episode #10
Gideon is the founder and CEO of Multichain, he started coding as a child and selling his software in high school. He has built a number of successful websites, including Copyscape, a leading plagiarism search engine, and Web Sudoku, the most popular sudoku online.
Gideon has a BA and PhD in Computer Science (Cambridge and Technion) and an MA in Philosophy (London). He is now a regular lecturer on software entrepreneurship in his home town of Tel Aviv, Israel. Rather refreshingly for the founder of a blockchain platform company, Gideon’s most popular blog is titled: Avoiding the pointless blockchain project – written in 2015!
He first became interested in blockchain technology with the arrival of Bitcoin, which made him realise as a website owner he could transact directly with his customers removing the middleman – the credit card networks or PayPal.
He then started having ideas about using the underlying technology to transact other items across the blockchain network. Which led to the development of his first product Coin Spark – it probably came a bit early for customers and the technology at the time, but led onto the creation of Multichain.
entrepreneur
technology
blockchain
Multichain is a piece of software that allows people to build blockchain. Rather than having to build the whole system from scratch, companies can use Multichain to build their own applications on top of the software. As a result they don’t need to worry about the ‘technical innards’ of how blockchains work.
He believes there are things that blockchains can do, and things they can’t do. For instance a blockchain is very good at creating a shared repository of information, which is shared between multiple organisations, and which no individual organisation can take charge of to corrupt the data or delete the data.
So if you think about all the participants in a supply chain, they’re all dealing with the same goods at different stages in those goods life. And they’re all writing information about what’s happening to those goods. And some of them are reading that information. The blockchain enables them to create a kind of shared infrastructure, where they’re all writing to the same conceptual place and all reading from the same conceptual place.
For Gideon what’s crucial and unique about blockchains, is that the infrastructure created is not under the control of any one individual participant in that supply chain. It’s something which they all share together and which no individual participant can control and therefore corrupt or mess with.
We tackle the issue of energy consumption for blockchains, and how it differs depending on whether the blockchain is open or closed. Bitcoin is an open platform and as the value of the currency increases, people are prepared to expend more and more energy to mine the coins. The complex computational challenge is also required to ensure no one individual can take charge of the network.
However the method of consensus for a small, closed network is different, you don’t need to have an energy intensive problem solve.
Multichain when used in production, for a permissions network, which isn’t fully open to the whole world, is extremely low in terms of energy costs. And it’s essentially no more than any regular database. But that’s because it is a permissions network. That’s because it’s not open to the whole world in terms of participating, and in terms of building the blocks on the chain.
In addition to discussing blockchain we also talk about Collins Dictonary’s word of the year – the NFT – non fungible tokens!
transcript
SPEAKERS
Dome Burch, Gideon Greenspan.
Dom Burch:
Welcome back to the ubloquity podcast with me, Dom Burch. This is the podcast where we get to speak to thought leaders from across the industry so that we can start to figure out what is this blockchain thing? And what difference is that going to make on the lives of our customers, and ultimately, industries all around the world. And I’m delighted this week to welcome the founder and CEO of Multichain. Multichain is an open source blockchain platform. And Gideon Greenspan is the CEO and founder Gideon, welcome to the ubloquity podcast.
Gideon Greenspan:
Thank you. It’s a pleasure to be here.
Dom Burch:
So let’s just go back a little bit, how do you end up becoming the CEO of a blockchain company? What’s your, what was your journey to this point?
Gideon Greenspan:
So my personal background is as a software developer, and then later on an internet entrepreneur. And I was aware of, of kind of Bitcoin, fairly early on in its life, not perhaps as early on as I might have liked. And I sort of was interested in it, because it seemed to me like a way for an online business to take money from customers over the internet, without going through the traditional kind of credit card networks or PayPal. And that was quite an attractive idea, to me as a website owner, the idea of taking money directly from customers rather than going through an intermediary. So that’s kind of what got me interested in it at first. I then started having some ideas which were by no means unique about other things that could be done with the type of technology underlying Bitcoin. One idea, which is now of course, very well known is the idea that you can transact in other assets over a blockchain network, that isn’t just the kind of the currency, the cryptocurrency itself. So you can have dollars or pounds, or euros, or shares or anything else going over a blockchain network. And so I was so kind of taken by this concept that I decided to found a company to develop some technology to enable this to happen. And that led to the development of our first product, which is called Coin Spark. Coin Spark was very, very early in the market and was certainly out there, I think, before customers were ready for it. And also before the technology was really ready for it. But the early, the early conversations we had with people who were interested in this area led us to develop Multichain, which kind of started work on within the first year of the company’s life. And that’s that’s remained the company’s focus ever since. So that was kind of that was my journey into the field.
Dom Burch:
And just describe a little bit about Multichain then.
Gideon Greenspan:
Okay, so. So first of all, Multichain is not a blockchain, it’s important to make that clear. You know, it’s not parallel to Bitcoin or Ethereum in that way. Multichain is actually a piece of software, which allows people to make their own blockchains. So the idea behind Multichain is this, let’s say that a group of companies want to get together to set up a blockchain for a specific purpose, maybe for transacting in some kind of asset, maybe for recording information between them, they don’t want to build that whole system out from scratch, in the same way that if companies want to send emails to each other, they’re not going to build email software from scratch, they’re going to take something from the shelf and then adapt it to their needs. So Multichain is essentially a platform that companies can use to build a blockchain application, which takes care of all the blockchainey technical stuff for them, and allows them to focus on building their kind of own application on top, you know, what is the logic that’s important to them? What kind of information that they kind of keep track of, and they can focus on these questions rather than worrying about the kind of technical innards about how blockchains work.
Dom Burch:
And that’s really important isn’t it. So if you take somebody like ubloquity, now clearly we’re using your software in order to then build, let’s say, a blockchain for a food company that’s trying to really understand what is the chain of custody from the moment that ingredient or that animal was created. Following that all the way through what can be quite a complicated supply chain moving across borders, might be lots of different processes, might be manufactured in different ways, and then sold ultimately, you know, in a supermarket in a restaurant, and the end consumer wants to be able to (potentially anyway), go prove it, prove that this thing that I’m eating or I’ve bought, actually is the thing you’ve marketed on the packaging, or you’ve put on this menu, and the software that you’ve created is enabling us I guess, to build those blocks and put those things together in a way that is secure, and allows people to extract that data into some form of insight that actually makes it meaningful.
Gideon Greenspan:
What’s important, also, to be clear, that, you know, there are things that blockchains can do and that things that they cannot do. So a blockchain is very good at creating a shared repository of information, which is shared between multiple organisations, and which no individual organisation can take charge of to corrupt the data or delete the data. So if you think about all the participants in a supply chain, you know, they’re all dealing with the same goods at different stages in those goods life. And they’re all kind of writing information about what’s happening to those goods. And also some of them are reading that information. And the blockchain enables them to create a kind of shared infrastructure, where they’re all kind of writing to the same conceptual place and all reading from the same conceptual place. But, and this is what’s crucial, and this is what’s unique about blockchains, that infrastructure is not under the control of any individual participant in that supply chain. It’s something which they all share together and which no individual participant can control and therefore corrupt or mess with or anything like that. So that is what blockchains can do. The one thing blockchains cannot do, and there is no digital technology that can do this, is guarantee that the original information written to the chain is true. So you know, if at the very beginning, someone’s writing something which isn’t true in the chain, well, the blockchain itself cannot detect that that’s not something which a computer can solve that something which you need to kind of connect to the real world to solve. So maybe they’d have to attach a photo or some kind of chemical analysis or something like that. And once that information is digitised, then it will be stored in a blockchain securely and kind of revealed to everyone along the way. So you know, I think, early on, there was some misunderstanding about that. I think the understanding is now clearer about that. You know what the blockchain is really about coordinating that repository of information, sharing it between all of the organisations that are involved and making sure that no individual organisation can corrupt or modify that information.
Dom Burch:
The other bit that I guess often confuses people, particularly if their entry point to understanding crypto or hearing about, you know, blockchains is via Bitcoin is this sense that every single computation every single transaction, every single inquiry on a blockchain is hugely energy intensive, because of this distributed ledger, because it is not centralised in one place. So just you know, help people understand how that differs, depending on the kind of blockchains you’re building and the purpose and how those transactions take place.
Gideon Greenspan:
So this there’s two separate parts of my answer to the question. First of all, if you look at something like the Bitcoin blockchain it is extremely energy intensive, the no question about that. But the energy it consumes does not go up with the number of transactions that it processes, the energy it consumes goes up essentially with the profitability of mining blocks on the chain. And the more profitable it is the more work people are willing to do to solve the problem to put a new block on the chain and they’re willing to consume more energy to do that. And therefore it gets more and more difficult. So there’s never a per transaction cost, not even on a public cryptocurrency blockchain like Bitcoin, but it is energy intensive. Now, if you look at something that Multichain, because Multichain is designed to work between a set of identified participants, rather than being open to the internet as a whole, the method by which it creates that consensus is completely different to the method by which Bitcoin does it. So Bitcoin has to have this very expensive computational challenge, in order to ensure that no individual party seizes control of the chain. But as soon as you have a more closed network, at least in terms of building the blocks, you don’t need to have a very energy intensive problem solve. Instead, you have a very, very energy light process by which each party that participates in the consensus essentially signs off its opinion, it signs off on its vote. And so Multichain when used in production, for a permissions network, which isn’t fully open to the whole world, is extremely low in terms of energy costs. And it’s essentially no more than any regular database. But that’s because it is a permissions network. That’s because it’s not open to the whole world in terms of participating, and in terms of building the blocks on the chain.
Dom Burch:
And even that can be a barrier can’t it? So when you’re talking to organisations and you know, sometimes the kickback from an organisation that hasn’t quite embraced the idea of how blockchain might serve them well, they can say, Well, I’ve already got a database, and I already hold it like this. But increasingly, you know, every single aspect of whether it’s finance, whether it’s health data, whether it’s food provenance, increasingly blockchains are becoming relevant in a way that maybe 10 years from now 20 years from now we’ll look back and go, Gosh, remember when things weren’t supported in this way?
Gideon Greenspan:
Look, first of all, I would, I would say that those organisations have a point, in the sense that early on in the development of the idea of a permissions blockchain, there are lots of ideas about what they could be used for, which didn’t really make sense. And everyone was kind of trying everything and doing lots of projects and spending lots of money. And funnily enough, my most popular ever blog post was called avoiding the pointless blockchain project, because there was an awful lot of those pointless blockchain projects going on. So it’s very important, you know, to be clear, and crystal clear. The reason you would use a blockchain is if you have a good reason not to centralise your database. So if you’re talking about a single organisation, which is working fully internally in a single office, and storing data only for its own purposes, and is the only one writing that data, then they’re not going to get a lot of value out of using a blockchain instead of a regular database. The reason you would use a blockchain is if you have a good reason not to have a single central place of control. And that reason can be technical, if you’re concerned about the data being corrupted, for technical reason. That reason can be commercial because you’ve got multiple participants in this network who have kind of some sense of cooperation but they’re also somewhat competing with each other. The reason can be regulatory because the government in a particular country or jurisdiction demands that the database is more secure than under the control of a single party. And the reason can also be political, that you have multiple countries working together to create a shared repository. And no one country is willing to give control over that repository to another country. And so they need to work together on that in a collaborative way. And they need a technical way to do that. And that’s what blockchains can give them. So you need to have a reason to use a blockchain instead of a database for your application. And if you don’t have that reason, then frankly, you shouldn’t be using a blockchain.
Dom Burch:
I feel like we’re covering so much ground and we’re only 11 minutes in. So we’re going to have to come to what Collins Dictionary has chosen as their term of the year, the NFT, the non fungible token. And it’s you know, it’s timely, isn’t it? Because version 2.2 is out of Multichain. And of course, you’ve now allowing
Gideon Greenspan:
Okay. So, so we can look at kind of three stages of development of putting something of value on a blockchain and when I say something of value, what I mean is something where the owner likes to own that thing, and it can be transferred to other people, ownership can be transferred from one person to another. Blockchains can be used for other things as well. But let’s talk about that category of thing where there’s kind of meaningful ownership and transfer of ownership. So the first stage was cryptocurrencies themselves, right? Bitcoin on the Bitcoin blockchain, Ethereum on the Ethereum blockchain, you know, that is one type of asset whose ownership is represented by information on the blockchain and whose transfers takes place using transactions on the blockchain. So first, we have cryptocurrencies. The second stage is what I would call some kind of issued asset on the blockchain. So, for example, someone wants to issue a million tokens and call them dollar tokens. And essentially, they are saying if you hold one of these tokens, you effectively own one of the million dollars, which I’m holding in my bank account. And so we have what’s called a fungible asset. It’s not a cryptocurrency, but it’s fungible in the sense that there are multiple units of this asset, and they can be transferred between participants in the blockchain. If you own $5 on the blockchain, and someone else owns another $5. And you swap $5 with each other, you haven’t done anything of any meaning, right? Because it’s all just fungible, every dollar is worth the same as every other dollar. So that’s kind of you know, the second stage and non fungible tokens essentially take that to the next level. Non fungible tokens are for types of assets, where there is essentially only one, or in some cases, very few of each thing. But there are an awful lot of these different things. So for example, you can imagine the titles to properties, in theory being put on a blockchain, you know, each home is unique, it has a unique address, and it’s uniquely different from every other home in the country, each home could be represented by a non fungible token. And there will be millions and millions of these unique tokens placed on a blockchain because there are millions and millions of homes in you know, in the ecosystem and the property ecosystem. And then it will be a matter of transferring individual tokens from one party to the next in order to represent the transfer of a home. Now, I should be clear that that homes are not a very practical example for reasons I can give. But nonetheless, the idea is that you have millions of unique items. And those items transfer hands from one to the other. Now, the kind of the lowest hanging fruit in terms of applications of NFTs is digital information, right? Because, you know, if you have a digital information such as a jpeg or a video, you can just say, Well, what’s on the blockchain is the truth. And there’s no other piece of, kind of, property or item or physical good in the world which needs to move around to match what happens on a blockchain. So it’s kind of the easiest application of NFTs are where the thing that the NFT is representing is itself purely digital. But of course, NFTs can be used for other things. Any kind of real real world piece of property can be represented by an NFT. And of course, I think that’s more like the kind of application that ubloquity are building.
Dom Burch:
Absolutely right. And I guess, you know, we’re already building our trade asset management solution on Multi hain, you’d call it native would ‘t you? This sort of native NFT support means that we’r able to do things, I guess, muc easier now. We’re able to verify those assets, or al ow those individual ass ts to be verified, and the tracked across the supply chai , in our case, in a muc easier, sustainable and scal ble way. And that’s important, sn’t it? Because, you know, th re might be and we’ve talked o other, you know, contribut rs to the podcast, we’ve ta ked about creating a digital sset of a cow, for example. An actually having a digital twi , the GPS of that animal is nown, the movements of that animal is known. And so you ca start to use that non fungibl token in other ways you might ant to be able to draw down inance on that because it becom s a fixed asset. We talked t Rohit Talwar about this who e world that’s opening up now here what were once floating as ets, you know, from a banki g perspective, because they’ e non fungible tokens, because they exist as a unique, ident fiable, digital twin, you can tart to address them and appro ch them in very different and nnovative ways, which is, it ort of hurts my head a little bi , but I kind of half get i . That’s, that’s the potent al, isn’t it, of how these thi gs might become, you know, far ore tangible, if you like i the real world, and give, yo know, a farmer on a farm access to something that at the moment
Gideon Greenspan:
Well, it’s interesting, because there was, there was a project built on our platform a while back, which wasn’t using NFTs, but was nonetheless doing something kind of related to what you’re saying, which is that you can identify and tag individual animals using data on a blockchain. And then you can essentially take out insurance for individual animals, and you can prove the vaccination status of individual animals. And by tracking these individual items, you get a much higher resolution picture of what’s happening in the real world. And then you can also financially or through insurance, or through credit, you can kind of do a much more efficient job of leveraging these assets you have, because you’ve got a much higher resolution picture about what each one is worth, and you know, different types of counterparties might be interested in, so to speak different cows, or pay different prices, or insure them for different costs. And then once you have that level of resolution, you can kind of make things much, much more efficient than if you just have a kind of aggregate fuzzy picture about what’s going on, you know, on the farm as a whole or in the flock as a whole.
Dom Burch:
I love that ‘high resolution’ as a metaphor, I think that’s a brilliant way just to describe it, you’re just tuning in aren’t you? You’re really focusing in at a granular level, a high pixel level, if you like, of the picture of what’s going on, and using multiple sources as well. So this kind of multifactor, you know, we think about multifactor authentication in terms of like, you know, getting onto a website these days, and your mobile phone, pinging you a code, and all that kind of stuff. But imagining that kind of three dimensional digital representation of something that might have only been one line on an Excel spreadsheet previously. What’s coming, right Gideon, because you’re sat here, looking over the horizon, I feel like you’re on a huge, you know, like crane right above my head, and you can see over the horizon far further than I can see. And you’ve got the best binoculars in the world. Where do you see this going? Like, what what’s coming along, that’s really exciting you and giving you energy about how technology is going to, you know, reshape the future.
Gideon Greenspan:
So yeah, what’s interesting to me is, is the potential to take goods from the real world, in the physical, natural world, and to turn them into pieces of information. So many aspects of the natural world, which are now being digitised. Partly because it’s, it’s more efficient to do so. Take for example a forest, that forest has value, not just to whoever happens to live next to it, but it now has value to the earth as a whole, you start to think about well, that’s great, but how do the people who are maintaining the forest, how do they get compensated for what they’re doing, again, for the value that each tree is effectively providing to the world as a whole in terms of sequestering collecting carbon and not being burnt in order to release that carbon. So you start to think about ways in which you can essentially financially create this incentive, by having a token down to level of reason, an individual tree, there’s no technical reason why you can’t do that. And then you know, people in any industry anywhere in the world could essentially purchase the rights to the carbon, that tree represents, that money goes to whoever’s owning that forest, and helps to maintain that forest, which is for the good of everybody. And on the other hand, the people who need those carbon credits to offset what they’re doing, they’re able to do so in a very transparent and clear way. So you know, those sorts of incredibly, you know, to go back again, to incredibly high resolution ways of taking the the ecosystem of goods and turning them into something that can be preserved and financialized. I think that sort of thing is coming down the road, and NFTs are a kind of very natural way to be able to do that. Because they can scale to so many, you know, millions and billions of individual items, which can then be tracked individually, but also can then be used to enable the kind of financial models that don’t exist today.
Dom Burch:
Absolutely brilliant Gideon. It’s been a real pleasure talking to you because you’ve demystified this world for me and therefore I’m sure for many of our listeners, it’s been great catching up with you. And absolutely pleasure to have you on the ubloquity podcast but for the time being founder and CEO of Multichain, Gideon reenspan, thank you so much for oming on.
Gideon Greenspan:
Thank you very much. It’s been a pleasure.
