The team here at OnTheBlock recently caught up with Michael Mainelli, co-founder of Z/Yen, an innovation-focused think-tank pushing the boundaries of technology within finance. In addition to heading up Z/Yen, Michael has an eye-watering list of achievements, directorships and advisory roles across government, charities and the private sector. We were excited to dig deeper into Michael’s experience and discover just how he became a leading figure in blockchain and Mutual Distributed Ledger (MDL) technology.
As a departure point, we discussed first the taxonomy of blockchain, as Michael introduced us to MDLs, a significant field of research for Z/Yen since the 90’s. MDL technology describes the set of technologies related to distributed databases and immutable records which skyrocketed to fame when cryptocurrencies used MDLs to store blocks of transactions, essentially culminating in the Blockchain. With so much activity in the blockchain space, Michael made plain what blockchain and MDLs should represent, namely a ledger which is distributed and, as such, not on a single machine where one person or organisation controls or owns the records.
Z/Yen has an impressive stock of MDL applications which are helping people to resolve common issues such as identity or document management within industries as varied as insurance and healthcare. We asked what it was about this technology which made it the silver-bullet to so many different industries.
Michael explained that ‘when you look for ledgers, you find them everywhere’! More often than not ledgers relate to accounts but they exist wherever you have someone validating that something has occurred, from academic records, to passports to the receipts you keep in your pocket. We learn that ledgers pre-date most of the technologies looking as far back as the ancient Samarians over 6.5 thousand years ago. The story of ledgers, we are told is the story of databases which transitioned from tablets, papyrus and tallysticks to vellum and paper and then in the 60s electronic databases. MDLs represent the next step, which Michael describes as ‘a multi-organisational database with a super audit trail’, and we are reminded here that the excitement does not lie in the ubiquity of the technology, nor even the technology itself, but in its power to disintermediate central third parties.
“when you look for ledgers, you find them everywhere”
We wanted to know why this was so exciting, and Michael explained that natural monopolies (referring here to the central third parties controlling the single ledger of truth) can easily become lazy and corrupt. Centralised ledgers are neither immutable nor transparent, so land titles, deeds and contracts are only as secure as the moral integrity of the person or institution responsible for them.
Now grasping the benefits, we then asked Michael about his opinion on how the blockchain industry could secure widespread diffusion. A difficult question, as blockchain is presented with its fair share of barriers. Firstly, Michael explained, there was the fact that people are achieving the same end-goals without being 100% blockchain, so it’s not a binary issue. Secondly, the development of blockchain within the Cryptocurrency sphere has meant that there are somewhat warped perceptions of the technology, both in terms of security and cost. There are also technical considerations. Blockchain will be slower to adopt than a standard database, and we were told that this was because ‘these databases are more complicated than the traditional database… perhaps in order of magnitude ten times harder than a normal database, just to put a number on it’. But multi-organisational projects are also in the order of ten times harder than a comparable single-organisation project. So MDL projects might be 100 times harder than a conventional central third party arrangement, though the benefits may well exceed the higher costs.
Finally Michael tells us that returns will only be realised when multiple organisations operate on the same blockchain, which involves multiple organisations coming together; this is no easy task, but one which many organisations are already pushing, thinking here of B3i and R3 for example.
We drew the interview to a close by asking Michael to advise us on the first steps for any budding blockchain adopter. First off, ‘look for multi-organisational problems’ Michael advises, look for the gaps in trust which have caused projects to fail, this is where blockchain can benefit your organisation. Once you have your use case, we are told not to ‘overegg doing pilots’, get to the real thing and take care to experiment here because once the ball is rolling and a multi-organisational, immutable ledger is created, pushing through change requires all players to sing from the same hymn sheet.
Michael Mainelli will be delivering the ‘Building a Roadmap for Blockchain Implementation: Where do I start?’ Workshop as part of our Blockchain 1.0 Theatre. The Blockcahin 1.0 Theatre offers Interactive workshops outlining the premise of blockchain technology, what it means for business and its potential to reduce costs and improve efficiency, transparency & security.
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