Is Blockchain Technology The Next Big Thing or Just Hype? – Product Hacker – Episode 1

For the premiere of Product Hacker, Arcweb Principal Consultant Mark Hughey and Head of Engineering Shahrukh Tarapore are joining the podcast to discuss an upcoming trend in the world of technology: Blockchain. Is it simply a hype word or is it a tool that will forever change the tech world? We’ll gain some insight into how blockchain might manifest, its application in cryptocurrencies, and if it’s the right time for adoption.

Kurt Schiller | Head of Marketing

Shahrukh Tapore | Head of Engineering

Mark Hughey | Principal Consultant

 

 

Kurt Schiller [00:00:02]: Welcome to Product Hacker, Arcweb’s Business Innovation Podcast. We bring you the latest from the world of business innovation from emerging technologies to game-changing ideas. Product Hacker connects you with the people and concepts that are changing the face of business. I’m your host, Arcweb Head of marketing, Kurt Schiller. Product Hacker is brought to you by Arcweb Technologies, digital strategy, user experience and software engineering. That’s how we move business forward. Learn more at Arcweb.co

Kurt Schiller [00:00:29]: Hey, are you a healthcare innovator? Will you be attending the HIMSS 2018 conference in Las Vegas this March? We’d love to meet up with you and chat about what the future of healthcare might look like. For more information, email us at producthacker.arcweb.co.

Kurt Schiller [00:00:51]: Innovation is about keeping your eyes on the horizon and identifying opportunities as they become relevant. We’ll start the year off by taking a look at three emerging technologies and picking them apart. What are the opportunities? What are the risks? And how can you use them to drive your business forward? We’ll also talk about a few technologies that we didn’t pick and why. Today, we’ll be joined by Arcweb Head of Engineering, Shahrukh Tarapore and Project Manager, Mark Hughey. Shahrukh has 15 years of experience in research and development and delivering software technology to both startups and large corporations. At Arcweb, he leads the engineering team and sets technology strategy for the company and its clients. 

Kurt Schiller [00:01:30] Mark has spent his career consulting with organizations of every shape and size. At Arcweb, he helps customers establish digital product strategies and tackle business challenges with the help of our integrated, agile design and development teams. Mark and Shahrukh, welcome to the show. 

Shahrukh Tarapore [00:01:45]: Hey, thank you. 

Mark Hughey [00:01:46]: Glad to be here. 

Kurt Schiller [00:01:47]: So before we get into the three technologies that we’re going to talk about, I want to talk a little bit about some that we didn’t pick and why. The first one is augmented reality. Shahrukh, before the show we were talking a little bit about this and I think it boiled down to, there’s a lot to say about it, but most of it is not right now. 

Shahrukh Tarapore [00:02:05]: Yeah, so kind of what I’ve seen over the last couple of decades would be a lot of hype gets thrown at augmented reality, virtual reality, computer graphics. And a lot of time and effort and money gets thrown at these problems coming up with new, innovative solutions, but they don’t really go anywhere because their ability to adapt and integrate into our daily lives or into the types of activities we want them to improve, that disconnect doesn’t get solved for. And so every like 7 to 10 years, people get inspired to address the problem with one of these types of technologies and I feel like it doesn’t really go anywhere. 

Shahrukh Tarapore [00:02:44]: And I think we’re kind of in that similar space now where a lot of attention is getting put on it. There are new technologies that are being brought to bear to make augmented reality in virtuality more accessible. But we still haven’t solved some of the more critical social aspects of how these technologies integrate into our lives. And that seems to be the greatest barrier to– a wider adoption of these technologies. 

Kurt Schiller [00:03:07]: Do consumers actually want augmented reality?

Shahrukh Tarapore [00:03:10]: I think that we’re all– we’re always excited by something new and cool and the thing that we saw in the Jetsons when we were kids. Whenever I ask, like, you know, my mom or my mom’s friends what this means or my or my brother’s friends what this means. There’s not always a clear answer of how this could actually add value to our lives or be more entertaining or more useful. And so that’s kind of the gap that I’m referring to. 

Kurt Schiller [00:03:35]: So the other one that we didn’t wind up picking, and this will probably come as a much larger surprise, because it’s something that I think it Arcweb we’re very passionate about. I personally am certainly very passionate about is machine learning. And I think, again, we are talking about this before the show. What it seems to boil down to is that it’s not really a technology in the true digital sense, but a lot of technologies. 

Mark Hughey [00:03:58]: I’ll say from a customer perspective, what machine learning means is that, you know, there’s a way to add additional value based on context, based on situations that the users are in. It’s not just one thing. So I think we’re going to find a lot of instances where we’re exploring the possibility of how to add value with machine learning based on a particular product or situation or device even that a particular user is using. It’s going to have to be context-specific to add real value. 

Kurt Schiller [00:04:42]: I think a lot of the focus on machine learning has also been as a very disruptive and pothole technology. But where it actually seems to be being used is more in efficiency or additive sense to existing things. Well, one of the things I’ve heard people say is that it has the potential to make 10 percent of things 90 percent easier. True. But also 90 percent of things 10 percent easier. And obviously one of those is much more impressive than the other. 

Kurt Schiller [00:05:10]: But it’s not necessarily a specific lightning bolt striking the way that some technologies might be, where it’s literally opening a door on things that were closed before. 

Kurt Schiller [00:05:21]: So before we get into the three technologies that we are going to be talking about, I wanted to go through some of the criteria for inclusion in this. There’s really two big ones. One of them was that they have to solve an immediate need. And this kind of gets back to what Shahrukh was saying about augmented reality. It can’t be a solution in search of a problem. There’s a lot of things that come along that are really neat and they’re exciting and everyone wants to use them. But they’re not actually addressing a business need or a human need or a user need. And since we are focused on business innovation, if it didn’t have an actual business challenge that was attached to it, it’s out of the running. So this marks off quite a few things. 

Kurt Schiller [00:06:01]: The other one is it has to be a really novel technology, not just several existing technologies bundled together in a new way or a new form of an existing technology. And I think a good example for this is something like a drone or a Segway where, it’s very cool, undoubtedly and the technology is really neat. But if you look at a drone, it’s really a collection of existing technologies and a few innovations that allow them to come together in a neat and admittedly eye-opening way. But a drone in and of itself isn’t itself a technology. 

Kurt Schiller [00:06:33]: So for each of the three technologies that we do cover, we’re going to try to answer five key questions. First off, what problem does this technology solve? Then, what are the key challenges that need to be overcome? Third, what does a good use case look like? In other words, what are the prerequisites that you have to have in place to bring this technology to bear? Fourth, what are the key risks of using this technology? And then fifth, Shahrukh and Mark are going to chime in on whether it’s go now or wait for it. In other words, is this a technology that you can use right away or is it something that needs to rest and grow a little bit more before it can be turned to use in business? 

Kurt Schiller [00:07:12]: So the first thing we’re gonna talk about is blockchain. Obviously, there was a lot of buzz in 2017 about blockchain-based technologies. A lot of that driven by the fact that Bitcoin and cryptocurrency was in the news constantly. We’ve also heard a lot about blockchain potential applications in the health care world. So my question for you guys, and especially for you Mark, is 2018 the year that blockchain becomes more than a gimmick? And if so, how and where are we going to see it? 

Mark Hughey [00:07:39]: You’re definitely gonna see a lot of attention. So certainly all the hype has been around cryptocurrencies. That’s where all the attention around blockchain is right now. Bitcoin has just had this remarkable run over the last year and is now suffering, you know, a really hard pullback. But it’s even hard sometimes to even stay relevant and talk about where the price currently is on cryptocurrencies because it changes so drastically and so quickly that as soon as you say it, your information is out of date. 

Mark Hughey [00:08:19]: But the interesting thing, like, I think cryptocurrencies is a really interesting use case and for this type of technology. But I think it’s important for innovators out there realize that blockchain and that type of technology and cryptocurrency are not the same thing. 

Mark Hughey [00:08:36]: Some of the most amazing use cases around blockchain technology and similar types of technologies is even different kinds of innovation that’s happening now that isn’t technically blockchain, but aims to solve the same kind of problems. The value that these things are bringing is that they essentially enable the elimination of the middleman and the middleman, you know in general terms, it just underpins almost all of our commerce and the things that we do. If you think about simple transactions like like buying a house, you know, right now we have to have this third party involved in that transaction. And it’s a third party that both the buyer and seller trust to ensure that the seller actually has title to the house, that there aren’t any leans against that property. 

Mark Hughey [00:09:32]:  There is no way for a buyer and seller in modern society in so many cases to be able to directly interface with one another and do business with one another without a trusted third party. 

Shahrukh Tarapore [00:09:44]: In fact, you have many third parties in that scenario. 

Mark Hughey [00:09:46]: Yeah, for sure. You know, the real innovation that’s going to happen as a result of the adoption of blockchain and similar technologies is going to be this move towards decentralization. Cause certainly when you have it– when you have to have a trusted third party, that’s where the power in the transaction resides. Because nothing can happen without that trusted third party. We’re gonna see a lot of– we’re gonna see a lot of solutions where blockchain essentially eliminates the need for that trusted third party and brings the power in that transaction back directly to the people that want to do business with one another or want to communicate in any way. 

Kurt Schiller [00:10:33]: So it sounds like there are some industries who should be worried about blockchain basically eating their lunch as the trusted third party. 

Mark Hughey [00:10:41]: So from kind of the grassroots person who wants to, you know, wants to disrupt big technology, it’s a very welcome change that is anticipated with great vigor. But for a lot of enterprise organizations that right now are those trusted third parties, I think the question that lies before them is how do we take advantage of this technology and innovate before some disruptor comes along and eats our lunch? 

Kurt Schiller [00:11:17]: So, Shahrukh, I’m going to put it to you that Mark didn’t really answer the question about is 2018 the year that it becomes more than a gimmick? I think– I think we all agree that it has the potential for this huge disruption but are there tech barriers in the way that we’re not accounting for it actually being adopted? 

Shahrukh Tarapore [00:11:35]: Yeah, there are some tech barriers that I think are going to have to get reconciled before you see the mainstream adoption of more than just a single application like Cryptocurrencies to blockchain. And they really have to do around the rules that govern how a distributed ledger technology is used to engender trust by many parties who don’t trust each other. How transactions occur and not just financial transactions, but just transactions for goods and services, for knowledge, for IP for, you know, anything that you would confer on another individual. 

Shahrukh Tarapore [00:12:16]: And there’s efficiencies in those transactions that need to be worked on. And then there’s also just efficiencies on accessing the marketplace that this technology enables. 

Shahrukh Tarapore [00:12:28]: So, you know, for a long time, everyone’s talking about how blockchain doesn’t require a centralized authority or entity with trust, but the blockchain is not the only– is not the only medium in the exchange of money or goods and services. 

Shahrukh Tarapore [00:12:46]: There’s also the broker. There’s also like the coin base of cryptocurrencies that require people to get access to the blockchain to transact bitcoin, for example. And so there’s a lot of inherent trust just built into organizations like that, that kind of conflict with the ideas of what blockchain is gonna offer. And we’re going to have to reconcile those issues before they’re going to be a real mainstream adoption of this technology. 

Kurt Schiller [00:13:10]: Do you think there’s a potential issue with a blockchain standard around, say, healthcare data, forking or having 18 to 25 different competing formats in the same way that we see cryptocurrency branching out and proliferating in all these different types of cryptocurrencies? 

Shahrukh Tarapore [00:13:29]: Yes, that problem exists. I don’t know if that’s a specific problem to blockchain. I think that, you know, that problems existed for a long time in healthcare. And it’s really a– you know, it’s less of a technology problem, I think, and more of a business problem. You know, there’s there’s a lot of, you know, business moat that exists in keeping proprietary formats and safeguarding access to data that that enables organizations to maintain competitive advantage and with good reason. You know, they’re going to continue to try to maintain that advantage and keep, you know, proprietary data formats. And there’s always going to be a group of organizations that are trying to open that up and create more transparency and allow interoperability. And you know, that kind of constructive conflict is necessary in every industry. And technology is going to be a factor that tips the scales, but it’s not going to be the thing that solves that kind of problem. I think that’s really a business problem that that will ultimately get solved. 

Mark Hughey [00:14:27]: Related to that, one of the biggest challenges that you have with these types of distributed technologies is the other side of the coin for the big promise of decentralization. When you remove the authority from a situation, you create a situation where sometimes consensus is very hard to build. If we use bitcoin, for example, you know, just because it’s the most well-known example of this type of thing that’s happening right now. There is no one person that decides. There’s no one organization that decides what the Bitcoin code is going to look like. And so to make any innovations on that, to improve on the weaknesses in that platform that have been identified, you need to get a critical mass that you need to get a majority of the people that are on the network to all agree to this change. And there’s nothing really forcing them to, you know, to come to resolution. And so I think that’s a big challenge, is that the speed of innovation can be both fast and slow for those reasons. And we’re gonna see that in healthcare, too, which is a historically a somewhat slow industry to adopt, change and move because you have these really large enterprise organizations. And there’s a lot of competing priorities and factors that need to be worked through before those solutions are adopted. 

Shahrukh Tarapore [00:15:49]: Another thing to add is that, you know, bitcoin and blockchain, the application and the underlying technology, they’re kind of in this interesting relationship where the killer app seems to be getting a lot more attention than the actual technology that enables the killer app. 

Shahrukh Tarapore [00:16:04]: And it’s worthwhile to remember that the original technical paper that was put out that talks about blockchain and in particular, bitcoin’s application to blockchain or the other way around, sorry, blockchain’s application to cryptocurrencies. It’s only eight pages long. So it’s not like a huge, complex document that describes like a huge, complex inner workings of a distributed ledger. It’s fairly straightforward. The complexity comes in the rules that govern how you define trust. How do you ensure cryptographic encryption and how do you ensure an anonymity? How do you how do you have a sufficiently complicated proof of work algorithm and the decisions that were made to enable bitcoin were appropriate for the technology that it was going to be deployed on at the time in which it was conceived. We have a lot of distributor computers all over the world. We have the Internet. We know how fast those computers run. And some of the decisions that were made to implement that proof of work algorithm were made knowing how fast computers can talk to each other all over the world. And to maintain a certain amount of lag to ensure that trust can be confirmed when the blockchain keeps building. You know as computers get faster, as networks become more efficient, as new technologies come in that have nothing to do with blockchain or cryptocurrencies come in and change our technology ecosystem. Those rules will– those underpinnings will go away and blockchain and bitcoin or cryptocurrencies will need to be able to adapt to that. And so– the real devil is in the details of the rules that you use to govern the blockchain. 

Shahrukh Tarapore [00:17:41]: And I think a lot of what is caused, you know, either volatility in the Bitcoin market is because some of those rules are still getting worked out as people are investing in those currencies and understanding the blockchain technology. 

Mark Hughey [00:17:57]: You mentioned something there that I think is a really interesting point and is useful when considering how do we make use of blockchain technology or we know where we go from here. And it kind of ties back to Kurt’s original question is 2018 the year. So where we are in this space is that we’re still very much figuring out the platforms. You made the distinction between Bitcoin as sort of a product and the technology that’s built on. 

Mark Hughey [00:18:27]: So, you know, right now one of the other most popular cryptocurrency is the Ethereum network really. And so that was, people who have heard the term ” contracts”, this is– this was very much built as a platform for other people to develop applications that would run on that platform. I think the market place hasn’t answered the question, what’s the platform like? What’s the winning platform? And that right now is why we have over a thousand cryptocurrencies, because they’re all trying to improve on that original technology and figure out what really is the standard that is going to rule them all. And so as a consequence, every application that is built on blockchain technology runs the risk of becoming obsolete if they pick the wrong platform. If they’re on something that doesn’t have legs and goes the distance. 

Mark Hughey [00:19:23]: So that dichotomy like that difference between the platform and the actual application that runs on it, that’s– it’s maybe too early to tell, you know, what are going to be the winning applications because we definitely don’t know what the winning platforms are going to be. 

Kurt Schiller [00:19:39]: So it sounds like we kind of have our answer for the last question, which is go now or wait for it. I’m still going to ask it anyway. So, Mark, for blockchain, is this just a go right now use this for your business? Or should people looking to use blockchain expect to wait another few cycles and see what comes along? 

Mark Hughey [00:19:56]:  Yeah so, you know, always with this question, my answer is probably going to have to be contingent upon the listener’s risk tolerance. But I think to go back to the point about platform versus application, I think if you are someone who has a really good idea for a platform, because that’s the question that the marketplace is trying to answer right now, I think you go. If your idea is really more of like a distributed application that would be built on a platform, you know, maybe you’re going to lean more towards let’s wait and see what happens over this next year in terms of these platforms. Because there’s a lot of platforms, there’s a lot of up-and-coming. Again, I’m going to use cryptocurrency as a– because that’s really the test bed right now, right? Because that’s where all the interest is there is up-and-coming currencies like Cardano or Steller Lumens, and they’re trying– they’re doing a very good job of trying to solve some of the initial weaknesses that Bitcoin has experienced. And so– we’re starting to see developments in that platform space and so I think that that’s where the interesting investment could be. 

Shahrukh Tarapore [00:21:15]: I think it’s a go. The distinction to that I would give is let go of all the hype of cryptocurrencies. And I think people who have– that are solving diverse business problems, they’ll see the types of things that blockchain can like as attributes of a technology, what they can provide like distributed– you know, distributed ledgers and trust and anonymity. And if these things are things that have been holding you back from being able to offer a new type of value to users, then you need to be looking at blockchain. 

Shahrukh Tarapore [00:21:48]: And I say go now because it’s going to take a long time to wrap your head around the business problem and how– solutions need to adapt from the way we do it today to a way we would do it with blockchain or even something further down the line. 

Shahrukh Tarapore [00:22:03]: That kind of ideation really needs a lot of time to kind of stew and to be iterated on. And it’s not– it’ll be too late to say, OK, this is mature enough now let me apply my problems with you really thinking about how your problem has to adapt pretty dramatically in order for this to work. So I would start thinking about that right now. 

Kurt Schiller [00:22:26]: Thanks for listening to Product Hacker. Join us next time when we continue our discussion about emerging technologies for 2018. Next time, we’ll be discussing the Internet of Things and wearable technologies. Make sure you tune in. Products Hacker is brought to you by Arcweb Technologies, a digital product design and development agency in Old City, Philadelphia. We help companies innovate, pilot new ideas, and get to market fast by combining product strategy, user experience, and agile software development. Learn more by visiting on the Arcweb.co or calling 1-800-846-7980. 

Kurt Schiller [00:23:02]: Make sure you visit Arcweb technologies at the Amplify Philly House at this year’s South by Southwest. We’ll be joining Comcast, the University of Pennsylvania and others to talk about the innovations coming out of Philadelphia. There’ll also be panels about new technologies, concerts, and giveaways a plenty. To get more information. Visit get.arcweb.co/sxsw

Kurt Schiller [00:23:25]: Our show is produced and engineered by Martin R. Schneider and hosted by Kurt Schiller. Want to make sure you never miss an episode of Product Hacker? Make sure to subscribe to us on iTunes, Stitcher, and other fine podcasting platforms. You can also subscribe to our mailing list at get.arcweb.co/product-hacker. You’ll also get notified about upcoming Arcweb events and giveaways.