Welcome!

Open Source Cloud Authors: Zakia Bouachraoui, Pat Romanski, Elizabeth White, Liz McMillan, Yeshim Deniz

Related Topics: @CloudExpo, Open Source Cloud, Cloud Security

@CloudExpo: Blog Feed Post

Is Blockchain the Ultimate Open Source Disruptive Technology? | @CloudExpo #Cloud #FinTech #Blockchain

The goal of the blockchain is to allow anonymous and secure record-keeping

Is Blockchain the Ultimate Open Source Disruptive Technology?

Fred Wilson of Union Square Ventures has been talking a lot about the blockchain recently, so I decided to learn more about it.  I read the Marketing the Blockchain e-book, watched The Grand Vision of a Crypto-Tech Economy video and the video keynote of Overstock CEO Patrick Byrne at the Bitcoin 2014 conference, and did some more research on my own.  While far from an expert, I do see some interesting similarities to the adoption of open source software. Here’s what I’ve learned — please comment and tell me if I’m wrong:

What’s the Big Deal about the Blockchain?
Blockchain is a distributed ledger system using crytography and open source software. The goal of the blockchain is to allow anonymous and secure record-keeping. But here’s the big thing: instead of those records being kept in one central, allegedly secure place, it is kept distributed in a peer to peer way, while also being (allegedly?) secure.

Okay, that’s nice.  So what?

Now stop for a moment.  Think about this: What does every institution in our society do?

What does your bank do?

What does the Federal Reserve, European Central Bank, Bank of England, or any other central bank do?

What does your local registrar/recorder do?

What do eBay, etsy, Paypal, uber, airbnb, Facebook, Amazon, Yelp do?

What does every business, big or small, do?

They all keep records in a central, allegedly secure, place.

So what if there was a technology (open source no less!) that could replace every single centrally kept source of information with a peer-to-peer distributed alternative?

The internet is a big deal because it fundamentally replaced centralized information repositories such as newspapers, TV, and encyclopedias with distributed, peer-to-peer alternatives.  If the blockchain could replace all these other parts of our society, right down to our monetary and banking systems, wouldn’t it be a 10x, 100x, 1000x more powerful force for change than the internet?

IF.

Could it Really Happen?
Blockchain enthusiasts would tell you that it is already happening: Openbazaar is out to replace eBay, Amazon, and etsy. Steemit is out to replace reddit, twitter, and Facebook.  And then, there’s bitcoin, out to replace your money with a digital currency outside the control of any government!  Not only is it accepted at Overstock now, but there’s actually an impressive list of places that take bitcoin for payment, including Expedia, Microsoft, Whole Foods, Dell, Home Depot, and Sears.

But here’s the catch: These places are accepting bitcoin based on its spot exchange rate to mainstream currencies.  For example, when you checkout at Overstock, your shopping cart is quoted in dollars, and then Coinbase will quote you a bitcoin price based on the current bitcoin/dollar exchange rate.  This bitcoin price is good only for a short period of time (10 minutes from when I tried it.)

So in reality, “accepting bitcoin” today is like accepting the Discover card.  It’s certainly a necessary step if bitcoin is to go mainstream, but it doesn’t mean that bitcoin is replacing established currencies.  For that to happen, we’d actually have to see an economy that’s priced in bitcoins.  This means a group of people must be willing to take a relatively fixed amount of bitcoins for their goods or services, instead of pricing them in dollars, euros, or another established currency.  Usually, that means other people must be willing to take their bitcoins in turn.

For example, you might bill $100 per hour for your services. You probably wouldn’t change that rate as the dollar fluctuates from $1.05 to $1.2, $1.3, or even $1.6 to the euro. Would you similarly accept 0.1 bitcoins instead of $100 per hour, whether 1 bitcoin was worth $700, $1,000, or $1,300?  That depends on what you can do with it, doesn’t it?  If you live in the United States and pay rent, buy groceries, and go to restaurants and movies with dollars, it won’t matter to you what the dollar to euro exchange rate was, because all your expenses are still (more or less) the same in dollars.  Similarly, until you could buy all sorts of stuff at relatively stable bitcoin prices, you’re taking quite a risk fixing your price in bitcoins.

Hence we have the classic adoption problem for new technologies: Until we get a large group of people to adopt it, most people wouldn’t want to adopt it.

Lessons from the Quiet Revolution
Most blockchain advocates deeply believe that a de-centralized economy is a fundamental virtue, but they also realize that the rest of the world won’t care. They know that for the blockchain to take off, it must be an invisible part of the apps that power regular people’s lives.

Which sounds just like open source software: Most open source developers believe that software freedom is fundamentally good, and software copyrights and patents are fundamentally evil. Richard Stallman’s The GNU Manifesto could practically be translated into a manifesto for blockchain just by changing some words.  Yet that’s not what drove the adoption of open source software in the end.  We did not, as a society, all rise up to overthrow the shackles of commercial software.  Instead, open source is a quiet revolution: When you open your smartphone, check some reviews, surf the web, play a game, or buy something online, you’ve probably used at least a dozen different open source technologies.  But most people don’t even know what “open source” means (although it sounds nice.)

What drove this quiet revolution?  In retrospect, open source software has been most successful when three conditions are met:

  1. The market space has no dominant commercial incumbent.
  2. The market space was not deemed mission critical.
  3. Open source was the easiest, lowest friction option available.

For example, Linux, Apache (actually just the httpd web server), MySQL, and PHP (aka “LAMP”) were all successful because they were used for building web-based applications in the early 2000’s.  Commercial alternatives like Solaris, Microsoft IIS, Oracle, and ASP .NET were not dominant the way Microsoft Windows and Office or SAP were.  Funnily enough, back then websites weren’t considered mission critical by most companies, so it wasn’t a big deal to let the geeks try out some new technologies.  And it was much easier for those geeks to download and install LAMP and start making a website than go through the long procurement process with Oracle, Sun, or Microsoft.  So open source took off.

What Don’t You Like About Establishment?
Contrast this with the blockchain today, and we see that in all the niches we’ve talked about, there is a dominant player: Our currencies and banks, major corporations, and social networks are very much established.  Furthermore, they are very much mission-critical.  We get paid with dollars and know that we can pay our rent or buy groceries.  We put it in the bank and trust it’ll be there tomorrow, and we don’t have to worry about losing all our money if our hard drive crashed and we lost our bitcoin keys.  We trust the reviews on Amazon and eBay and know that when we buy something, the goods would get to us.  We trust that uber will send us a driver who is not going to hijack us, and the driver trusts that uber will pay them for our trip.

We may not like everything about them, but how many people are ready for a peer-to-peer, de-centralized alternative?  And if anything went wrong with that alternative, “who would I sue?”

So can we find some non-mission-critical applications where there are no dominant incumbents?

We might think that blockchain is a natural fit for places that fall outside the established monetary and banking system, for example in countries with failing currencies.  But the dominant incumbent currency in those countries is usually the US dollar: there are apparently more dollar bills in circulation outside the United States than inside for that very reason.

We might think that technologically, the blockchain is a natural fit for peer-to-peer transactions, like eBay or uber.  But those are very mission-critical applications.  There are plenty of eBay sellers whose livelihood depends on getting paid and getting good reviews.  They’ve learned how to get those through eBay and Paypal.  Would they trust that livelihood to someone else easily?  As for uber, it’s the driver’s livelihood and the rider’s life that are literally at stake.

One interesting blockchain application is micro-payments.  Today’s payment networks, such as Paypal and credit cards, have a minimum threshold below which the costs are just too great.  It’s not worth it to send someone $0.05 electronically, but it is with blockchain.  So can we have an economy where blockchain is used to transact in such small amounts?  Perhaps.  But who would want to exchange such small amounts?  I don’t know.  You might.

Last but not least, there’s health care.  Here’s a great one: Our health care system is antiquated.  Records are not even kept electronically.  We don’t trust our doctors, hospitals, and especially insurance companies and government health departments.  There is no dominant incumbent.  Wouldn’t it be great to be able to keep all my health records in the blockchain, so I can share them with doctors and insurers and even other physicians at my choice?

But what if something happened to my health records?  What if they got stolen, tampered with, or simply lost forever?  It could be life or death.  Talk about mission critical.  So would most people trust Google or a peer-to-peer distributed ledger?

As you can see, I haven’t figured out a break out application for blockchain.  But then again, like I said at the beginning, I’m far from an expert–not even much of a beginner in fact.  If you think of something, please let me know in the comments.

Read the original blog entry...

More Stories By Si Chen

Si Chen is the founder of Open Source Strategies, Inc. and Project Manager for opentaps Open Source ERP + CRM (www.opentaps.org).

IoT & Smart Cities Stories
Bill Schmarzo, Tech Chair of "Big Data | Analytics" of upcoming CloudEXPO | DXWorldEXPO New York (November 12-13, 2018, New York City) today announced the outline and schedule of the track. "The track has been designed in experience/degree order," said Schmarzo. "So, that folks who attend the entire track can leave the conference with some of the skills necessary to get their work done when they get back to their offices. It actually ties back to some work that I'm doing at the University of San...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
If a machine can invent, does this mean the end of the patent system as we know it? The patent system, both in the US and Europe, allows companies to protect their inventions and helps foster innovation. However, Artificial Intelligence (AI) could be set to disrupt the patent system as we know it. This talk will examine how AI may change the patent landscape in the years to come. Furthermore, ways in which companies can best protect their AI related inventions will be examined from both a US and...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Chris Matthieu is the President & CEO of Computes, inc. He brings 30 years of experience in development and launches of disruptive technologies to create new market opportunities as well as enhance enterprise product portfolios with emerging technologies. His most recent venture was Octoblu, a cross-protocol Internet of Things (IoT) mesh network platform, acquired by Citrix. Prior to co-founding Octoblu, Chris was founder of Nodester, an open-source Node.JS PaaS which was acquired by AppFog and ...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...