution isn’t the shortterm
surge in the valuation of these coins, but
in the business applications of blockchain,
the technology that powers cryptocurrency.
My name is Ash Bennington.
I’m going to talk to entrepreneurs, consultants,
and theorists to find out what’s happening
in the world of business blockchain.
I’m in midtown Manhattan heading to Hudson
Malone to meet with my old colleague, Forbes
crypto staff writer– Michael Dell Castillo–
to discuss the issues and to put my conversation
with the other experts into context.
The words enterprise blockchain, what do they
mean to you?
Michael del Castillo: To me, enterprise blockchain
is the adoption of this distributed ledger
technology that was first popularized by Bitcoin
by companies that are already generating revenue
using the old centralized model.
AB: Michael and I met when we were both reporters
at CoinDesk.
While I was finance and markets lead, Michael
was delving into exactly these issues running
corporate blockchain coverage.
MC: In a lot of ways, the distributed ledger
the technology behind Bitcoin, it was designed
to make middlemen unnecessary.
And when we talk about enterprise adoption
of this very same technology, sometimes it’s
actually those very same middlemen that some
people are imagining no longer need to exist.
So it’s striking that balance between staying
on the cutting edge of what technology enables,
while still holding onto a strong revenue
stream is really at the core of what makes
enterprise adoption of blockchain so interesting.
AB: So what exactly is a blockchain?
Blockchain is a distributed database that
stores information in blocks, what you can
think of as a kind of virtual container for
As new data gets added, additional blocks
are created.
The blocks are then linked together chronologically
to form a sequence of blocks called a chain.
As new information gets added, the chains
get longer.
This method of data storage is called nondestructive,
meaning old data never gets erased or overwritten
because the previous blocks in the chain remain
Each new block that is written contains something
called a cryptographic hash, a small mathematical
fingerprint of the blocks that came before
it in the chain, making it extremely difficult
to tamper with the data that resides inside
the blocks.
We spoke to some very interesting people in
this space, people at top consulting firms,
people at sort of hipster Brooklyn startups
across the board.
This is going to be really interesting to
get your view on what they’re thinking about
First, we went downtown to IBM’s Watson Global
Headquarters and spoke to Jason Kelly, General
Manager for IBM’s blockchain services.
Jason Kelly: When you think of core value,
it’s back to what’s the core outcome.
And blockchain really is– as bright and shiny
and exciting as it is– it’s really simple.
It reaches two elusive objectives that have
been there for years.
First, we know that businesses and the outcome
of businesses run on data.
There’s been two things we’ve always tried
to get with data.
First, access, shared and permissioned access.
The other is that once you get to that data,
is that data quality there?
Is it what you think it is?
Are you sure?
Those two things are now the biggest outcomes
that you have with this bright, shiny technologies.
One of the things that makes blockchain so
powerful is its distributed nature.
Distributed in this case means that data isn’t
just stored in one centralized database controlled
by a single account or administrator, but
across a wide-ranging network of computers
called nodes.
In fact, the capacity for global networking
itself is the very core of how blockchain
Modern distributed computer networks began
in the late 1960s with ARPANET, a precursor
of the modern internet, which connected computers
at research universities out West.
But peer-to-peer networks, which power block
train’s communication and are so central to
its functionality, are a much more recent
The first well-known peer-to-peer network
was Napster, which appeared in the late 1990s.
Napster– as you probably remember– allowed
users to share music files between their personal
Each node– or independent computer on the
network– has the ability to share data with
all of the others without being coordinated
by a central computer.
Really, the value that you get in this transparency
and trust, and this thought that you have
transactions that are happening across different
stages with people, paper, and process.
Well, if you think of that, people tend to
go supply chain.
And it’s an easy one, because you have these
transactions that go from point A to Z, or
in some cases, this thought of farm to fork.
There’s many people who consume organic food.
However, there’s more organic food consumed
than is produced.
Wouldn’t it be great if you could confirm
right there before you consume or at point
of purchase that this is organic?
Food, as soon as you say, oh, there could
be an illness, that food is presumed guilty
until it’s proven innocent.
So you’re going to throw it away.
So working with Walmart– who is world class,
world class– seven days in finding a point
of origin of their food.
You’d say, seven days?
That’s a lot of food to be throwing away.
How can we take IBM Food Trust and use this
blockchain network and figure this out?
And in doing that, they went from seven days–
world class– to 2.2 seconds.
Trust is going to be part of each transaction.
MC: IBM has been far and away one of the earliest
enterprise blockchain adopters in the world.
But then something really interesting happened
in November of 2017, which is that IBM became
the first global enterprise to publicly talk
about embracing cryptocurrency in a real application.
Slowly, we’ve seen this shift where enterprises–
who are in a lot of ways the definition of
these middlemen– are experimenting with the
AB: It’s almost like as though they’ve gotten
to the point where they decide if someone’s
going to intermediate them, they might as
well disintermediate themselves, right?
But that ties in very nicely to the point
that they were making that it’s about transparency
and trust.
How do they do that though?
MC: Yeah, It’s a great question.
When we see enterprises looking at using blockchain
technology, we’re not actually talking about
We’re not talking about a sort of a Trojan
horse that makes the company unnecessary What
we’re talking about has increased efficiency
of the middle and the back office level.
AB: That must be frightening for enterprises
to even have that conversation, right?
MC: I’ll tell you who I think it’s frightening
for are the employees.
For now, what enterprise blockchain adoption
looks like is really reimagining middle and
back office operations with fewer employees
to help make it happen.
AB: Then we went uptown to Park Avenue to
KPMG’s US headquarters and spoke to Eamonn
Maguire, managing director, advisory at KPMG.
How is the mortgage industry structured today?
And specifically, if you could touch on some
of the pain points.
Eamonn Maguire: Yeah, so the mortgage industry
is incredibly complex.
It’s one of the most diverse ecosystems that
I can think of.
There are multiple providers who are involved
in making a mortgage happen.
So for a customer, it’s a pretty awful process.
It takes somewhere between 60 and 90 days
in the United States to get a mortgage.
AB: What is it about this technology that’s
so unique?
EM: The data aspect to blockchain, as well
as the smart contract aspect of blockchain,
which is about executing automated processes,
are the two things that make blockchain be
particularly useful or good for people.
In the future, if you were to go to a portal
and choose a product, you could effectively
provide for digital power of attorney to the
lending institution to go and get all of the
information about you without having to lift
a finger beyond providing that digital power
of attorney.
So you could authorize the banking institution
to collect information on your employment,
on your alimony payments, on the value of
the current asset or assets that you have,
on your credit score, on so many things that
have historically been very, very painful
for the borrower to provide.
And now it can all happen at the drop of a
There’s no doubt that there could be situations
where some of the process might be, let’s
say, accelerated or expedited.
Like, for example, in the title search space.
Many times, when a title search is done, the
title search has done not just on the most
recent owner for the property, but you may
need to go back in history many generations
and many owners ago to confirm the validity
of the provenance and ownership for the current
In a blockchain world, where there is confidence
in the historical information that has been
collected on the ownership for the property,
then you will only have to go to one generation
and to update the historical record.
MC: When you take a look at the accounting
industry, they really were the second adopter
of enterprise blockchain technology.
Obviously, the first use case was cross-border
payments with Bitcoin, and buying and selling
alpaca socks.
But the second use case was really accounting.
And I remember the first time that I put the
words of a big four accounting firm in a headline,
people were freaking out.
Because the idea of a big four accounting
firm using this technology that we had only
used to buy alpaca socks before was mind-boggling.
But the connection from a decentralized way
to send money to a decentralized way to account
for money is so close as to be inseparable.
And I think it was really inevitable that
accounting firms were going to be the next
to experiment.
I just actually purchased my first home, and
I can’t tell you how frequently I wished that
the people that I was dealing with had access
to the same ledger.
It was just time, and time, and time again,
week after– 10 months of work, a week before
closing, we discovered we were missing a certificate
that the previous three owners hadn’t had.
AB: And this is exactly the case for that
ledger that can go back and see what’s been
in the process.
MC: Yeah, by moving certificate of occupancies
to a distributed ledger.
And so that every time an upgrade is made
to a property, that certificate is passed
down to the next owner without any extra work
is incredibly, incredibly valuable.
AB: Next we went out to Bushwick, Brooklyn
to meet with Jesse Grushack, co-founder of
Ujo Music, which works under the umbrella
of the blockchain giant consensus.
Jesse Grushack: What we’re doing and what
we have been kind of working on for the past
few years is building a new music industry.
A lot of the laws and rules and regulations
were set when we were still listening to piano
And the world’s changed quite a bit since
And so now, there’s no system built for digital
There’s no systems that can handle the transfer
of files and value transfers.
And to us, that looks like creating systems
that automate rights and royalties that can
automate and create dynamic licensing, so
you’re not stuck in this one license.
It can flex or mold or shift pricing based
on the usage of it.
And to start for us was the artist and their
digital identity and their content.
Now, how do we digitize those in a way where
no matter where they are on the web, we can
find out what the policies are around usage.
We can find out know who wrote the song, who’s
involved in the song.
And if we buy that license or utilize that
content in some way, we want to make sure
everyone who had a part in that song is being
paid fairly.
And fairly means that they can see who licensed
it, or at least what it was licensed for,
and they can see what percentage was.
And they don’t see that in a year or two.
They see that instantly, or within 15 seconds.
AB: Let’s talk a little bit about the nuts
and bolts mechanics of the technology itself.
JG: It comes down to three main things, right?
And that’s the ability to have payments, to
have data, and to have identity all wrapped
up in a transferable way.
If you’re a musician or just a consumer, it’s
something you should be paying attention to.
MC: So the music space was really a natural
next step for the industry to go in a lot
of ways.
AB: Another very dysfunctional industry, right?
MC: Well, also, I feel like if the accounting
firm is kind of like the epitome of the big,
boring, buttoned-up corporation, then the
music industry is rock and roll.
And it’s a really easy way for an entirely
different group of people to get interested
in blockchain and the potential benefits that
it can bring.
Specifically, Ujo is reimagining the ways
that musicians are compensated.
And perhaps more importantly, the way that
appreciators of music express that appreciation
by removing the middle businessmen that separate
the appreciation of music from the selling
and the creation of music.
AB: The possibilities here are virtually endless,
And we’re just at the very beginning of that
MC: Very exciting space for blockchain.
AB: We also went to Gowanus, Brooklyn to visit
Lawrence Orsini, CEO and founder of LO3 Energy
at their headquarters and workshop, where
they design blockchain-based power meters
for use on an electrical grid.
So what is the Smart Grid?
Lawrence Orsini: So historically speaking,
we built from big power plants that push energy
to the edge of the grid.
So today, people are really looking for choice.
So you see a lot of distributed renewables
popping up, wind, solar, on people’s rooftops.
We now have two-way power flows.
Electricity is being produced at the edge
of the grid, as well as the head of the grid.
And the grid’s not really built for energy
moving both directions.
So Smart Grid has to figure out how to balance,
load, generation, storage.
AB: And how does blockchain fit into this
ecosystem that you just described?
LO: So one of the challenges is we’re talking
about adopting millions of devices that need
to be controlled in real time.
It’s going to be billions of devices in the
next few years.
So what we’re doing with blockchain is really
setting price as a proxy for control, allowing
those devices to respond in real time to grid
AB: So you’re using blockchain as kind of
a transporter communication layer inside the
Is that right?
LO: It really is.
The blockchain is really just pushing information
to the edge of the grid, and then picking
information back up.
AB: So Lawrence, tell me what we’re looking
at here.
LO: So these are our transactive elements.
These are the actual meters the blockchain
runs on.
So what these things do, they sit right next
to your utility meter, and they net the energy
that’s going back onto the grid, or that’s
coming off of the grid.
So if you’re a prosumer– that’s somebody
who has solar panels on your roof, or a battery
behind the meter– then when you’re producing
electricity, typically, you’re overproducing.
So you’re making more energy than the house
can use, so that energy actually goes back
onto the grid.
So that’s when you’re actually producing something
valuable for the grid.
So we want to count those electrons.
So these meters actually count those electrons,
net what goes back on the grid, and incorporate
that into the blockchain.
So it’s really about how do we make the edge
of the grid balance itself in a smart way
as we get more and more distributed resources
at the edge of the grid.
And particularly, electric vehicles.
Consider this, an electric vehicle looks like
two houses to the utility grid, and they drive
So somehow, we’re going to have hundreds of
new houses popping up on the electric grid
that isn’t built for it.
AB: And are these actually deployed in the
field today?
LO: Yeah, we’ve got them deployed here.
We have them in Australia.
We have a few in Germany, the UK.
AB: So right here in Brooklyn?
LO: Right here in Brooklyn.
MC: So I was actually on location in Brooklyn
the first time they ever did a live demo of
this technology, and it was thrilling to see
two neighbors buying and selling energy from
each other.
On one side of the street, there was a gentleman
that had good sun, and on the other side of
the street there was a gentleman who was in
the shade.
They were friends, and they were transacting
on the energy grid together in real time.
AB: It sounds like an economics book test
case, right?
I mean, it’s really extraordinary.
MC: They loved it.
This is another example similar to Ujo where
the users are empowered in a really meaningful
AB: It’s also so interesting to see blockchain
actually helping to build a new industry,
rather than supplanting existing technology.
Finally, we came back to Manhattan to meet
with Alex Rass.
Before Alex got involved in blockchain, he
worked in traditional finance on credit risk
systems at Goldman Sachs.
Now he runs his own shop that specializes
in blockchain and smart contract development.
What was it that you saw in this space that
made you feel like this was a technology that
had promise?
Alex Rass: Moving money, we’ve done this before.
Storing data in a database, that’s been done
And then writing code on distributed machines,
all of that was done before.
But now they secured it, made it solid, and
distributed it in a way that has never been
done before.
It’s very easy to scale one tiny database
to go to 10 users, 100 users, 10,000 users.
Been done before.
But you try to say OK, I want this piece of
data to be available to the entire world,
that is very tricky and does not work with
the typical approach that’s been taken so
far to distributing data.
AB: So one of the things that I find very
interesting about you is that you’re involved
in this and you’re a great advocate for the
technology, but you’re also profoundly skeptical
of some of the things that are happening in
this space.
Can you tell us a little bit about that?
AR: Yeah there’s been a lot of companies–
larger ones especially– who want to– who
see this, they understand the value, and they
say, well, we’ll make our own version.
But then you looked into us, and we’re not
going to mention to you all the problems we
create by doing it in house.
AB: So what are some of those problems?
AR: The infamous 51% attack.
The way the nodes synchronize, is they declare
a consensus that as long as majority agrees
the data is right, then that’s the data they
AB: So what you’re saying is if there are
more than 51% on the network that are bad
actors, then suddenly the entire security
of the system can be compromised?
AR: Correct.
Which has actually happened with public blockchains,
let alone with private ones where I can go
to major– AB: What’s that distinction between
private blockchains and public blockchains?
AR: The private ones are run by a firm, within
the firm, and they control the nodes.
They say, these are the nodes we’re allowed.
These are nodes we don’t allow.
AB:I think for many people, when they hear
that, they may think, well, that that could
be less risk, because there’s actually a corporation
that’s controlling– AR: Exactly.
AB: So I think the perception might be potentially
at odds with what the reality is.
AR: Yeah, it’s very common, especially with
high tech areas like math and sciences where
that things seem intuitive, until somebody
explains to you why they’re not.
AB: So do you see the potential, Alex, when
you look at these technologies for a catastrophic
risk at some point in the future for one of
these firms that is using blockchain technology?
AR: The problem is with the larger– the popular
ones, the open source blockchains, you have
entire world looking for errors.
Some looking to make it better, some looking
to steal money.
Whatever the case may be, there’s a ton of
people who are looking for problems.
AB: So what you’re saying is when these technologies
are out there and they’re public, they’re
being vetted by hundreds of thousands– AR:
Constantly, every day, all day long.
Because everybody wants money.
And Google in fact– and a lot of other firms,
Microsoft even started more recently– they
go out and they offer bounties to developers
to go find bugs and report it to them.
So that only works to a certain extent.
The problem with the smartest guy in the room
is that there’s always another room.
And that’s what happens with this kind of
Because there’s so much code involved, it’s
really easy to miss something.
AB: So you and I go to a lot of blockchain
conferences, crypto conferences, those kinds
of things, and you listen to the speeches
that you hear there.
And sometimes it sounds like the only thing
that’s missing is the pompoms, right?
We’re going to arrive at Nirvana two weeks
from Tuesday.
When you hear that, what is your reaction?
AR: As a technologist, I’m usually skeptical,
because if it was so amazing, they could have
done this 10 years ago within your regular
AB: When
we’re talking about blockchains, what are
the questions that often comes up is the distinction
between a blockchain and a traditional database.
Can you explain what exactly those differences
are? AR: The original database, you have–
typically, you have records that you store.
And the record can contain let’s say, name,
phone number, and address.
And it goes in something called a table, and
there it resides until somebody decides to
erase it, update it, change it.
So with the blockchain, the difference is
when you come and you say, OK, I when my phone
number to be 1, 2, 3, 4, 5 from now on, you
don’t erase the old record, you just append
the new record after all the– after the latest
So anybody who reads, has to read from start.
What the benefit is now, you don’t have to
store all the data.
You just say, phone number’s being updated.
In the same time, you can’t say, oh, I never
had that phone, because it’s still stored
there deep down somewhere, and anybody with
the copy of the node– which should be freely
distributed and available– can go dig down
and find it.
AB: So why or use cases that look like plain
vanilla database solutions being sold as blockchain
AR: Because of all the hype.
It’s become such a popular topic lately that
everybody just wants to be part of it.
Everybody wants to be on the bandwagon.
Because they promised a new internet, here
it is.
Jump on it or you’re going to regret– you’re
gonna regret not jumping on it when your grandma
said no.
MC: So I think Alex is actually 100% right
about the question of whether or not a blockchain
is really just another word for a distributed
And especially when you remove the cryptocurrency
component, it really starts to look a whole
lot like a distributed database.
AB: Or a distributed database with marketing
upsell attached to it.
MC: Exactly.
And there is actually some value to be said
for that.
I think people weren’t even talking about–
they weren’t even looking for use cases of
distributed databases before blockchain came
And a traditional database system is perhaps
no better exemplified than Equifax, the credit
bureau that keeps a central repository of
millions of people’s credit history.
The existing system– which some people say
might make blockchain not really as necessary
as it’s cracked up to be– was very recently
powerfully hacked.
In a centralized system, you would think that
there’s actually fewer points of attack, and
in a distributed system, you’re expanding
the points of attack, when in fact, we’re
seeing the exact opposite.
And by moving this information to a shared,
distributed technology, you’re actually creating
a disincentive for attackers to go after the
honeypot, as it’s called, right?
AB: As we look back over what we watched today,
what did you find most surprising?
MC: What really catches me most off guard
is the diversity within the enterprises themselves
as far as whether or not they think there’s
promise, or it’s just a bunch of hoopla.
I’m really surprised that after almost 10
years, there isn’t more consensus on that
It’s really a question of are people, are
consumers looking to place– to spend their
money to express their trust in corporations,
and in centralized authorities, and in protectors?
Or are they looking to express their trust
in cryptographically protected systems?
AB: And that’s probably a very nuanced question,
And how does that balance out as we move forward?
MC: Yeah.
That’s where there’s going to be money to
be made.
The people who answer different parts of that
question correctly first are going to make
immense amounts of money.
The people who miss subtle opportunities are
going to be left behind.
And that’s when we talk about the big D word,
AB: Right.
Disintermediation is a lot of fun unless you’re
the one being disintermediated.
MC: Indeed.
It’s funny though, to see some of these big
enterprises– as you put it earlier– selfdisintermediate.
And in the end, I’m not really sure where
that takes us, but it’s going to be fascinating
to watch.
AB: Thank you for joining us.
MC: It was a pleasure.
Thank you.


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