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Alexandre Stachtchenko (Blockchain France): “Blockchain lets you look at the concept of trust from a whole different angle”

Econocom 27 Oct 2016

Although still in its early stages, blockchain is on the verge of revolutionising a number of processes, and even whole areas of economic activity. Finance, banking and insurance are the first industries affected by this revolution, or more exactly by its flagship product, bitcoin, but in the future other sectors will also change.

So which professions, industry sectors and processes will be the most affected by widespread use of the technology? Do companies know enough about it? What’s the best way to broach the subject – methodically, pragmatically – and not miss out on this major change? Alexandre Stachtchenko, co-founder/Managing Director of Blockchain France and Chairman of la Chaintech, gave us an overview of the different uses of blockchain in economic life and told us more about the implications of this technology.

Founded in 2015 to address the lack of information available in French on blockchain, Blockchain France is a startup that assists organisations in exploring and rolling out the technologies. To make the subject more accessible, the startup published “La Blockchain décryptée” (“blockchain deciphered” in June 2016 and devised a MOOC at the end of September.

 

What is blockchain?

 

Alexandre Stachtchenko: Put simply, it’s a transparent, secure technology for transmitting information which works without a central control body. It’s a way of archiving transactions chronologically without a trusted third party:  they’re linked together in blocks, and each one is linked to a previous block, like a chain – hence the name. If one block is changed, the whole chain is changed, making it easier to combat fraud.

You hear a lot about “blockchain technologies,” so you have to specify exactly which one you’re talking about. Bitcoin is a blockchain; it was actually the first one. But there are others – hundreds of others actually!

 

What do companies use it for?

 

There are several types of use: at Blockchain France we put them into three categories, depending on the different timelines:

  • Short-term: the benefits will mainly be in terms of certification and exchanging assets. Certification involves providing proof of existence of files in transactions, and certifying them or using colored coin protocol to transfer various types of digital assets, aside from just currency. Asset transactions were the first ever blockchain technologies, such as bitcoin.
  • Short and medium-term: this is more to do with keeping track of the ledgers, which is similar to certification. This allows you to check, for example, whether a product is organic, made in France, or counterfeit. It also enables you to track the path of a product.
  • Long-term: the ideal use case for blockchain is smart contracts: there’s been a great deal of talk about these, although the technology is still in its early stages. It symbolises both all the hopes and fears surrounding blockchain, in that it seems as though anything is possible with it. Smart contracts mean that transactions can be validated, monitored, and enforced bilaterally over a digital network without the need for a trusted third-party intermediary and can be used in a variety of areas ranging from music to IoT and insurance.

 

“THE IDEAL USE CASE IS smart contractS”

 
At Blockchain France, you help companies who want to roll out this type of technology. How does that work?

 

Our startup helps organisations discover, explore and develop blockchain solutions.

The discovery stage involves a lot of training, familiarising people with the issues associated with blockchain, based on a methodology whereby these questions are addressed right up to senior management level, to make sure they remain alert on this matter, and that goes for SMBs and large groups.  The exploratory phase involves ideation, typically with large groups, in order to come up with use cases. We also deploy prototypes or proofs of concept  to test feasibility.

“The market isn’t quite at the industrialisation or large-scale IT deployment stage: we’re more in the iteration and experimentation phase.”

All industry sectors are affected by blockchain, but to varying degrees, and nor with the same timelines. Banking and finance were the first to use it, with bitcoin.

 

“Banks ARE USING blockchain TO UNDERSTAND THE potential THREAT it poses”

 

How do the companies you work with approach the matter?

 

They generally have some basic knowledge, particularly in the finance industry. They are often very much influenced by the media, and more specifically everything to do with bitcoin.

That can lead to certain misconceptions: for example, we’ve heard a lot of people say that blockchain is used to fund drugs and dirty money. There’s a whole load of preconceived ideas we have to dispel so that organisations can overcome their wariness of the technology.

But there’s also always someone in a company who plays the role of opinion leader, who’s heard of blockchain and who wants to encourage the organisation to look into it more and try and take advantage of it.

 

And what exactly are these advantages?

 

For companies, the main advantage is cost reduction, particularly where asset transactions and certification are concerned, because it’s often infinitely cheaper to do it with blockchain technology. Another considerable advantage is that it saves time. In complicated supply chains, you have to go through a number of stages: with a blockchain, which is almost real time, you know at any given time who owns what.

There are also new uses outside the company: this means doing things we couldn’t do before. With intellectual property, for example, blockchain can ensure fairer, faster distribution of royalties.

“there are different types of advantages for different people”

 

Generally speaking, which processes will be the most affected by the advent of blockchain?

 

It’s difficult to say what will continue or be transformed by blockchain. But generally speaking, it’s obvious that certain internal processes within organisations will be revolutionised, for example in insurance where it will cut out a whole part of the claims process. There’s a lot of things happening in that area, particularly in index-based insurance.

In terms of business, the process of resolving disputes could be revolutionised by blockchain as it could address the issue of information asymmetry, one of the main reasons for disputes that drag on.

 

What can we expect from blockchain in the years to come?

 

You have to put it into the context of innovation: the reason blockchain is generating such enthusiasm is that it’s technology that addresses a fundamental question: it lets you look at the concept of trust from a whole different angle. And these days there’s a serious lack of trust, whether it’s because of the financial crisis, the property crisis or the political crisis. We basically no longer trust public institutions, the people who manage our money or our votes.

In the future, we’ll inevitably have to look at the ethical aspects because this technology raises fundamental issues, social issues. We can’t leave it to private organisations, groups of developers, or any particular part of the population decide what they want to do with blockchain because it’s an architecture technology: once it’s deployed, it’s difficult to change it – it’s a bit like building railways.

At the moment we’re working on the protocol, the set of rules that will govern the way we use this technology: it’s going to be rolled out over the next few years, but ordinary citizens should start showing an interest in it soon, otherwise there’s a risk that private businesses will dictate the rules of blockchain and put their interest before society’s.

To sum up, blockchain has a great deal of potential, in all sorts of areas, so we have to be pragmatic: on the one hand, the technology is disintermediating, but it’s also creating new intermediaries, which have a different role. Some will profit from it, and that’s where regulation will come in. This is what I talked about with Axelle Lemaire (the French Secretary of State for Digital, Ed) when she came to the Blockchain Hackademy  at the Microsoft experiences and the parliament forum on blockchain. The fact that she is showing an interest in blockchain is revealing: it’s not just a personal interest but a sign that politicians are beginning to understand the significance and potential of the technology.

Axelle Lemaire clarified the government’s current position on the matter, which is that you shouldn’t regulate it too much at the risk of stifling innovation. Naturally, I’m pleased about this but I also think that regulation can go further, on the one hand by giving transactions on blockchain legal proof status, and on the other hand by clarifying this non-regulation position. Because what the ecosystem wants is not so much to regulate or not regulate, but to plan ahead and to do this it needs to know what the government’s position is on certain basic subjects, such as whether cryptocurrency should be defined as digital assets or currency, so we can have a consistent, predictable framework to work in within the next two years, and can reassure potential investors.

 

Also on our blog:

-> Security: should we be wary of the cloud interview with Gregory Haik, Eurocloud France

-> Matthieu Bonenfant: ransomware is increasing exponentially

-> Claudio Vandi, Numa: innovation is more likely to arise from the unexpected than from structured approaches

 

Crédit photo : BTC Keychain  / Flickr.com / Licence CC BY 2.0

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