Few things announce to the world that you have acquired influence as being called to testify in front of Congress. Now blockchain has ascended to these dizzy heights as a range of experts were asked to present a range of suggestions for how the US government can begin to potentially make use of the technology, as well as allowing companies to innovate.
One of the people called before a group of senators was IBM vice president for Blockchain Technologies Jerry Cuomo. We caught up with him after to go over what had been said and what evidence it gives about the future direction of blockchain innovation.
Getting the call
Not many people are asked to provide evidence to the lawmakers of the most powerful country in the world. The honour and the magnitude of the moment were not lost on the participants of the session either.
“One of the congressmen came up to us before and asked us if we knew why we were there,” says Cuomo. “At first, I didn’t really understand where he was going with the questioning, but he was basically saying that doing things like this is part of a person’s civil duty.
“Serving in the armed forces or doing jury duty and things like that, you are there to provide a service, to educate lawmakers. So, it was a really good welcoming and really positioned the whole thing well.”
The specific goals for Cuomo, both as a representative of IBM and an enthusiastic proponent of blockchain technology, was to share a number of beliefs and recommendations with lawmakers. The last two years have seen an explosion of the number of companies utilising blockchain and the use cases span almost every industry. Recently, a number of governments have made it publicly known that they are investigating whether the technology can be incorporated into their processes.
Moving the innovation happening in the private sector over into government services was at the forefront of the session, as Cuomo explains.
“So, I wanted to hopefully get the creative thoughts flowing around ‘well, if this happening in the business world, perhaps we should be doing projects like this with regards to driver’s licenses and land registry’ – because they are similar in nature,” he explains “I really wanted to share the belief that blockchain is transforming industries today and that it must continue to be developed in the open to encourage adoption, innovation and interoperability. And also, that the technology is ready today for government.”
Recent events in the cryptocurrency space provided an interesting backdrop to the Congress hearing. Bitcoin had rocketed up to almost $20,000 in a frenzy of public interest, throwing the digital currencies into the public consciousness like never before. The ICO boom of 2017 also continues to draw the attention of governments in terms of how to regulate the practice and protect investors from potential scams and pump and dump operations. One of the aims of the hearing was to ensure that the tumultuous nature of the cryptocurrency space was separated from the underlying value of blockchain technology.
“You have to do what you have to do on the regulation side for currency, but we are not always talking about currency when talking about blockchain projects – and much of my testimony was about those other projects,” Cuomo says. “So, let’s keep the two together because we can have consequences that stymie innovation.”
blockchain is transforming industries today and that it must continue to be developed in the open
Recommendation #1 – Don’t confuse the broader uses of blockchain with cryptocurrency
It can often be hard to judge the level of knowledge Congress has about the industries and technologies that they regulate. They are, after all, incredibly busy people who are under a high degree of pressure. For Cuomo, however, it seemed that the level of in-depth technical knowledge about blockchain had definitely progressed since he had participated in a similar session for the Energy and Commerce Commission in 2016.
“One of the best things that I personally got out of this was witnessing the maturity of questions from 2016 to 2018,” he says. “I think that the members of Congress that asked questions, and they all went at least one round of questions with us, were quite articulate and proved to me that they understood the difference between blockchain use for cryptocurrency and blockchain use for broader applications, so I was very excited about that.”
There was a tendency from the senators to jump into the futuristic, speculative line of questioning. Cuomo was asked more questions about quantum computing and its relationship to blockchain than he, or anyone else called up, would have predicted. The key concern centred in on the theoretical ability of a quantum computer to break public key encryption and therefore be able to hack blockchains. This line of questioning was a little misplaced, principally due to the fact that estimates among experts put quantum computing ‘going mainstream’ at anywhere from 10 to 30 years. Gartner puts the technology at more than a 10 year gap in its most recent hype cycles.
“We also said that it comes down to capabilities – the question was really ‘how will quantum computing in the future break the public key encryption of today?’,” continues Cuomo.
“The fact of the matter is that when we have quantum computing, we will also use that technology to create new types of cryptography. Our team at IBM are quite vocal about what those types of cryptography can be.”
So why does blockchain appeal to lawmakers? Is it the supposed security and immutability of the technology, or is it more to do with the potential for efficiency gains and cost savings? The questions asked seemed to reflect an interest in both aspects. One area that was heavily spotlighted was how the technology can be used to eliminate honeypots of personal identity information. There is a widespread assumption, not just among lawmakers, that the goal of companies like IBM is to put all personal identification data onto distributed ledger.
“The truth is that we’re not,” says Cuomo. “We’re not making it just a different honeypot. What we are doing is putting proofs and permissions on the blockchain, meaning that we are using it as a digital rights management system, and putting the control of those rights in the hands of the rightful owner of the data.
“In that way, we are keeping the identity information where it is and we’re using the blockchain to manage access control to the information without causing a centralised point of failure.”
For Cuomo, identity management is the area where the government, blockchain and the private sector could really begin to work together soon. “Identity is an equal opportunity employer, meaning that, as we get more digital and as our general lives become a mess as there are bits and pieces of our digital lives become scattered all over the planet, how blockchain can help clean that up – but it does take a team to make that work.”
explore adoption through these projects and then, and only then, use the knowledge gained to inform policy
Recommendation #2 – Insert blockchain into already existing projects
It is already clear that the US government does not need to be the force pushing companies to adopt blockchain technologies. The starting gun went off a couple of years ago, and there are a number of industry-specific early adopters that are already well down the road towards having their own production networks.
For Cuomo, the fact that the drive is coming from the companies actually on the ground innovating is a big plus. “That’s good, that’s how the internet worked,” he says.
“It’s how the internet got started. The early adopters, the guys with a twinkle in their eye and an idea about how something could be done better, they didn’t ask for permission. They just went off and did it.”
At this point, adoption seems to have picked up an unstoppable momentum. On the IBM blockchain alone, there are now around 40 active networks with multiple parties exchanging every day. These range from food safety and trust to trade digitisation and digital payments and involve such heavy hitters as Maersk and Everledger.
On the government side, there are already institutions like NIST that have established their own sandboxes to test blockchain technologies, such as those emerging from the Hyperledger Project. While the government is unlikely to be able to innovate as fast as those in the private sector, they are at least getting their hands dirty under the hood. Cuomo hopes that institutions like NIST will continue to invite industry players into their sandboxes in order to test out environments together.
“I think we will see the level of mutual adoption, and the states that will start coming out of the gates with regards to things like digital driver’s licenses and digital land registries that are more state bound,” he says. “You do see states like Delaware, Illinois, Colorado and Arizona as early movers in the blockchain space.”
“My recommendation is that we work to explore adoption through these projects and then, and only then, that we use the knowledge gained to inform policy. We shouldn’t start off by looking to create policy before we have actually tried out what is actually possible. So, let’s look where we can insert blockchain versus trying to drum up special funding.”
sometimes starting a blockchain network can be like running a three-legged race
Recommendation #3 – Focus on projects that positively impact citizen’s lives
For Cuomo, the true test of whether the advent of blockchain will be judged a success will be if it actually leads to improvements in the lives of everyday people. While the technology has scores of use cases based around making businesses more efficient and profitable, this is not the main goal.
By focusing on making the processes and services that citizens interact with on a daily basis, businesses and government institutions will naturally adapt and become faster and better. “I think that economic competitiveness comes through helping people out, whether it is the safety of our digital identities, or the safety of the food we eat, or the drugs that we take,” Cuomo says.
So many of the use cases for blockchain are inherently tied to the goal of improving modern life; from providing a safer environment for identity information to allowing consumers to better track the providence of the food they consume.
“I think by improving everyday life we also by association improve our economic competitiveness,” Cuomo agrees. He believes that many of the legislators at the Congress shared this view as well.
The last year has seen a growth in the number of governments actively exploring blockchain technology. Recent examples include local authorities in Russia piloting a blockchain-based system for local voting and the Canadian government testing whether a product built on the Ethereum blockchain can be used to publish funding and grant information in real time. Does this uptick in activity across the world indicate that there is competition among governments to take the lead in blockchain innovation? Does the US want to lead the pack?
“I think the sheer fact that we had that hearing was a strong desire for the US to be that leader. I applaud it,” Cuomo says. The US would seem to have the edge when it comes to the strength of the companies operating in the private sector, which further highlights the importance of collaboration between industry players and government institutions.
“Blockchain is a little bit tricky. Sometimes starting a blockchain network can be like running a three-legged race,” Cuomo continues. “It’s about coordination across your members. You are as fast as your slowest member. You’re as secure as your least secure member and as smart as your least informed member.”
Exactly what shape future blockchain-based government services will take remains to be seen, but one certainty is that IBM will be right in the middle of this constantly evolving space. For a company that were such early, and vocal, adopters of the technology, seeing lawmakers getting so enthused about its potential must seem like a huge vindication of the risk involved in taking that position.
“We were so inspired by the technology and the early work and enabling that our CEO said that we had to get into it ourselves and start using it as a business,” says Cuomo.
“I think that those two things, on the technology provider side and the technology user side, is a great confidence booster that we are doing the right thing. Now, we won’t become complacent. When you think about AltaVista and BlackBerry, they were early adopters too. So, we want to stay focused on our users and stay focused on the business value and have the wisdom to pivot and keep riding this very fast track that we’re on.”