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ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THE I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do A SIMPLE EXPLANATION OF FEES IN THE PAYMENT CARD INDUSTRY Merchant receives $97.76 – overall fee $2.24. Final picture showing how the merchant’s $2.24 fee is allocated. As I’ve stressed above, this is just a simple example but it shows two key points: 1) It is the issuer who receives the bulk of the fees (this is, in part, how they fund their loyalty schemes, etc) 2) The schemes actually earn A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
A SIMPLE EXPLANATION OF HOW MONEY MOVES AROUND THE BANKINGSEE MORE ONGENDAL.ME
RICHARD GENDAL BROWN As that article explains, it seems like the decision to use a non-replicating virus was a choice, presumably on safety and public acceptance grounds: it would have been possible to design a vaccine where the virus could replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with.ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THE I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do A SIMPLE EXPLANATION OF FEES IN THE PAYMENT CARD INDUSTRY Merchant receives $97.76 – overall fee $2.24. Final picture showing how the merchant’s $2.24 fee is allocated. As I’ve stressed above, this is just a simple example but it shows two key points: 1) It is the issuer who receives the bulk of the fees (this is, in part, how they fund their loyalty schemes, etc) 2) The schemes actually earn A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
A SIMPLE EXPLANATION OF HOW MONEY MOVES AROUND THE BANKINGSEE MORE ONGENDAL.ME
BITCOIN MINING: THE FIRST TECHNOLOGY PLATFORM THAT WORKS They key to understanding mining is to realize we need blocks to be produced slowly! Whenever I present Bitcoin to new audiences, I avoid talking about mining. I find it confuse more than it enlightens. Instead, I simply give some intuition. I say: “Today’s value-transfer systems rely on central ledgers. Banks, telcos andother firms
WELCOME TO BITCOIN ISLAND The “Land Interpretation” of Bitcoin. Think “Bitcoin Island”. Second, it helps us put some intuition behind the concept of the “ unspent transaction output ”. These are Bitcoins that have been sent somewhere but not yet themselves been spent. So the set of all unspent transaction outputs (UTXOs) can be thought of as the latest state CORDA: AN INTRODUCTION Corda is the outcome of the analysis we did on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible but in a way that is sympathetic to and addresses the needs of regulated financial institutions. Corda is intended to be a contribution to the plurality of technologies that will be adopted inthe
LESSONS FROM BITCOIN: PUSH VERSUS PULL Lessons from Bitcoin: Push versus Pull. Bitcoin is going to change the world – but not for the reasons we commonly assume. One subtle way in which it will change the world is through its influence on other players in the payment ecosystem. At the heart of the Bitcoin system is the idea of a transaction: at its simplest, this is a transfer of TOWARDS A UNIFIED MODEL FOR REPLICATED, SHARED LEDGERS Don’t Say The “B Word”! I’ve come to the conclusion that saying “blockchain” has become unhelpful. It just confuses people. It means too many different things to different people and so it’s almost impossible to have a conversation in this space without talking past each other. So, as I argued in this piece on permissionlessledgers and this
R3 CORDA: WHAT MAKES IT DIFFERENT Corda is a distributed ledger platform designed and built from the ground up for the recording and automation of legal agreements between identifiable parties. It is heavily influenced by the requirements of the financial industry but we believe the community will find the underlying architecture will lend itself to a broad range ofapplications.
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A DECENTRALIZED SECURITIES TRADING AND SETTLEMENT SYSTEM Colored coins, chromawallet, coinprism, NXT Asset Exchange, Mastercoin, Counterparty tens of projects are working on asset tracking, transfer and exchange systems. What are they doing? Will it work? I wrote a piece last year explaining how today’s securities trading and settlement systems work. The full picture of participants is pretty complex: There are surprisingly many RIPPLE IS HARD TO UNDERSTAND, BUT IT’S WORTH MAKING THE Ten dollars in your pocket is not the same as ten dollars in the bank and neither are the same as a ten dollar credit on your electric bill or the ten dollars your friend owes you. Ripple is simply a manifestation of this insight. I spent a couple of hours at the Startupbootcamp Fintechathon BLOCKCHAIN IS WHERE BANKS HAVE THE MOST OBVIOUS Nasdaq’s recent announcement shows you need a strategy for both I have argued for some time that the world of “blockchains” is actually two worlds: the permissionless world of “bitcoin-like systems” and the permissioned world of “ripple-like systems”. The reason we so often talk about them together is because they share a common architecture: the RICHARD GENDAL BROWN As that article explains, it seems like the decision to use a non-replicating virus was a choice, presumably on safety and public acceptance grounds: it would have been possible to design a vaccine where the virus could replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with.ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) ON DISTRIBUTED DATABASES AND And so we call Corda a distributed ledger, to distinguish it from distributed databases. A distributed ledger that is designed painstakingly for the needs of commercial entities. Put more simply: you simply can’t build the applications we envisage for Corda with traditional database technology. And that’s what makes this newfield so exciting.
A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF ENTERPRISE BLOCKCHAINS FOR And why R3’s Open-Source Corda platform is the one to watch We’re doing some really interesting engineering at R3 right now We have Java running in Intel SGX We’re hacking a JVM to make it deterministic We’ve proved you can suspend threads of execution to a database and bring them back to life across restarts A BRIEF HISTORY OF MIDDLEWARE AND WHY IT MATTERS TODAY A brief history of middleware and why it matters today. This tweetstorm is a mini history of enterprise middleware. It argues that the problems we solved for firms 10-20 years ago are ones we can now solve for markets today. This blog post elaborates on a A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
HOW TO EXPLAIN THE VALUE OF REPLICATED, SHARED LEDGERS “Digital currencies” aren’t needed to explain why distributed ledgers are important. In this post, I develop an argument for replicated shared ledgers from first principles. It is intended to be an “education piece” aimed at those, particularly in the finance industry, who prefer explanations of new technologies to be rooted in a description of a real-world business A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
RICHARD GENDAL BROWN As that article explains, it seems like the decision to use a non-replicating virus was a choice, presumably on safety and public acceptance grounds: it would have been possible to design a vaccine where the virus could replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with.ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) ON DISTRIBUTED DATABASES AND And so we call Corda a distributed ledger, to distinguish it from distributed databases. A distributed ledger that is designed painstakingly for the needs of commercial entities. Put more simply: you simply can’t build the applications we envisage for Corda with traditional database technology. And that’s what makes this newfield so exciting.
A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF ENTERPRISE BLOCKCHAINS FOR And why R3’s Open-Source Corda platform is the one to watch We’re doing some really interesting engineering at R3 right now We have Java running in Intel SGX We’re hacking a JVM to make it deterministic We’ve proved you can suspend threads of execution to a database and bring them back to life across restarts A BRIEF HISTORY OF MIDDLEWARE AND WHY IT MATTERS TODAY A brief history of middleware and why it matters today. This tweetstorm is a mini history of enterprise middleware. It argues that the problems we solved for firms 10-20 years ago are ones we can now solve for markets today. This blog post elaborates on a A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
HOW TO EXPLAIN THE VALUE OF REPLICATED, SHARED LEDGERS “Digital currencies” aren’t needed to explain why distributed ledgers are important. In this post, I develop an argument for replicated shared ledgers from first principles. It is intended to be an “education piece” aimed at those, particularly in the finance industry, who prefer explanations of new technologies to be rooted in a description of a real-world business A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
BANKING | RICHARD GENDAL BROWN Step 2: Once the consumer has the payment request, they use a program or app on their smart device (laptop, smartphone, whatever) to instruct the payment. Examples: An M-Pesa user launches the M-Pesa SIM app and instructs the payment. A Bitcoin user pastes the destination address and value into their Bitcoin wallet. A SIMPLE EXPLANATION OF FEES IN THE PAYMENT CARD INDUSTRY Richard. This is a nice, simple explanation, and the major themes largely hold true. However, it possibly misses a couple of key points – the first is the sheer variation (some might say cross-subsidisation) between different extremes of the market (egARCHITECTURE
Posts about architecture written by gendal. And the other videos are pretty good too!. What that video doesn’t say (but should!) is the key point: in real-life scenarios, the dependency tree for any given transaction is invariably a very small subset of the overall set of transactions and so this technique (lazy on-demand provision of just the directly-required dependency tree and no more A SIMPLE EXPLANATION OF ENTERPRISE BLOCKCHAINS FOR just comment on the Go vs. Java part to be fair, Go’s crypto lib is about 8 times faster than that of Java. for a basic ECC point multiplication operation, Java’s BouncyCastle benchmarked at about 257ns, where as in Go that number is around 35ns (using base point, which BouncyCastle does not implement, the test was performed on a Intel i7 3.2Ghz processor). A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THE I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do A SIMPLE EXPLANATION OF HOW MONEY MOVES AROUND THE BANKING Hi Simon, I’m inclined to agree. I think there are two major forces driving us towards this sort of outcome. 1) the “average” user is likely to trust a reassuring brand more than themselves to manage their wallet, driving a move to a bank-like “safekeeping” business model and 2) the blockchain may not be the best vehicle formicro-payments.
FABRIC | RICHARD GENDAL BROWN Posts about fabric written by gendal. And the other videos are pretty good too!. What that video doesn’t say (but should!) is the key point: in real-life scenarios, the dependency tree for any given transaction is invariably a very small subset of the overall set of transactions and so this technique (lazy on-demand provision of just the directly-required dependency tree and no more) gives CORDA: AN INTRODUCTION Corda is the outcome of the analysis we did on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible but in a way that is sympathetic to and addresses the needs of regulated financial institutions. Corda is intended to be a contribution to the plurality of technologies that will be adopted inthe
LESSONS FROM BITCOIN: PUSH VERSUS PULL Lessons from Bitcoin: Push versus Pull. Bitcoin is going to change the world – but not for the reasons we commonly assume. One subtle way in which it will change the world is through its influence on other players in the payment ecosystem. At the heart of the Bitcoin system is the idea of a transaction: at its simplest, this is a transfer of TOWARDS A UNIFIED MODEL FOR REPLICATED, SHARED LEDGERS Don’t Say The “B Word”! I’ve come to the conclusion that saying “blockchain” has become unhelpful. It just confuses people. It means too many different things to different people and so it’s almost impossible to have a conversation in this space without talking past each other. So, as I argued in this piece on permissionlessledgers and this
RICHARD GENDAL BROWN As that article explains, it seems like the decision to use a non-replicating virus was a choice, presumably on safety and public acceptance grounds: it would have been possible to design a vaccine where the virus could replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with.ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) ON DISTRIBUTED DATABASES AND And so we call Corda a distributed ledger, to distinguish it from distributed databases. A distributed ledger that is designed painstakingly for the needs of commercial entities. Put more simply: you simply can’t build the applications we envisage for Corda with traditional database technology. And that’s what makes this newfield so exciting.
A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A SIMPLE EXPLANATION OF HOW MONEY MOVES AROUND THE BANKINGSEE MORE ONGENDAL.ME
A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THEHOW DOES STOCK MARKET WORKHOW DOES STOCK MARKET WORKHOW DOES STOCK TRADING WORK I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
RICHARD GENDAL BROWN As that article explains, it seems like the decision to use a non-replicating virus was a choice, presumably on safety and public acceptance grounds: it would have been possible to design a vaccine where the virus could replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with.ABOUT RICHARD BROWN
About Richard Brown. I am Chief Technology Officer at R3. The opinions that I express are my own and do not necessarily reflect the view of R3. At times, I comment on assets or companies in which I directly or indirectly may hold a position. I also advise several firms in the cryptocurrency and decentralised consensus space both formally and A SIMPLE MODEL FOR SMART CONTRACTS A smart-contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. But that’s just my working definition. And there are lots of conceptual issues. I summarise some of them here, merely as signposts for further study (and future posts) ON DISTRIBUTED DATABASES AND And so we call Corda a distributed ledger, to distinguish it from distributed databases. A distributed ledger that is designed painstakingly for the needs of commercial entities. Put more simply: you simply can’t build the applications we envisage for Corda with traditional database technology. And that’s what makes this newfield so exciting.
A CENTRAL BANK “CRYPTOCURRENCY”? AN INTERESTING IDEA, BUT The retail use-cases get all the press but the killer-app for digital central bank money might be smart contracts This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people. A SIMPLE EXPLANATION OF BALANCE SHEETS (DON’T RUN AWAY… IT Shared ledgers could be revolutionary but do we need to share a mental model for banking to make sense of it all? What would be your first instinct if your friend were to tell you they had £1m in the bank? To congratulate them on their good fortune? To suppress a pang ofjealousy? Wrong,
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A SIMPLE EXPLANATION OF HOW MONEY MOVES AROUND THE BANKINGSEE MORE ONGENDAL.ME
A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THEHOW DOES STOCK MARKET WORKHOW DOES STOCK MARKET WORKHOW DOES STOCK TRADING WORK I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
A SIMPLE EXPLANATION OF BITCOIN “SIDECHAINS” Could sidechains be the enabler of “semi-decentralised” Bitcoin products and services? An important paper was published this week: If you've followed Bitcoin for any time, you'll know this is a seriously eminent group of authors It describes a way to build “pegged sidechains”. Sidechains themselves are not new – the idea, and how to build them, has been A SIMPLE EXPLANATION OF HOW SHARES MOVE AROUND THE I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do CORDA: AN INTRODUCTION Corda is the outcome of the analysis we did on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible but in a way that is sympathetic to and addresses the needs of regulated financial institutions. Corda is intended to be a contribution to the plurality of technologies that will be adopted inthe
THE CORDA WAY OF THINKING The Corda Way of Thinking Corda is a revolutionary new Distributed Ledger Platform, the only DLT specifically designed for the needs of financial services. This article introduces the “Corda Way of Thinking”: understand this article and you’ll be well on your way to being a Corda Expert Solution Designer! What problem are we tryingto
A SIMPLE EXPLANATION OF HOW APPLE PAY WORKS (PROBABLY): IT Forget contactless point-of-payment that’s a solved problem. Apple’s use of tokenization is the interesting part I’ve been using a beta version of ApplePay on my iPhone 4 for some time now My very old, but very effective, Barclaycard contactless PayTag, stuckto my iPhone 4
BITCOIN AND BLOCKCHAIN: TWO REVOLUTIONS FOR THE PRICE OF I gave a brief talk on Bitcoin and blockchain technology to an audience of non-specialists at a dinner last week. It covers many of the themes I’ve explored on this blog before. But the short, fifteen-minute, format forced me to be brief and clear. This is an edited version of the speech. A £20 note has an obvious, yet extraordinary super-power. LESSONS FROM BITCOIN: PUSH VERSUS PULL Lessons from Bitcoin: Push versus Pull. Bitcoin is going to change the world – but not for the reasons we commonly assume. One subtle way in which it will change the world is through its influence on other players in the payment ecosystem. At the heart of the Bitcoin system is the idea of a transaction: at its simplest, this is a transfer of BITCOIN MINING: THE FIRST TECHNOLOGY PLATFORM THAT WORKS They key to understanding mining is to realize we need blocks to be produced slowly! Whenever I present Bitcoin to new audiences, I avoid talking about mining. I find it confuse more than it enlightens. Instead, I simply give some intuition. I say: “Today’s value-transfer systems rely on central ledgers. Banks, telcos andother firms
TOWARDS A UNIFIED MODEL FOR REPLICATED, SHARED LEDGERS Don’t Say The “B Word”! I’ve come to the conclusion that saying “blockchain” has become unhelpful. It just confuses people. It means too many different things to different people and so it’s almost impossible to have a conversation in this space without talking past each other. So, as I argued in this piece on permissionlessledgers and this
COUNTDOWN TO CORDA OPEN SOURCE Countdown to Corda Open Source. R3 will soon be open-sourcing Corda. Here’s what to expect. As I confirmed a few months back, R3’s Corda platform will be open-sourced, under the Apache 2 licence, on November 30. Corda is a distributed ledger platform designed and built from the ground up for the recording and automation of legalagreements
RICHARD GENDAL BROWN THOUGHTS ON THE FUTURE OF FINANCEMENU
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VIRAL VECTOR VACCINES – MORE FUN THINGS I’VE LEARNEDIn this post
, I
shared what I had learned about how the AstraZeneca ‘viral vector’ vaccine worked and how endlessly fascinating I found it. But I was struggling to understand why it takes so long for the immune system to ‘learn’ about the new threat that the vaccine is trying to teach it about… why it seems to take “weeks” to gain any protection. I still don’t understand but I’ve learned a few more things that others might find interesting too! RECAP OF THE BASIC IDEA The basic idea behind Viral Vector vaccines such as the AstraZeneca and Johnson & Johnson products is that a harmless virus is genetically modified so that, if it were to infect a human cell, the cell would start producing protein fragments that look a lot like the spike proteins on real Covid viruses. These ‘fake’ spikes become visible to your immune system, which mounts a response. Thus, if you subsequently become infected with the ‘real’ Covid, your immune system is already primed to destroy it. DO THOSE FIFTY BILLION VIRUSES REPLICATE ONCE INSIDE ME? ANSWER: NO When I read that the vaccine relies on injecting a harmless ‘carrier’ virus, my immediate thought was: “I wonder if that virus is able to replicate like normal viruses do?” I saw on my ‘vaccine record’ that there were fifty billion copies of it in my dose, which made me suspect not… after all, why would you need to inject so many if each one had the ability to replicate? The human body only has about 15 trillion cells, so 50 billion viruses is enough for one in 300 cells! Surely you’d need far fewer if each one could trigger the creation of many many copies? Turns out I was right about this: the modified ‘adenovirus’ that is injected into me is unable to replicate: those fifty billion copies are the only ones I’ll ever have as a result of that shot. This infographic (click for better image), from The Royal Society of Chemistry, has a nice explainer on CompoundChem:
As that article explains, it seems like the decision to use a non-replicating virus was a _choice_, presumably on safety and public acceptance grounds: it _would_ have been possible to design a vaccine where the virus _could_ replicate, and some vaccines for other diseases do work that way. The advantage of the latter, I guess, is that far fewer copies would have had to be injected to start with. It’s interesting to speculate (based on absolutely zero knowledge of the science or of where the bottleneck in production actually is…) whether vaccine rollouts could have been quicker if they’d been based on replicating viruses. Would it have meant any quantity of production could have been spread more broadly? _Note: I’m still not yet clear on what happens to my cells that are infected by one of these non-replicating vector viruses… are these cells then destroyed by my immune system because they present the spike protein? Or are they allowed to live? Can they divide? If so, do their daughters also produce the spike protein?_ WHAT HAPPENS IF MY BODY ALREADY HAS ANTIBODIES TO THE VECTOR VIRUS? I made a throwaway comment in my last post about how the ‘carrier’ virus has to be carefully selected: if you’ve been exposed to it – or something like it – in the past, your body will attack the virus particles before they have a chance to infect your cells… and so you’ll produce no (or fewer) spike proteins and you’ll presumably develop weaker protection against Covid than would otherwise have been the case. This piece in The Scientist explains more. It explains that this was why the AstraZeneca vaccine uses a modified chimp virus – it’s far less likely the average human has seen it before. And it points out that there’s a downstream consequence: that virus can’t now be used for a malaria vaccine. You really do have to use a different one for eachvaccine.
There were a few other interesting tidbits in that article. It was the first time I’d seen an argument that one possible reason for milder side-effects from the AZ vaccine amongst older people is that the older you are the more pathogens you’ve been exposed to and so the more chance there is that your immune system has seen something _like_ the vector virus before. And so relatively more of the fifty billion particles will be destroyed before entering a cell. So I’m even more pleased about my feverish sleepless night now! WHY ARE VACCINES INJECTED INTO MUSCLE? HOW LONG DOES IT TAKE FOR THE VIRUS PARTICLES TO GET TO WORK? The question that triggered my attempts to learn about this stuff was why does it take weeks for me to gain any meaningful protection from the vaccine when it’s clear that my body was fully responding to the onslaught after barely twelve hours? It got me wondering whether the mechanism of injection had anything to do with it. For example, if the vector virus is injected into a muscle, how long does it take for all fifty billion virus particles to get to work? And _where_ do they operate? In that muscle? Or do they circulate round the body? Was the first night reaction in response to all fifty billion viruses going to work at once? Or were only a _few_ of them at work that night and it wasn’t yet enough to persuade my immune system that this is something it should lay down ‘memories’ about? Perhaps it’s going to take a few more weeks until they’ve all infected a cell and enough spike proteins have been produced to get my immune system finally to say “Fine! You win! Stop already! I’ll file this one with all the others on the ‘things we should be on alert for in the future’ shelf. Now stop bothering me!!”? I was surprised how little definitive information there is about this sort of stuff online. I guess because it’s ‘obvious’ to medical professionals, and _they_ don’t learn their trade from quick skims of Wikipedia and Quora. (I hope). From what I can tell, the main reason vaccines are injected into the muscle are for convenience: the shoulder is at just the right height for a clinician to reach without much effort, it’s an easy target to hit, there’s no need to mess around trying to find a vein, and the risk of complications (eg inflammation of a vein or whatnot) is lower. This literature reviewmakes for an
interesting skim.
I’d also wondered if injection into muscle, rather than veins, results in the vaccine having a localised effect… eg is it only my shoulder muscle that churns out the spike proteins? Turns out the answer to that is no: muscle is chosen over, say, fat precisely _because_ it is rich in blood vessels. The vaccine designers _want_ the vaccine vector virus to enter the bloodstream and rush round thebody.
And I’d wondered if injection into muscle was in order to create a ‘slow drip drip’ of vaccine into the bloodstream over time and perhaps that would explain why it took so long for the body to develop full immunity. Turns out the answer to that is _also_ ‘no’. It seems that injections into the deltoid muscle (shoulder) are absorbed quicker than those into other commonly used injection sites. Implication: if the manufacturers wanted slow absorption, they wouldn’t be telling doctors to stab patients in the shoulder! So when I bring all that together, I still remain confused… injecting the vaccine into my shoulder results in quick absorption, and my body was in full ‘fightback’ mode after twelve hours, so it’s hard to imagine there was any meaningful amount of vaccine lingering in my shoulder after, say, 24 hours… it must, by then, all surely have been whizzing round my veins and happily infecting mycells.
So what gives? Why does it take _weeks_ after billions of my cells have been turned into zombie spike protein factories and my immune system has gone on a frenzied counterattack for me to have a meaningful level of ‘protection’ against Covid? (I’m ignoring the relevance of the ‘second dose’ here for simplicity) I guess the answer must be ‘because that’s just how the immunesystem works!’
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April 28, 2021
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THE MATHEMATICS OF COVID VACCINES _My AZ vaccine dose contained FIFTY BILLION virus particles. Wow! _ I was fortunate to receive my first COVID vaccine dose yesterday; I received the Astra Zeneca product and all seemed to go well. As seems to be common, it made me feel feverish overnight and I slept badly. This was reassuring in a way as it made me feel like it was ‘working’… it was exciting, in a strange sort of way, to imagine the billions of ‘virus fragments’ racing round my body infecting my cells and turning them into zombie spike protein factories! However, my inability to sleep also made me realise that I had absolutely no idea how it really worked. So as I was struggling to sleep, I started reading more and more articles about these ‘viral vector’ vaccines. They really are quite fascinating. And these articles did answer my first wave of questions… but they also then triggered more questions, to which I couldn’t find any answers at all. I’m not sure I’m going to be particularly productive at work today so thought why not write down what I discovered and list out all my questions. Perhaps my readers know the answers? VIRAL VECTOR VACCINES: KEY CONCEPTS Most descriptions I found online were hopelessly confused or went into so much extraneous detail about various immune system cell types that they were useless in imparting any real intuition. However, what I did seem to discover, at a very high level, was something like thefollowing:
* A harmless virus is used as the starting point. * _Interesting detail: the virus needs to be somewhat obscure to reduce the risk patients’ bodies have been exposed to it before and thus already have antibodies that would destroy it before it’s had a chance to do its magic_ * It is then genetically engineered so that when it invades a human cell it triggers the cell to start churning out chunks of protein (the famous spike protein) that look a bit like Covid-19 viruses. * These spikes eventually become visible to the immune system, which mounts a vigorous response and, in so doing, learns to be on the lookout for the same thing in the future. In essence, we infect ourselves with a harmless virus that causes our body’s own cells to start churning out little proteins that look similar enough to COVID that our body will be on high alert should a real COVID infection try to take hold. Or, at least, I _think_ that’s what’s going on. SO MANY EXTRANEOUS DETAILS Now, most of the articles I read then go on to talk about things likethe following:
* Technical detail about how several little fragments then have to be assembled to make one ‘spike’. * _Important but not really critical to understanding the concepts from what I can see_ * The role of different types of immune cells. * _The only thing these kinds of articles taught me was that it’s clear that immunologists have no idea how the immune system works and their attempts at explaining it to lay readers just makes thispainfully obvious _
* Endless ‘reassuring’ paragraphs about safety. * _I understand why they do this but it is somewhat depressing that every article has to be written this way, and I can’t help thinking that it may even be counterproductive._ ONCE AND DONE OR AN ONGOING PROCESS? However, I found the descriptions unsatisfactory in several ways, and maybe my readers know the answers. The literature talks about how the genetically modified virus cannot replicate. I assume this is because the modification that causes infected cells churn out spike proteins means that the cell _isn’t_ churning out copies of the virus, as would normally happen? That wouldmake sense if so.
And it would also explain why my ‘vaccination record’ revealed that my dose contained _fifty billion_ viral particles! That’s one for every three hundred cells in my body! Truly mindblowing. That said, I have no idea what a ‘viral particle’ is. Is that the same as a single copy of a virus? It’s mindblowing to imagine that 0.5ml of liquid could contain _fifty billion_ virus particles! Anyhow, if the virus can’t replicate once inside my body, then the only modified virus particles that will ever infect my cells are the ones that were injected yesterday. And so I guess the next question is: how _long_ does it take to start invading my cells to turn them into zombie spike protein factories? Well: the evidence of my own fever was that it was barely twelve hours before my entire body had put itself on a war footing. And in those twelve hours, presumably a lot had to happen. First, enough virus particles had to invade enough cells. And then, secondly, those infected cells then had to have started to churn out spike proteins in sufficient quantity to catch the attention of my immune system. The invasion must already have been underway before I left the medicalcentre!
And I guess a related question is: what happens after those fifty billion viruses were injected into my right deltoid muscle? Do they just start invading cells in that region and so my shoulder muscle becomes my body’s spike protein factory? Or do they migrate all over my body and enlist all my different cell types in some sort of collective endeavour? How long does this migration take if so? Is this what explains the time lag from “body is on a war footing after twelve hours” to “you ain’t got no protection for at least three weeks”? Are the majority of the particles floating around for days or weeks before invading a cell? Or is the full invasion done withinhours of injection?
Put another way: if the only vaccine virus my body will ever see are the fifty billion copies that were injected yesterday and if after twenty four hours my body already seems back to normal from a fever perspective, what is actually going on over the next few weeks? I _did_ wonder if perhaps there _is_ some reproduction going on… but not of the virus, but of the cells that have been _invaded_. That is: imagine the vaccine virus invades one of my cells and forces it to start churning out spike proteins. Presumably that cell will _itself_ periodically divide. What happens here? Does the cell get killed by the immune system before it has a chance to replicate (because it’s presenting the spike protein)? Or does many of these cells actually replicate and hence create children cells? Do those children cells _also_ churn out spike proteins? _That_ process would explain a multi-generational multi-week process, I guess? But it wouldn’t be consistent with statements that the vaccine doesn’t persist in yourDNA.
Or is the lag all to do with the immune system itself, and there’s some process that takes weeks to transition the body from “wow… we now know there’s a new enemy to be on the look out for” to “we’re now completely ready for it should it ever strike”? As you can probably tell, I’m hopelessly confused, but also fascinated. If anybody can point me to explainers about the _mathematics_ of vaccination, I’d be enormously grateful. Forexample:
* How many of the 50 billion virus particles are typically expected to successfully enter cells? * How long does this invasion process take? Hours? Weeks? * Is there _any_ replication going on (either of the virus or of thecells they infect?)
* Do the virus particles diffuse across the body from the injection site? If so, how? And how long does it take? * Or is the time lag all to do with the immune system’s ownprocesses?
I didn’t expect to end up learning (or learning I didn’t know) somuch!
UPDATE: Follow-up post here.
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August 15, 2019
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A BRIEF HISTORY OF MIDDLEWARE AND WHY IT MATTERS TODAY _This blog post is a lightly edited reproduction of a series of tweetsI wrote recently_
*
* This tweetstorm
is a mini
history of enterprise middleware. It argues that the problems we solved for firms 10-20 years ago are ones we can now solve for MARKETS today. This blog post elaborates on a worked example with @Cordablockchain (1/29)*
* I sometimes take perverse pleasure in annoying my colleagues by using analogies from ancient enterprise software segments to explain what’s going on with enterprise blockchains today… But why should they be the only ones that suffer? Now you can too! (2/29)*
* Back in the late 90s and early 2000s, people began to notice that big companies in the world had a problem: they’d built or installed dozens or hundreds of applications on which they ran their businesses… and none of these systems talked to each otherproperly… (3/29)
*
* IT systems in firms back then were all out of sync… armies of people were re-keying information left, right and centre. A total mess and colossal expense (4/29)*
* The solution to this problem began modestly, with products like Tibco Rendezvous and IBM MQSeries. This was software that sat in the _middle_ connecting applications to each other… if something interesting happened in one application it would be forwarded to theother one (5/29)
*
* Tibco Rendezvous and IBM MQSeries were like “email for machines”. No more rekeying. A new industry began to take shape: “enterprise middleware”. It may seem quaint now but in the early 2000s, this industry was HOT. (6/29)*
* But sometimes the formats of data in systems were different. So you needed to transform it. Or you had to use some intelligence to figure out where to route any particular piece of data. Enterprise Application Integration was born: message routing and transformation.(7/29)
*
* Fast forward a few years and we had “Enterprise Service Buses” (ESBs – the new name for EAI) and Service Oriented Architecture (SOA). Now, OK… SOA was a dead end and part of the reason middleware has a bad name today in some quarters. (8/29)*
* But thanks to Tibco, IBM, CrossWorlds, Mercator, SeeBeyond and literally dozens of other firms, middleware was transforming the efficiency of pretty much every big firm on the planet. “Middleware” gets a bad name today but the impact of ESB/EAI/MQ technologies was profound (9/29)*
* Some vendors then took it even further and realised that what all these parcels of data flying around represented were steps in _business processes_. And these business processes invariably included steps performed by systems _and_ people. (10/29)*
* The worlds of management consulting (“business process re-engineering”) and enterprise software began to converge and a new segment took shape: Business Process Management. (11/29)*
* The management consultants helped clients figure out where the inefficiencies in their processes were, and the technologists provided the software to automate them away. (12/29)*
* In other words, BPM was just fancy-speak for “figure out all the routine things that happen in the firm, automate those that can be automated, make sure the information flows where it should, when it should, and put some monitoring and management around the humans”(13/29)
*
* Unfortunately, Business Process Management was often oversold – the tech was mostly just not up to it at that point – and its reputation is still somewhat tarnished (another reason “middleware” is a dirty word!) (14/29)*
* But, even given these mis-steps, the arc of progress from “systems that can barely talk to each other” to “systems and people that are orchestrated to achieve an optimised business outcome” was truly astounding. (15/29)*
* Anyway… the point is: this was mostly happening at the _level of the firm_. The effect of the enterprise middleware revolution was to help individual firms optimise the hell out of themselves. (16/29)*
* But few back then even thought about the markets in which those firms operated. How could we have? None of the software was designed to do anything other than join together systems deployed in the sameIT estate. (17/29)
*
* So now let’s fast forward to today. Firms are at the end of their middleware-focused optimisation journeys and are embarking on the next, as they migrate to the cloud. But the question of inefficiencies between firms remains open. (18/29)*
* Take the most trivial example in payments: “I just wired you the funds; did you get them?”… “No… I can’t see them. Which account did you send them to? Which reference did you use? Can you ask your bank to chase?” (19/29)*
* How can we be almost a fifth of the way through the 21st century and lost payments are still a daily occurrence? How can it be that if you and I agree that I owe you some money, we can still get into such a mess when I actually try to pay you? (20/29)*
* As I argue in this post,
the problems we solved for firms over the last two decades within their four walls are precisely the ones that are still making inter-firm business so inefficient (21/29)*
* What stopped us solving this 20 years ago with the emerging “B2B” tech? Easy inter-firm routing b/w legal entities (the internet was scary…), broad availability of crypto techniques to protect data, orchestration of workflows between firms without central controller etc (22/29)*
* But we also hadn’t yet realised: it’s not enough merely to move data. You need to agree how it will be processed and what it means. This was a Bitcoin insight applied to the enterprise and my colleague @jwgcarlyle drew this seminal diagram that captures it so well. (23/29)*
* And my point is that the journey individual firms went on: messaging… integration… orchestration… process optimisation – is now a journey that entire markets can go on. The problems we couldn’t solve back then are ones we now can solve. (24/29)*
* What has changed? Lazy answer: “enterprise blockchain”… lazy because not all ent blockchains are designed for same thing, plus the enabling tech and environment (maturation of crypto techniques, consensus algorithms, emergence of industry consortia, etc) is not allnew (25/29)
*
* But the explosion of interest in blockchain technology was a catalyst and made us realise that maybe we could move to common data processing and not just data sharing at the level of markets and, in so doing, utterly transform them for the better. (26/29)*
* In my blog post I make this idea concrete by talking about something called the Corda Settler.
In truth, it is an early – and modest – example of this… a small business process optimisation (27/29)*
* The Corda Settler optimisation is simple: move from asking a payee to confirm receipt once sent and instead pre-commit before the payment is even made what proof will convince them it was done, all enabled through secure inter-legal-entity-level communication and workflow(28/29)
*
* But the Settler is also profound… because it’s a sign the touchpaper has truly been lit on the next middleware revolution… but this time focused on entire markets, not just individual firms (29/29)Standard
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August 9, 2019
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PROCESS IMPROVEMENT AND BLOCKCHAIN: A PAYMENTS EXAMPLE _“I just wired you the funds; did you get them?”… “No… I can’t see them. Which account did you send them to? Which reference did you use? Can you ask your bank to chase?”_*
The cheque is in the post… How can we be almost a fifth of the way through the twenty first century and this is still a daily occurrence? How can we be in a world where _even if you and I agree that I owe you some money,_ it’s still a basically totally manual, goodwill-based process to shepherd that payment through to completion?! THE “SETTLER PATTERN” REDUCES OPPORTUNITIES FOR ERROR AND DISPUTE IN _ANY_ PAYMENTS PROCESS – AND DOES SO BY _CHANGING THE PROCESS_ This was the problem we set out to solve when we built the Corda Settler . And I was reminded about this when I overheard some colleagues discussing it the other day. One of them wondered why we don’t include the _recipient_ of a payment in the set of parties that must agree that a payment has actually been made. Isn’t that kinda a bit of an oversight?! The Corda Settler pattern works by moving all possible sources of disagreement in a payment process to the _start_ As I sketched out the answer, I realised I was also describing some concepts from the distant past… from my days in the _middleware_ industry. In particular, it reminded me of when I used to work on _Business Process Management_ solutions. And there’s a really important insight from those days that explains why, _despite all the stupid claims being made about the magical powers of blockchains and the justifiable cynicism in many quarters_, those of us solving customer problems with Corda and some other enterprise-focused blockchain platforms are doing something a little bit different… and its impact is going to surprise a lot of people. Now… I was in two minds about writing this blog post because words like “_middleware_” and “_business process management_” are guaranteed to send most readers to the “close tab” button… Indeed, I fear I am a figure of fun amongst some of my R3 colleagues… what on earth is our CTO – _our CTO of all people!_ – doing talking about boring concepts from twenty years ago?! But, to be fair, I get laughed at in the office by pretty much everybody some days… especially those when I describe Corda as “_like an application server but one where you deploy it for a whole market, not just a single firm_” or when I say “_it’s like middleware for optimising a whole industry, not just onecompany._”
> “Application Servers? Middleware? You’re a dinosaur! It’s all > about micro-services and cloud and acronyms you can’t even spell > these days, Richard… Get with the programme, Grandad!” Anyway… the Corda Settler discussion reminded me I had come up with yet another way to send my colleagues round the bend… because I realised a good way to explain what we’re building with Corda – and enterprise blockchains in general – isn’t just “industry level middleware” or “next generation application servers”… it’s also _a new generation of Business Process Management platform_… and many successful projects in this space are actually disguised Industry Process Re-Engineering exercises. Assuming you haven’t already fallen asleep, here’s what I mean. ENTERPRISE BLOCKCHAINS LIKE CORDA ENABLE ENTIRE MARKETS TO MOVE TOSHARED PROCESSES
Think back to the promise we’re making with enterprise blockchains and what motivated the design of Corda: > “Imagine if we could apply the lessons of Bitcoin and other > cryptocurrencies in how they keep disparate parties in sync about > facts they care about to the world of regular business… imagine > if we could bring people who want to transact with each other to a > state where they are in consensus about their contracts and trades > and agreements… where we knew for sure that What You See Is What I > See – _WYSIWIS_. Think of how much cost we could eliminate through > fewer breaks, fewer reconciliation failures and greater data > quality… and how much more business we could do together when we > can move at pace because we can trust our information” And that’s exactly what we’ve built. But… and sorry if this shocks anybody… Corda is not based on magic spells and pixie dust… Instead, it works in part because we drive everybody who uses it to a far greater degree of commonality. Because if you’re going to move from a world where everybody builds and runs their own distinct applications, which are endlessly out of sync, to one where everybody is using a shared _market-level application, _what you’re actually saying is: these parties have agreed in some way to _align their shared business processes, _as embodied in this new shared application. And when you look at it through that lens, it’s hardly surprising that this approach would drive down deviations and errors…! I mean: we’re documenting – in deterministically executed code – and for each fact we jointly care about: who can update which records, when and in what ways. And to do that we have to identify and _ruthlessly eliminate_ all the places where disagreements canenter the process.
Because if we know we have eliminated all areas of ambiguity, doubt and disagreement up-front, then we can be sure the rest of our work will execute as if it’s like a train on rails. Just like trains, if two of them start in the same place and follow the same track… they’ll end up in the same place at the end. REDUCING FRICTION IN PAYMENTS: A WORKED EXAMPLE So, for payments, what are those things? What are those things that if we _don’t_ get them right up front can lead to the _“I haven’t received your payment”_ saga I outlined at the start of the post? Well, there’s the obvious ones like: * How much needs to be paid?* By whom?
* To whom?
* In what kind of money/asset? There are trickier ones such as: * Over what settlement rail should I pay? * To which destination must we pay the money? * With any reference information? These are trickier since there is probably a bit of automated negotiation that needs to happen at that point… we need to find a network common to us both… and the format of the routing strings is different for each and so forth. But if you have an ability to manage a back-and-forth negotiation (as Corda does, with the Flow Framework ) then it’s prettysimple.
But that still leaves a problem… _even if we get all of these things right, we’re still left hanging at the end. _Because even if I have paid you the right amount to the right account at the right time and with the right reference, _I don’t know that you’vereceived it._
And so there’s always that little bit of doubt. Until you’ve acknowledged it you could always turn around in the future and play annoying games with me by claiming not to have received it and force us into dispute… and we’d be _back to square one_! We’d be in exactly the same position as before: parties who are _not_ in consensus and are instead seeing _different_ information. And it struck us as a bit mad to be building blockchain solutions that kept everybody in sync about really complicated business processes in multiple industries, only for the prize to be stolen from our grasp at the last moment… when we discover the payment that is invariably the thing that needs to happen at the end of pretty much every process hasn’t actually been acknowledged. It would be as if our carefully tuned train had jumped off the rails and crashed down the embankment just at the last moment. Calamity! > So we added a _crucial_ extra step when we designed the Corda > Settler. We said: not only do you need to agree on all the stuff > above, you _also_ need to agree: _what will the recipient accept > from the sender as IRREFUTABLE PROOF that the payment has been> made?_
_And with one bound, we were free!_ Because we can now… wait for it… _re-engineer the payment process_. We can _eliminate_ the need for the recipient to acknowledge receipt. Because if the _sender_ can secure the proof that the recipient has _already said they will accept irrefutably_ then there is no need to actually _ask_ them… simply presenting them with the proof is enough, _by prior agreement._ And this proof may be a digital signature from the recipient bank, or an SPV proof from the Bitcoin network that a particular transaction is buried under sufficient work… or whatever the relevant payment network’s standard of evidence actually is. But the key point is: we’ve agreed it all up front and made it the sender’s problem… because they have the incentive to mark the payment as “done”. As opposed to today, where it’s the _recipient_ who must confirm receipt but has no incentive to do so, and may have an incentive to delay or lie. > But building on this notion of cryptographic proof of payment, the > Corda Settler pattern has allowed us to identify a source of > deviation in the payment process and moved it from the _end_ of the > process, where it is annoying and expensive and makes everybody > sad… and moved it to the _start_ of the process and, in so doing, > allows us to keep the train on the rails. And this approach is universal. Take SWIFT, for example. The innovations delivered with their gpiinitiative
are a perfect match for the payment process improvements enabled by the Settler pattern. The APIs made available by Open Banking are also a great match to thisapproach.
MIDDLEWARE FOR MARKETS, BUSINESS PROCESS MANAGEMENT FOR ECOSYSTEMS, APPLICATION SERVERS FOR INDUSTRIES..! And this is what I mean when I say platforms like Corda actually achieve some of their magic because they make it possible to make seemingly trivial improvements to inter-firm business processes and, in so doing, drive up levels of automation and consensus. So this is why I sometimes say “Corda is middleware for markets”. It’s as if the first sixty years of IT were all about optimising the operations of individual firms… and that the _future_ of IT will be about optimising _entire markets_.Standard
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January 14, 2019
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BUSTING THE MYTH OF PUBLIC BLOCKCHAINS FOR BUSINESS _It’s time to talk about transaction finality. Last week’s 51% attack demonstrates that Ethereum-style blockchains are not ready forbusiness_
A belief took hold amongst some of the tech community in 2018: “If you have an enterprise blockchain use-case you should build it on a platform based on Ethereum.” The argument was pretty well constructed and relied on several plausible-sounding claims so it’s understandable how it seemed pretty convincing. However, as 2018 unfolded, these claims began to be challenged. And as we enter 2019, the final remaining argument has been undermined with a public demonstration of how the lack of settlement finality in public blockchains such as Ethereum renders their immutability and security guarantees worthlessfor business.
> _In this piece, I will argue that it is now time to conclude that > Ethereum’s core technologies are the wrong foundation upon which > to build business blockchain solutions. My argument is: 1) the core > Ethereum technologies are due for abandonment, leaving businesses at > risk of technology dead-ends, 2) the Ethereum developer skill-pool > has been massively overstated and is in fact far tinier than that > for the purpose-built business blockchains based on existing > languages, and 3) the idea of building on Ethereum in order to > securely ‘anchor’ private blockchains to a public chain is now> discredited. _
In short, business blockchain applications should be built on technologies designed for the enterprise, not Ethereum. WHAT _WAS_ THE ARGUMENT FOR WHY BUSINESSES SHOULD BUILD ON ETHEREUM? To understand how we reached this point as a community, it’s helpful to review the thinking that led here. Here’s how the argument for why businesses should build on Ethereum went: * “GO WHERE THE SKILLS AND INNOVATION ARE: Ethereum has the largest community and the broadest availability of skills.” * “USE THE TOOLS THAT WILL BEST LET YOU INTEROPERATE WITH THE PUBLIC CHAIN: Even if you’re not using the _public_ Ethereum network you should use platforms that are _based_ on the EVM, and use languages like Solidity so you can inherit the innovation from the public chain and maximise the chances of interoperability in thefuture”
* “OVERCOME THE ‘WEAK’ SECURITY OF PRIVATE CHAINS BY ‘ANCHORING’ IN THE PUBLIC CHAIN: Public chains are more immutable than ‘insecure’ private networks and so you should ‘anchor’ your private transactions to prevent malicious parties rolling back your transactions behind your back.” By the end of 2018, there was ample evidence to debunk the first two claims, but the third claim persisted. Indeed, this third claim, that a public blockchain such as Ethereum offers a degree of transaction confirmation permanence that is otherwise unobtainable, has been repeated over and over again, even as late as December 2018.
_Until last week_, that is, when a 51% attack against the Classic (original) Ethereum network demonstrated for real what we already knew in theory: that history on a public blockchain like Ethereum can bearbitrarily rewound
,
money double-spent and network participants defrauded.
The rest of this article will review each of the three claims above in depth to explain why they are incorrect and how that makes Ethereum – and Ethereum-based platforms – unsuitable for business. But it’s important to note that the purpose of this blog post is actually to make a _positive_ message. Because the broader picture is actually one of success: Ethereum is proving to be a valuable tool for a wide range of isolated social and economic experiments. And plenty of blockchains _purpose-built _to solve business problems, such as Hyperledger and Corda, are live and are changing the world ofcommerce.
So my key message is that it’s the inappropriate _application_ of Ethereum technologies to the unforgiving world of real business problems, for which it was not designed, that we need to guard against. These two worlds have very different requirements. > _It’s time to declare in public what has been openly discussed in > private: Ethereum is currently unsuited to the world of business and > we should have the courage as a community to say so._ So let’s now review the arguments for using Ethereum in the enterprise, that have now shown to be incorrect. _CLAIM 1: “GO WHERE THE SKILLS AND INNOVATION ARE: Ethereum has the largest community and the broadest availability of skills.”_ This argument starts well. For example, ConsenSys claim that the “Ethereum developer community”
has 250,000 members, by which they presumably mean the number of people who can code using Solidity, the language in which almost all Ethereum apps are coded. But when you scratch the surface, reality begins to intrude: * Hundreds of thousands of Solidity developers _sounds_ like a big number until you realise that there are over a million developers with the knowledge to build applications for Hyperledger Fabric using the language _Go_ and _twelve million_ developers
with the knowledge to build applications for Corda using _Java_. In the latter case, our experience shows that any competent Java developer can pick up the Corda library and be productive in a couple of days. This means the Hyperledger and Corda developer skillpools are at least one, maybe even two, orders of magnitude bigger, even using ConsenSys’s figures. * But we need to challenge ConsenSys’s figures, small as they now seem. This is because there is minimal evidence to support even the 250k figure. The claim seems to be based on looking at how many people have downloaded one of the development tools that pretty much _every_ Ethereum developer has to use, and assuming half of them became Ethereum developers. But that methodology doesn’t work. To see why, let’s apply the same logic to the Java ecosystem to generate an estimate for how many developers there are and see if it matches the correct figure, twelve million. Now, we know that _one_ tool for developing Java applications, IntelliJ, had almost _twenty five million _ downloads in 2017 alone, and that product had barely ten percent of the huge and diverse market for Java development tools (Eclipse, Android Studio and NetBeans were all larger). This means we can estimate there were _at least _250 million downloads of Java development tools in 2017, which would mean there must be over 125 million Java developers by ConsenSys’s logic. Except, there aren’t… we know the correct number is about _twelve_. It’s out by a factor of ten. So the true number of people with Ethereum skills is almost certainly _much_ smaller than 250k; I would be surprised if it was even 50k or 10k, a rounding error in the world of developer communities. And the number of those who can write Solidity contracts _securely_, critical to avoiding another DAO-style bug, is
smaller still.
* And on top of this, we also need to add the _huge_ productivity gains that come from being part of established ecosystems. For example, the range of development environments, debuggers, testing frameworks, profilers and libraries available for the Java ecosystem is staggeringly larger than that for the Ethereum and Solidityecosystems.
The reality is that the developer ecosystem and momentum is with the Hyperledger and Corda communities, not Ethereum. So it’s perhaps no surprise that the overwhelming majority of truly ground-breaking, successful enterprise blockchain deployments to date run onHyperledger Fabric
and
Corda
,
not Ethereum.
_CLAIM 2: “USE THE TOOLS THAT WILL BEST LET YOU INTEROPERATE WITH THE PUBLIC CHAIN: __Even if you’re not using the public Ethereum network you should use platforms that are based on the Ethereum Virtual Machine (EVM) so you can inherit the ‘innovation’ from the public chain and maximise the chances of interoperability in thefuture”_
This argument is more pernicious than the previous one. It says to developers: “even if you’ve _correctly_ determined that a public Ethereum network is wrong for you, you should _still_ use the Ethereum toolset for your private project.” It is an argument that plays on people’s deep fears: stick with the crowd; after all, you won’t be fired if you make the same mistake that everybody else made! The problem is: as we demonstrated above, there _is_ no crowd and the Ethereum community plans to throw all the current technology away in any case: _the EVM is set for total replacement_. The plan,“Ethereum 2.0
”,
is to build a new design from scratch. So the world faces the possibility that, long after the public Ethereum community have moved on to something new, business leaders will wake up one day to discover critical parts of their business are running on technology that isn’t even being used any more for the purpose for which it was built. Talk about buyer’s remorse… This might be OK if the Ethereum Virtual Machine was a sound technology but, as the team from Kadena documented, the EVM is “fundamentally unsafe”.
And the team at Aion also independently reached a similar conclusion and have written eloquently why they didn’t use the EVM and chosen the Java ecosystem instead. And yet consultants, some from reputable firms, are pushing this technology _hard_ in to organisations that don’t always possess the technical expertise to realise the advice may not be appropriate. Genuinely ground-breaking work is, of course, being done by some very talented and committed people in the Ethereum community on the public Ethereum network, but it is – and should continue to be done – safely away from the back offices of the businesses upon whose data integrity the world depends. However, 2018 ended with one, last, _killer_ plank in the argument for why businesses should nevertheless build on Ethereum rather than a platform like Hyperledger Fabric or Hyperledger Sawtooth or Corda. And it was this last argument that was severely undermined this week. _CLAIM 3: “OVERCOME THE ‘WEAK’ SECURITY OF PRIVATE CHAINS BY ‘ANCHORING’ IN THE PUBLIC CHAIN__: Public chains are more immutable than insecure private networks and so you should ‘anchor’ your private transactions to prevent malicious parties rolling back your transactions behind your back.”_ This argument was actually pretty clever. Here’s how it went: * ‘The security of public blockchains is “backed” by the work performed by billions of dollars worth of mining equipment and electricity. To reverse a “confirmed” transaction would be economically infeasible and, since only public blockchains use proof of work, only public blockchains can provide this “immutability”guarantee.’
* ‘By contrast, blockchains that rely instead on identifiable parties to provide consensus cannot deliver this level of security and immutability; there is always the chance that parties could “collude” to reverse a transaction.’ And so, the proponents of Ethereum for the enterprise propose a clever idea: by all means, use a peer-reviewed fault-tolerant algorithm for your business transactions – you need rapid and _final_ confirmation, after all. But then, as an additional layer of safety, “anchor”
a summary of your transactions in the _public_ Ethereum network. The network that is massively more secure and resistant to mutation. Its proponents even claim this would provide ‘greater “proof of settlement finality”’ and that ‘any chance of counterparty disputes about membership is eliminated’. This _sounds_ perfect: the privacy, performance and settlement finality of a private chain and the security and immutability of apublic chain!
Except… there was always a problem with this argument: _finality_. In short, the two unanswered questions were: * If your enterprise blockchain needs settlement finality but the chain into which it is ‘anchored’ provides only probabilistic finality, when is it safe to tell a user of the private chain their transaction has been confirmed? What happens if two conflicting hashes might be vying for inclusion at the same time? Are users expected to constantly monitor the underlying chain to check the private chain hasn’t gone bad? And what exactly are they supposed to do at thatpoint in any case?
* If the ‘anchor’ gets washed away by a ‘reorganisation’ of the underlying public _probabilistic_ blockchain, what are you supposed to do then? The problem is: technically savvy people knew these questions made the concept highly suspect but the fact that there had never been any high profile examples of where this would ever have been a problem, nobody seemed to care. And the concepts were complicated in any case – probabilistic settlement, reorganisations. All too abstract! So the response seemed to be: “sure… this could happen in theory but it never happens in practice, so who cares?”.Until last week.
When a high profile Ethereum network suffered a devastating and unprecedented attack, that caused transactions _over one hundredblocks deep
_
to go from “confirmed” to “unconfirmed”. Any “anchor” that had been in one of those hundred blocks would have been _washed away_, opening up the possibility that a simultaneous attack on the private network could result in a conflicting anchor taking its place. In other words, the trivial ease with which the supposedly secure and immutable chain was rewritten means it failed in its only and single purpose for an enterprise deployment. _ _ The right approach to settlement finality for _business_ blockchains is to acknowledge things can go wrong and to plan for them up-front: accept that you need to know the identity of the consensus providers, which also ensures provider diversity rather than increasingly centralised mining providers; and that you need a governance process and dispute resolution forum for problems that cannot be solved solely with clever math or novel technology.CONCLUSION
So, here at the start of January 2019, what is left of the “Ethereum in business” story? * The number of developers with skills in Ethereum is far lower than Ethereum’s proponents claim and is orders of magnitude smaller than the programming language ecosystems supporting Hyperledger and Corda * The core ‘engine’ of Ethereum, the EVM, has been publicly disowned by the communities that spawned it and the platform is being expensively rewritten, yet enterprise Ethereum _vendors_ continue to push tools based on this dead-end into unsuspecting businesses. * And the only remaining plausible argument for using Ethereum in the enterprise, that it somehow makes it easier to secure your network by ‘anchoring’ into the public network, has been shown by the Ethereum Classic debacle to be false. > Be in no doubt: blockchain for the enterprise is real and it is here > to stay. But if you’re doing it on Ethereum, you’re doing it> wrong.
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CORDA: OPEN SOURCE COMMUNITY UPDATE _The Corda open source community is getting big… it’s time for a dedicated corda-dev mailing list, a co-maintainer for the project, a refreshed whitepaper, expanded contribution guidelines, and more..!__ ___
It feels like Corda took on board some rocket fuel over the last few months. Corda’s open source community is now getting so big and growing so fast that it’s just not possible to keep up with everything any more — a nice problem to have, of course. And I think this is a sign that we’re reaching a tipping point as an industry as people make their choices and the enterprise blockchain platforms consolidate down to what I think we’ll come to describe as “the big three”. _Read the rest of this post over at the Corda Medium blog…_
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INTRODUCING THE CORDA TECHNICAL ADVISORY COUNCIL I’m delighted to announce the formation of the Corda Technical Advisory Council (the Corda TAC). This is a group of technical leaders in our community — who most of you know well — who have volunteered to commit their time over and above their existing contributions to the Corda ecosystem to provide advice and guidance to the Corda maintainers. Members of the TAC are invited by the maintainers of the Corda open source project (Mikeand Joel
) and will change over time — the inaugural members are listed below. If you’re also interested in contributing to the TAC, please do let us know — most usefully through your technical leadership and contribution to the ecosystem! _Read the rest of this post over at the Corda medium blog…!_
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UNIVERSAL INTEROPERABILITY: WHY ENTERPRISE BLOCKCHAIN APPLICATIONS SHOULD BE DEPLOYED TO SHARED NETWORKS BUSINESS NEEDS THE UNIVERSAL INTEROPERABILITY OF PUBLIC NETWORKS BUT WITH THE PRIVACY OF PRIVATE NETWORKS. ONLY THE CORDA NETWORK CANDELIVER THIS.
The tl;dr of this post is: * Most permissioned blockchains use isolated networks for each application, and these are unable to interoperate. This makes nosense.
* We should instead aspire to deploy multiple business applications to an open, shared network. But this needs the right technology with the right privacy model. * Corda, the open source blockchain platform we and our community are building, was designed for just this from day one. But there was a piece missing until now: the global Corda _network_. * In this post I describe the global Corda network for the first time in public and how it will be opened up to the entire Corda community in the coming months. * If you’re building blockchain solutions for business, you need to read this post… Think back to how excited you were (well, _I _was!) when you first heard about Ethereum. The idea of a platform for smart contract applications, all running across a common network, with interoperability between all these different applications written by different people for different purposes. It was _mind-blowing_. And it’s not just a vision, of course. The public Ethereum community have actually delivered it! Indeed, emerging standards such as ERC20 are a demonstration of the power of a shared, interoperable network and the power ofstandardisation
.
So the question we asked ourselves at R3 back in 2015 was: imagine if you could apply that idea to _business_… imagine if different groups of people, each deploying applications for their own commercial purposes, woke up one day and discovered that those apps could be reassembled and connected in ways unimaginable to their creators _but in a way that respected privacy and which could be deployed in real-world businesses with all the complexity that entails_. It seemed obvious to us that this was the right vision. And that it would require a universal, shared, open network, the topic of thispost.
But it dawned on me recently that this is not how everybody in the permissioned blockchain space sees it. The consequences for userscould be serious.
_The rest of this post is continued at our medium site here!_
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WHAT PROBLEM ARE WE TRYING TO SOLVE WITH CORDA? Todd pointed me at a great piece about “crypto finance” versus “regular finance”by
Bloomberg’s Matt Levine earlier. I thought he did a good job of nailing the essential contradiction that arises if one tries naively to apply Bitcoin or Ethereum principles directly to traditional finance. He uses the example of an Interest Rate Swap (IRS) and how a fully pre-funded model would kind of defeat the point… This caught my attention because an IRS was the _very first_ project we ever did on Corda!
So it’s something I know a little about… Anyway, I think the key to understanding the mismatch is captured in a post of mine from 2015 about how _two _revolutions are playing out in parallel.
_Anyway… full details over on my Medium page._
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NEW TO CORDA? START HERE! _Are you just hearing about Corda for the first time? Want to understand how Corda differs from other platforms and how its unique architecture is perfectly suited to address the real problems faced by today’s businesses? _ I just posted to the Corda Medium pagewith a
list of links and background info that should help answer thatquestion…
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