About one year ago I came across Bitcoin and the idea of the Internet of Money. Initially, I was really suspicious of its ability to influence our real life – why would anyone accept a currency without backing? But due to my curiosity about new technology, I decided to purchase some bitcoins and play around the bitcoin wallet on my cellphone. At the first glance, it may look similar to normal payment apps we use like Alipay or Paypal. However, as I spent more time reading and researching about bitcoin and its underlying technology, the blockchain, I found that the way Bitcoin network works was nothing like any payment platform or Internet service we had been using.
In our current online payment system, the transaction you make needs to be processed by the service provider and then settled by banks in order to prevent double-spending risk. Therefore, you are just transferring instructions or information to the service provider to initiate the transaction. However, in the bitcoin network, you are able to directly transfer value without the involvement of any central authorities (e.g. banks) or intermediaries (e.g. payment service providers), which was made realized by the blockchain technology’s cryptography and the consensus mechanism. The only other scenario people are able to do this is that you physically hand over cash to another person. In addition, you maintain 100% ownership of bitcoins in your wallet as long as you hold on to the private key, and if you lose the private key your bitcoins will be gone forever (sounds familiar? it works exactly same as the physical wallet we use every day).
In 2016, the discussion about blockchain's enormous potential to revolutionize business practices as we know them came to the peak hype. And I realize that it might be a good fit for me to do a deep dive with my experiences in cybersecurity and PKI security.
When I returned Shanghai from my two years international assignment, I was lucky that I got the opportunity to work with a blockchain startup - Qtum Foundation. I was excited and uncertain because I had never worked with a startup company. My role in Qtum Foundation is to assist the founder with project management, bring industry experiences into the project vision and use cases and advise the project to be professional and organized. At first, I didn't feel very comfortable about the way how startups work. Here you don't have orderly calendar schedule, strict meeting agenda, clear segregation of duties, and the plan can be changed in the next minute. So I tried to adapt myself to the new environment and step out of my comfort zone. Through this process, I noticed that the entrepreneurship was growing in me. Here you do not have predefined protocols to follow and you need to do whatever it takes to keep moving things forward and make things happen, let alone working in such an immature industry. The team is passionate about the value that the blockchain technology can bring to the business world. When working with them you can feel the cohesiveness brought by the passion for the technology. In achieving a key project milestone recently, I worked with various external parties such as investors, business partners, lawyers, and PR firms. As a result, I learned that in such an emerging industry you had to be open-minded, creative and constantly brainstorming to explore opportunities to work together. That also allows me to build the network in this community, and I had the chance to know blockchain pioneers in the fields of blockchain project founders, developers, marketing, legal and cryptocurrency exchange. One thing I found common in them is that everyone strives to contribute and find his or her value proposition in this cause. The experience will definitely benefit me in my future career, giving me the courage and confidence to be innovative and keep exploring new opportunities.
Blockchain technology is much broader than just bitcoin. The sustained levels of robust security achieved by public cryptocurrencies have demonstrated to the world that this new wave of blockchain technologies can provide efficiencies and intangible technological benefits very similar to what the Internet has done. But it was not until smart contracts got associated with blockchain people started realizing how powerful this technology could be. The smart contract is a term used to describe computer program code that is capable of facilitating, executing, and enforcing the negotiation or performance of an agreement (i.e. contract) using blockchain technology. Ethereum, the de-facto leading smart-contract system, has attracted lots of developers and organizations to create distributed applications (dApps) for business use on its platform. But why it has not yet achieved broad industry adoption? Qtum team thinks they found the root cause and decided to build a new public blockchain platform (Qtum blockchain) with features designed for business adoption. Based on Qtum’s project vision, Qtum is aiming to build a Proof of Stake (PoS) based smart contract platform that is executable on mobile devices.
-Proof of Stake (PoS) Smart Contract Platform
The Proof of Work (PoW) consensus mechanism used in public blockchains requires huge energy consumption. The PoW transaction validation diminishes scalability to the point where existing smart contract platforms are considered to not be feasible for massive industry applications. Organizations would not risk running their applications on a platform of which the mining power might be controlled by limited groups of people, and also maintaining significant mining power is not cost effective. On the other hand, PoS consensus mechanism which determines the creator of the next block based on the stake and coinage, which motivates organizations to be a part of the blockchain without energy waste. Therefore, building a smart contract blockchain platform with a business-friendly consensus mechanism is an essential step in achieving business adoption. Having said that, so far there was no PoS consensus standard that is proven to be as secure and stable as the PoW consensus.
Existing smart contract platforms require users to run a full node and hold a full blockchain copy to run dApps (the current size of Ethereum blockchain is around 30G), an untenable prospect for smaller devices in a storage sensitive or low bandwidth environment (e.g. mobile devices, IoT devices). Qtum blockchain was built with Go Mobile strategy in mind, it enables users to run smart contracts on their mobile devices without the need to download the full blockchain. This strategy will significantly improve the ease of use of the blockchain technology and let the general public appreciate the benefits brought by it. Let’s put it into context, today half of the Internet traffics is generated by mobile devices and the projected number of IoT devices by 2020 would be 24 billion. So in order to achieve massive adoption, the blockchain technology has to be tuned for a mobile strategy.
The Proof of Stake (PoS) consensus mechanism and Go Mobile strategy resonate with my vision for the blockchain implementation in business and individual markets. So I look forward to seeing Qtum team deliver their platform with these features later this year as stated in the project roadmap.
Based on PwC’s 2017 Global Fintech Survey, the blockchain technology is moving out of the lab and 77% of the respondents expect to adopt blockchain as part of an in-production system or process by 2020. People have seen its potential to change the way human interact and collaborate today across various industries such as financial services, supply chain, IP and copyrights, IoT, gaming, social network, and charity. That’s why there are so many activities and innovation going on every day. From the firm's perspective, we have seen rapidly increasing inquiries and requests from our clients asking how they can leverage this technology and stay ahead of the game. I will continue sharing my thoughts as I progress on this jour*ney.
[Disclaimer: this article is my personal thoughts and do not necessarily represent PwC positions or opinions.]