Reflections from the CryptoMountain

CryptoMountain - what? Sounds like a place where Swiss private bankers sit on their customer's gold, maybe something like Smaug's lair in the Hobbit's saga.

These were my first thoughts when I heard about the event that Reto Gadient from B-Academy decided to put together. Interestingly enough, there was an actual mountain, or 6 to be precise. Inaugural winter edition of CryptoMountain took place in Davos between March 16 and 19.

Serious topics and fun in the Snow

Much to my disappointment there was no dragon or a mountain of gold there, but a number of Swiss bankers, Entrepreneurs, FinTech Innovators, Technologists and other adventurous folks. So it did feel a bit like joining a party of dwarfs on an Adventure.

We did talk about gold, though. The digital gold! The discussion entitled "Is Cryptocurrency the future of Money" was very lively and we did try hard to understand why bitcoin might be a future reserve currency. You can watch the video here.

It was not all smooth sailing though. There are too many meetings on cryptocurrency and blockchain in general, where participants just agree with each other that the future will have no bankers, blockchain will somehow replace all the existing systems and "smart contracts" will replace lawyers and notaries. Not this time!

The mighty Steinbock

steinbock.jpg

The key feature of the event (besides the snow sports and obligatory fondue evening) were the "battles". Like native mountain goat species called Steinbock, we were expected to lock our "horns" and try to defend our respective points of view and promote the debate.

Consensus over Consensus?

I had the pleasure to "battle" with Dr. Sebastian B├╝rgel - co-founder and CTO at Validity Labs.

Sebastian opened our session by walking the audience through the key ideas and mechanics that make blockchain work and set it apart from other data sharing technologies.

I followed with my favourite topic - the consensus algorithms. To me, consensus is the fundamental part of any Distributed Ledger Technology. Too often, people forget that Distributed Computing was tackling the topic of consensus for a long time and focus just on Proof of Work or, more recently, Proof of Stake. There are a lot of techniques out there that solve the data (or state) synchronization problem, when multiple systems need to agree on a single, canonical version of the shared data. None of them is perfect; each of them makes certain assumptions about the network, motivation of the participants, trust levels, etc. They all have different throughput and scalability characteristics. In fact, different business use-cases will match different consensus algorithms, depending on design trend-offs and the selection will pretty much define success, failure and security guarantees of the resulting system.


This time I've decided to try and explain some consensus techniques in a non-technical manner, as much as possible. Hopefully it worked out.

What about the "battle"? Well, we did have a great debate in the end. After going through all the complexity and limitations that consensus techniques impose on blockchains, I've made an example of a different kind of system.

Is blockchain required at all?

Corda is a DLT that relies on crypto techniques and smart contracts to solve inter-org process automation for banks, logistics, etc. It does require that identities of all the participants are known, which is expected in a business setting today. There is no shared chain of blocks or graphs or any other kind of common data structure. Moreover, because you can attach a digitally signed legal prose to your transactions, it should be straightforward to present this data in court, should there be a dispute. Very practical.

So my question to the audience was:

If blockchains are just inefficient databases, shouldn't we just stick to strong crypto, peer-to-peer communications and remotely executable code (aka smart contracts)?

Lively discussion ensued, with many saying that while we still have issues with the current technology, we should all work on a future where decentralization, enabled by DLTs and powered by Smart Contracts will help us achieve new levels of transparency, efficiency and agility. I agree.

The slides are here. I'm looking forward to your comments.

Oh, and don't forget to attend the next CryptoMount event. The registration is open and maybe there will be dragons next time!

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