The Technological Convergence of Blockchain and AI to power the 4th Industrial Revolution

The more data Artificial Intelligence has the more accurate are the outcomes and predictions. Due to the foundations of internet architecture and underlying nature of the Internet, we are limiting the type of data algorithms have access to and how they access them.

The centralised approach of the Internet limits how we transfer, authorise and access data across networks. It is very difficult to duplicate multiple copies of terabytes/petabytes of data across internet networks to access and process data.

The decentralised interconnectedness of blockchains provides a new way to connect data without the overheads of trust, security and controls. Blockchains provide human-to-human or machine-to-machine trust without any of the parties needing to know or trust each other.

The consequences of existing Internet architectures is fundamentally going to change. For the first time, we can honour the original vision of the internet but based on blockchain technology, for all peers to trust each other.

For the first time we can honour the original vision of the Internet to create an open trusted network for people, machines and data to operate, but without the original flaw of having to know everyone in the network.

For the first time we can trust the network without the need to know and trust each other.

The original vision of ARPANET was a closed network where every member (node) knew exactly who the other party was. With the immense expansion of the internet, more and more networks and people started connecting, naturally everyone no longer knew everyone else. The internet became and stayed untrusted.

We had to build firewalls, harden operating systems, create internal networks that sat behind external facing gateways just to protect internal users and data. We had to build controls on top of controls to detect, protect, respond to threats.

The history of two technologies of the core of the next human advancement have take their own paths and evolution to reach the next stage. I foresee the evolution of technological and human evolution converged.

Up until now we have been working in advancing and evolving our current technology in silos. The advancement of machine learning and AI has stemmed in the various Bayesian, Symbolists, Connectionists and Evolutionaries tribes working almost in isolation to advance their particular areas of work.

Artificial intelligence was borne out of the need to win a war. Computing in principle was not developed to break code, computing was simple and calculations were made to solve mathematical and computational challenges.

In trying times, such as war, the motivations and incentives became a catalyst to make the evolutionary step such as nature when animals became amphibious

We foresaw the thinking computer. The Turing test was developed to validate the ultimate goal and progress in people not knowing the difference between man and machine.

That has been the holy grail that has been sought by computer scientists to accomplish what was envisaged all those years ago and we’ve made progress.

Today we have developed mechanisms and machines that are capable of accomplishing such complex transactional calculations which were impossible to achieve.

The advancement in field of machine learning stemmed through a rapid progress of statistics, data science and analysis fuelled by the gush of big data collected for anything

We have collected zettabytes of data by observing the interactions of the natural and logical worlds. Data is everywhere and we have woken up to understanding how we collect and now make use of it.
Think of all the intricate interactions in nature, every single movement, motion, action, reaction creates a data point that we’ve only just started to learn to catalogue and collect.

Topped with the advancement in data analysis methods we have created new ways to wholly analyse vast amounts of data in a simplified and accurate way. The idea of machine learning was only recently exploded using an evolution of pre-existing methods.

We have identified ways in which data can be analysed using the evolution of Bayesian statistics, fuzzy logic etc and developed into new ways such as Neural networks, recurring and convoluted NN, regression, clustering and segregation

This has lead to new ways in doing analysis that can be supervised, semi-supervised or unsupervised in the fields of machine learning and deep learning

Our technology and approach has resulted in new technology such a vision, autonomous driving, prediction and even learning (Go). We’re just at the beginning of what we can accomplish.

BLOCKCHAIN

The technology behind Blockchain stemmed from cryptography and security. The mechanisms of private key infrastructure have long been used in security for authentication and authorisation.

Blockchain provides us the map and ability to map and understand data, transfer of data without the need to trust or know the other parties.

The technology provides immutable proof that transactions or data stored in a ledger are valid and can be trusted as truth between parties. This validation is done through mass computing power, called miners, used to calculate and validate the cryptography within in block is secure and the integrity of it linked to previous blocks – creating a chain. This is the consensus algorithm used to accept the validity of the data and crypto.

CONVERGENCE

For AI to be effective, it needs a constant stream of data to process to improve its algorithms, accuracy and outputs.

For the first time, we are opening up and providing unrestricted access to huge datasets for processing without the limitations and restrictions of internet architectures.

We can create new AI agents that are no longer restricted to closed internal networks or clouds but able to openly and autonomously traverse blockchain networks to identify and access data.

We’ve seen a few early attempts of this in the DAO and Ethereum smart contracts that attempted to run autonomous code backed with crypto currency to perform tasks and potentially accumulate further currency. They failed not only to the immaturity of its application and code, but due to the limitations of its environment. The code was not truly free in the sense of the word but it was bound and restricted to its surrounding environment

But the true Turing test of Autonomous AI on Blockchain is the ability for the agent to live entirely autonomously on a decentralised internet.

In order to achieve this fundamental change in our architecture, we have to tackle the challenge one piece at a time. We can’t make a complete change to the internet overnight without disrupting the nature of the networks.

Our unique approach has been to overlay on top of existing and future blockchains, that themselves sit on traditional internet foundations. We need a virtual decentralised internet that works on top of the existing architecture and provides a new way to connect and interact.

We have the same issues in the blockchain space as we did with the early internet networks. We have independent closed networks that don’t connect to each. As soon as the internet networks connected, thanks to the adoption of TCP/IP (transmission control protocol/internet protocol) as the Standard to enable flows between networks created the modern internet of today.

We are experiencing the same challenges today with blockchain. As soon as we connect the various closed blockchain networks to each other we will see the emergence of a new blockchain internet.

It was this idea that I used to create the genesis of the blockchain ISO Standard TC307.

What we have done in Quant is create a blockchain operating system called Overledger which sites on top of existing and future blockchains. The system allows for the ability to reach and write of data between various blockchains respecting the rules of each blockchain, such as consensus.

We’re excited to be able to shape the evolution of the two foundational technologies of AI and Blockchain and help foster innovation to develop new and revolutionary technologies.

High Time for Blockchain Standards

As technology advances from the ground breaking to the almost innocuous, every-day and even primitive, its multiple variations settle to a standard whether organically or through formal discussion. Standardisation forms an essential part in a technology’s adoption curve and Blockchain/Distributed Ledger Technology (DLT) are no exceptions. One of the key people sounding the klaxon for blockchain standardisation sat down with the team to explain why we should be thinking standards.

With a 20 year history in Cyber Security, Gilbert Verdian has held several C-level roles across many respected organisations and public institutions such as Vocalink, NSW Health, HM Treasury and the Federal Reserve. Gilbert was also recently awarded the much sought after title of CISO of the Year in June. We asked Gilbert how it was that he first came across blockchain and why he thought it was the right time to talk standards. Gilbert told us of how he had provided the first spark of conversation within the corridors of Westminster while at HM Treasury, when he spurred senior officials to assess and consider bitcoin, and its impact to the UK, back in 2008. It wasn’t until 2014, during his work at the Australian Government’s Department of Health, that he was able to work on building blockchain solutions. In this instance it was a solution to solve longstanding issues with health record interoperability and security. This activity ultimately resulted in a wider discussion about compliance and standards. Campaigning initially for better understanding from government and regulators, Gilbert could see beyond the initial use case of secure data sharing in health IT to a cross-industry, multi-functional application of blockchain.

Despite initial resistance, Gilbert envisioned the scope of change blockchain was to bring, stating ‘I see a potential similar to that of the internet in the early 90s. We’re at the cusp of something big, blockchain can change a lot of how the internet operates and a lot of how processes operate, we just don’t know what we can do yet’. The most valuable step was then standardising a vision of blockchain and ensuring that everyone was on the same page so that the latent benefits can be brought to the forefront. This was done by authoring the ISO proposal to Standardise Blockchain and then establish a technical committee. The proposal was approved in October 2016 and the ISO/TC307 committee quickly grew from five to eight to now over thirty-five countries and bodies such as the European Commission. From Gilbert’s perspective, there was a clear and immediate sense of momentum and enthusiasm, the likes of which was unknown to the standards community.

We were interested in understanding a bit more about how the ISO committee was broaching such a nascent and fast evolving subject as blockchain. Gilbert explained that the first and current step was to divide the work. Initially splitting off into several working groups covering the following themes: reference architecture; taxonomy and ontology; use cases; security and privacy; identity; and smart contracts, we understood that two more working groups would soon be established including governance and interoperability. It is from the amalgamated work of these groups that we can expect initial guidance for a blockchain standard.

With a better understanding of how blockchain standards are being developed, we wanted to learn a bit more about the motivations directing this movement. 20 years of experience in cyber security had taught Gilbert a lot about the dangers of technology lock-in and he could already see tell-tale signs of this developing in blockchain. Gilbert added that ’by having standards it gives us that option to move between technologies and during implementation, clients can align to standards which makes it easier to implement with confidence in continued compliance.’

Returning to his experience in the public sector, we discussed the various regulatory responses to blockchain. In the UK, the FCA and the Bank of England appear to have really engaged with the subject of blockchain. Gilbert informed us the Bank of England has included the capability to interface to blockchain elements into the Real Time Gross Settlement (RTGS) Blueprint. Importantly, these blockchain elements would eventually be based on ISO standards when the Standard is complete. Though the UK, and certainly Australia have, in their own way, been pioneering in their engagement with DLT, Gilbert believed that the EU Commission and European Central Bank, who have a reputation for being early movers on issues of technology, were quite far ahead in their engagement. Discussing our thoughts for the future of blockchain, it became clear that welcomed experimentation must be followed by a settlement of standards before we could possibly expect wider adoption of blockchain. This being said, it would not be long until industry could expect these standards to develop, with much progress already having been made.

Look forward to speaking at Blockchain live, discussing Blockchain Standards with Sian Jones, Founder at COINsult and Benoit Abeloos, Policy Officer for Startups and Innovation for the European Commission.

Article published on:

HIGH TIME FOR BLOCKCHAIN STANDARDS

Blockchain and disruption Q&A with Penrhyn

I recently did a Q&A with Penrhyn on the disruption of Blockchain, Standardisation and adoption.

The report can be downloaded from: http://www.penrhyn.com/images/Attachments/Blockchain-disruption-and-changing-talent-need—Penryn-TMT-Group.pdf

 

Q: What is the journey towards cross-sector adaptation of blockchain?

A: Blockchain has been in the experimental stage for the past two years. 2017 is becoming the inflection point when people stopped experimenting with blockchain and started to implement and test it in real world use cases. Private and public organisations are constantly looking at the disruptive benefits of technology and how they can apply this innovation in order to bring change to existing internal and external business processes.

We can now find numerous blockchain use cases that have demonstrated the value of this technology. With many technological advancements we need proper governance and design to manage risk. Risks need to be managed in order to realise the full potential of any implementation.

Q: Which sectors and applications are most likely to benefit from this platform?

A: Versatility and the diverse application of blockchain mean we have seen benefits across numerous sectors and industries, with financial services and government receiving significant focus. The supply chain lends itself well to this technology. There was a recent use case in the farming sector, where from ‘farm to table’ the blockchain was able to cut out 20 of the steps it takes for a farmer to get paid. It reduced the process to three steps, with no delays in settling invoices.

The blockchain cuts out middlemen in complex processes and transactions and the reach of benefits can be significant. For example, the two billion people in the world with no bank account could get banking access through blockchain technology as it offers fewer barriers to entry. Quick and efficient onboarding of new banking customers and their access to financial services would completely disrupt traditional banking onboarding methods.

Blockchain can verify banking identity much more quickly and easily than in the branch of a bank. Once an identity or person has been verified, any organisation can access that identity to save the duplication of time and e ort of ID checks. Once an ID check is done everyone can use that as definitive confirmation.

Blockchain can give traditional areas of financial services greater efficiency and cost savings in existing operational processes. This can also span central banks and capital markets as well as the plethora of products and services wrapped around these organisations.

Q: How is the market addressing issues of standardisation?

A: Market forces traditionally allow innovators to create products and foster innovation. But based on past experience this is not always the best course of action due to the potential of technology lock-in. This in turn could make it difficult to migrate platforms in the future. I foresaw the potential challenges of this approach back in 2016 and proposed that the ISO create a Blockchain ISO Standard that will allow for interoperability, governance and security internationally in order to de ne a common model through a standard that will support organisations and allow them to benefit from future blockchain technologies.

35 countries and many organisations, including the European Commission, are involved in the Blockchain ISO Standard, which will take two to three years to create. A number of work streams are running which each address a different part of the standard, including: terminology; reference architecture, taxonomy and ontology; security and privacy; identity; smart contract; governance; and interoperability.

The ISO standard will allow for the wide adoption of blockchain, allowing governments and regulators to endorse it, for organisations to adopt it and for citizens to benefit from it.

Q: What will be the barriers and challenges to growth and adoption?

A: The market is dispersed at the moment, so the challenge will be to herd everyone in the right direction. There are no barriers or parameters currently in place to enforce controlled adoption. In the UK this is being encouraged, including through technology partners in the ISO process. Partners that are part of the standardisation work such as Hyperledger (IBM) and R3 that are building blockchain technology can take progress, updates and thinking around the standard back into their organisations and products. The output will be that people building the technology will deliver solutions that are truly interoperable and compatible with the standard.

Q: What risks should organisations consider when thinking about implementing blockchain technology?

A: Contrary to what the media would have you believe, blockchain is not the panacea for everything. The key is being able to understand the real benefits of the technology, then look at existing business processes or use cases that make good candidates for blockchain. It’s only then through proper governance and risk management that one can

then assess the tangible benefits and outcomes that organisations would like to achieve. Then add some Silicon Valley ‘fail fast’ methodology (try it and if it doesn’t work then park it) to prove use cases and proof of concepts. You would then be in a position to determine if this technology delivers benefits over the long term. Consideration needs to be given to operational, technological and financial benefits before applying common economics – in other words, will this provide a better return?

 

Chair of UK’s National Committee on Blockchain DLT/1

I would like to share that I’ve been elected Chair of the UK’s national committee on Blockchain and Distributed Ledger Technology – DLT/1 supported by the BSI, the UK’s standards body.

BSI will form this committee that represents the “UK voice” into what is needed and to feed into international standards in development in the new ISO committee.  Committee should represent all the relevant stakeholders (academia, government, trade associations, SMEs, etc).

It’s been quite a start for 2017, moving back to London in July after 2.5 years in Australia. While in Australia, in April 2016 I authored the following proposal to create an ISO Standard for Blockchain with the help of Standards Australia .

ISO TSP 258 (Blockchain and Electronic Distributed Ledger Technologies)

The vote took place at ISO in October with the following countries endorsing the proposal and Australia being appointed the Secretariat of the technical committed (TC307). Each country will form its own national committee and send representatives to the ISO Technical Committee (TC307).

Participating Countries:

Observing countries:

We had the first meeting in November at TechUK to explain more about standards, stakeholder groupings and get some initial perspectives in what standards are needed.

There will be a second meeting on the 7th February where we will continue the standards discussion and aim to ensure members are representing a particular stakeholder group.

The ISO kick off meeting will be held on the 3-5th April 2017 in Sydney.

There is much work to be done in this space and I look forward to working on this initiative. I will provide updates on progress and the thinking on this blog.

If you have a keen interest to be involved in DLT/1, please don’t hesitate to reach out to me or Emelie Bratt from the BSI on [email protected].