And welcome to day two of the computational law course and MIT IAP special course offering. And today we're going to have Michael Casey of the MIT Digital Currency Initiative join us to help lead and facilitate some discussion around very exciting prospects for utilizing blockchain in a supply chain context among other things and some other special speakers and presenters, students and activities. So while we kind of get gathered and get ourselves together, I'm going to keep the broadcast on but go into pause mode. So please go ahead and collect yourself, maybe do that last minute study, maybe some breathing exercises and come on in and we'll get started in earnest in about five minutes. Check one, two. Check one, two. Fantastic. First thing from the business. What are you learning in the program, like private equity? The kinds of clients and investments. So the primary business that we have is a combination of different institutions, like everything from insurance companies and banks to pensions to government loans. And what we've had in the last couple of years is commensurate labor and type of risk. Commensurate? Yeah, well, it was in line with the labor and type of risk. Commensurate. This is commensurate. It's sort of like some weird connection, commiserating and commensurate. Because when it comes to risk, there's a lot of worry that can't bring in. But anyway, I think I may prefer my miscarriage. Like the new word commiserate. Commiss... No, I can't even think about the present. But okay, that's fascinating. So you're basically an investment fund? So that's the institutional side, the retail side. If you provide a share, we're like an exchange trade fund family. No. Okay, but an mutual fund is an exchange trade fund. Oh, then yes. People like you need to ask. And then there's, we have a few small alternatives to investment associations. But also, most of the money in your management is not alternative. It's the unfortunate. Alternative? Is it a mutual consultant? That would be not what a hedge fund would be. Generally speaking, that's usually more restrictions and more esoteric. You guys can go to the investment side as well. There are also alternative investments. But I'm sure we'll find one. Okay. That's interesting.  Great. And let's get started. So we just did some introductions in the room. And I see we are joined by our erstwhile speakers. The main speakers from yesterday, professor Larry Bridgesmith from Vanderbilt Law School and our main professor and just kind of our main legal hacker hero of all time, Jonathan from Brooklyn Law School. So welcome gentlemen. Thank you. That's a good to be here. Okay.  That's good. And so what I'd like to do today before we get into the program and that I got some email and form feedback yesterday about having skipped is a quick review of what happened before yesterday in the course. So we actually started the course on January 23rd. And then we had a second day on January 24th. And then we had a hack night on January 26th, a day and a night. So to just fill people in on what that was all about. Let me go through just the high points here. So where I am by the way is at mit-course.computationallaw.org where I encourage everybody to go now and in the future that wants to have access to these resources. So going I guess chronologically backward. Most recently on Thursday, we had a really great, I'd even say triumphant legal hacking session with the American Bar Association business law section. And actually just a quick check. Okay. It does look like my voice is coming through. The ABA had their first legal hackathon for legal analytics with the brand new legal analytics subcommittee. A friend and colleague of mine, Warren Agan, bankruptcy attorney is starting that. And their first open event was at WeWork in San Diego last week. Part of the cyber law committee's winter working meeting and the hack they did was a contract analytics hack. And to support that and also to help engage people in the local community here that are interested. We, as part of this class, convened a team and got some people interested. And then ultimately that culminated with partnering a team up with Thomson Reuters Labs, a data science lab that we collaborate with and has some MIT grads runs it. And they had hired some MIT students for January. So they came to the class last week.  And used some APIs of sponsors of the American Bar Association event to look at the data and see what we could glean, care of being chief among them. And they provided some licenses, which is nice for people involved in the event. And then we kind of circled up and did a deep dive using sort of our own methods that we used to just basically attack a corpus of legal text. And it was a great way to learn more about how the team worked. And so you can see depicted here Brian, who believes how he pronounces it, who's sort of operationally the head of Thomson Reuters Lab, a great guy. And so he and I were at table right in this room for a better part of the day. And we got a chance to see how do you set up again, how do I set it up? What's your first thing? How do you kind of get the data into shape, naming conventions? I think we all picked up some tricks. They had a really fine user experience person with them as well, also named Brian. And when I was set and done, what we did was one moment. Here we go. I can actually give you a quick demo of it, I believe. So I've got a domain called prototypejam.org, which the ABA used. And I set up a subdomain, TR Labs, because they really took this seriously and put a team on it. Spent most of a day on it. And so we created a little GitHub site to identify what we did at trlabs.prototypejam.org. And here is a quick 30-second overview. Exactly 30 seconds. MIT and Thomson Reuters Labs got together to hack the legal analytics prototype jam for the ABA business law section. We prototyped a dashboard to understand jurisdictional issues around cloud contracts. The use case we chose is a tool to help small businesses understand their exposures to the new EU privacy law by automatically analyzing cloud contracts and visualizing them in an easy-to-explore way right on a web browser. You can't say much in 30 seconds, but there's also a five-minute walkthrough here that includes some little mini-interviews with each of the staff and the MIT students, which I think is important because they described what their role on the team was, what they did, and it meant partly to be an education for the ABA, but also I'd like to share it as an education for everybody, or at least a touch base on how a team gets together and does data science. I know we're joined by at least one. I'm going to call a friend of the program because we both know Dan Lagatuda. But we've got people that are mid-career that are really jumping into data science. Data science is really the thing, and it's frankly the technology that's animating law.mit.edu. So I encourage you to take a look at this, not just for a flavor of how to do one of these projects in a quick way, but also we describe the technologies that we use to interrogate the data, look for patterns, come up with a statistical model, and then in this case make it a business decision support tool. So the scenario, I was not able to keep up with most of the data scientists on the analytics, but I did contribute the use case of looking at the data and thinking through what we could do, which was basically looking at the rise of GDPR. GDPR, anybody? It's basically the updated privacy directive in Europe and so it controls, it governs the control and writes obligations for personal data on European citizens going through. And so that's a lot of US companies and furthermore a number of online service providers actually have data centers in Europe or would be subject to the rules because perhaps the companies that are looking at these contracts are subject to the rules and they might be wondering whether the service providers are compliant or could be, or they might just be wondering if the service providers are dragging them into the jurisdictions where the rules apply and if they're ready. So there's a number of ways you could, remember specific questions you can imagine an executive or management team wondering that they might be asking in the general scenario zone of GDPR rules in Europe or sunrise just to close that, it's like May. It used to be two years from now, it used to be a lot longer than it is now and how they could begin to do some decision support using data science and looking at their contracts is one window into the business relationships and some of the risk exposure. So might do this just like on the fly hack. I'm very happy with the way it turned out and really grateful for the chance to open good connections with the Thompson Reuters labs team. The other thing I want to just highlight is I learned more about this very fascinating tool they have that I think we might do a workshop on or something here that they call a PIRM ID and it just begins to deepen information on companies beyond like a tax ID or obviously people can go to Dunham Bradstreet and go to their publicly trade and get a lot of information online. What this is providing is a very sophisticated and very useful API based dossier on companies that layers a bunch of information so we're able to actually correlate the PIRM ID for all the companies in the contracts I think for all of them and then that could immediately pull up things like where is their headquarters, their principal place of business, what we could pull from the contract, the jurisdiction that their laws were governed under. We could also tell in some cases from the contract and the disclosures but sometimes from other sources that we could get through this tool like where their data centers are located for example so we could paint all that in the map and begin doing better decisions. Anyway, PIRM ID interesting. I want to be following up on that. So that's what happened on Thursday and it was a lot is the main thing. Now before that on the first, on the 23rd and 24th we actually did a workshop on how to visualize data. So we've got all this data, legal analytics, but frankly just at least in Sandy Pentland in the Human Dynamics Lab where I am a researcher, it's boundless. It's economics data, it's HR data, it's epidemiology, it's everything you can imagine and how do you visualize it? This is a major issue in terms of getting the best business use out of the intelligence embedded within this analytics and so this was an explanation could we use virtual reality as an approach to better understanding quickly and being able to explore and work with and extract value from analytics. Is there something better about the additional dimensions? So we had a great two days and I encourage you to take a look at the videos of the intros and the outros but in particular we had three, we broke into projects both days and before it's too late was a Sloan project with a number of MBA students who quickly attracted others to look at using climate data to better visualize and have a visceral feel of the importance of it with using VR in partnership with some counties in Florida and others before it's too late, it's a great project there and Scatterbiz was another one with a local VR consultancy which had worked out a thing where you can take scattergrams and basically extrude them or emit them, I think they call it in VR and kind of look around it almost like a constellation or something. It looks really cool and I think I was able to look into one or two things more quickly from it but it had a lot of potential was the main thing and a lot of potential action you can see that in detail here it's all I should highlight that that team used something called WebVR a JavaScript front-end framework that's free that works on browsers and A-frame as well we have people teaching that so that you can literally see this on any browser like mobile or desktop and if you get like $10 Google Cardboard you can explore the demo in VR but you can also just see it 2D on the screen with your keyboard kind of like or your mouse around the final one was basically K-12 educational deep dive where we looked at the potential of honestly it wasn't particularly legal but this one was a we could imagine social studies could look at constitutional things but we ended up doing lesson plans I think in geometry or something like that and it was a great team and really inspirational with Stephanie Mendoza who is a terrific co-lector online from Portland and they showed some great applications in the classroom could also be great for training so that I think that project will be moving forward to a hackathon in Brooklyn locally here with their public schools on Earth Day we sent and I hope to maybe use some of that in my own teaching when I'm doing things online if there's some way to visualize data or something that would be advantage by VR would like to do it or just do it for fun it doesn't go without saying that Thomson Reuters Labs provided us pizza the first day and it was delicious and we love companies that provide pizza just saying everybody does with pizza you can hack anything as far as I can tell so anyway here's the projects and I guess the thing there's some tutorials the major thing would be to look at the report outs at the last day of day two we just had a little time to see each of the projects and give you a flavor of it so and now I'm supposed to provide an overview so I put these notes here so this course is about basically five key themes that we've been exploring in the computational law program under law.mit.edu number one is legal analytics it's really just extrapolating into the field of law Sandy Pentland there's human dynamics big data approach to computational social science we call it applying that to the social science of law so it looks a lot like taking legal data sets maybe they are statutes, regulations contracts as we did this week disclosures, regulatory so much is legal and seeing what we can learn from it, about it maybe predict about it using these data science methods so we talked about this already but I'll just highlight one specific use case area we might be pursuing with Berkman Center in Harvard Law School is looking at the use of machine learning to augment legal advice when people are wondering can I make this investment or do I need that disclosure can if I go into some jurisdiction am I already approved for that if the regulated industry there's a lot of people doing decision support with machine learning now including in regulated contexts regulatory context one of the sub things that we want to start looking at is how to tune and train those algorithms and those systems to do a better job of complying with ethics that legal advisors are supposed to adhere to in providing legal advice fiduciary relationships so when you're taking advice like this it's very important advice like big decisions can be made upon this type of information ideally the advice constitutes the practice of law or part of the practice of law could be used with a licensed lawyer or some jurisdictions like UK and others are starting to carve off some things where they don't think you need a law license to be an app company to help with automated maybe like contract assembly or things like some more like workflow repeatable processes maybe you just need to be regulated likely perhaps but one way or the other you're providing important advice and so we'd like to understand how fiduciary duties can be reflected and supported with the way that we tune these algorithms in the way that we supply to basically deploy them or inflict them in some cases perhaps on the users so we'll look to the use case here that I'll just say quickly with the social physics seminar at the end of the semester we carried forward here of basically an algorithm that was advising a person on her divorce and you frame things one way like you'd be crazy not to take this amount of money like you're certain to lose it you're highly likely to lose in court you've now that's phrasing that some people might say like to their friends or themselves or informally as an attorney if you use that kind of phrasing as opposed to like apprising a client of what the rights and obligations are and you're providing your advice at some point especially when asked but by basically putting it in that way you're in effect reducing the client autonomy you're overstepping the bounds of serving their interests and supplanting like your morals your sensibilities the way you want to run your life what you value more or less in terms of relations maybe with the spouse or just how you do things for the clients and that's the reverse okay so it looks like we've got just one quick second we'll give Jonathan asking about link good oh wait a minute he's already online so those are some of the things that we went through there and I just realized I've gone way too slow so I'll just flip through the others digital assets Palooza yesterday we went through three outstanding ways to do valuation on digital assets that's right we did and it was you'll all remember the good times so you can go back and see the YouTube video now archive to review those or look in our slide deck but I think we made most progress it's erased on the market approach more so than cost or or yeah the third one and basically the big insight from Lynn Weber and Duff and Phelps was how to compose a market survey of prospective buyers for the digital information before there's a market to get a rational basis like a reasonable basis a responsible basis for valuation and we went into some other looks and crannies with that and it was terrific and here she is hi Lynn I was just talking about you so let's get some like flame retardant foam in your ears because they're probably burning up I was just saying what a great time we had yesterday and I was kind of giving my somewhat ill informed rendition of why the market approach seemed like you could really have legs the great way that you walked the great approach that you walked us through from your company of doing the market survey and some other approaches so mostly digital contracts we went into fairly deeply at a high level with a hack with Thompson Reuters labs but later today the mock trial will go even more deeply into looking at some of the legal elements for a valid and forcible contract including intent to sign and seeing crosswalking that basically to the business and technical dimensions of this electronic contracting sort of a process sort of like these transactions like that integrated thing that happens and there's legal business and technical dimensions of it and we want to look at how to align those harmonize them and integrate them so that we just have like greased skids to the deal and part of that is understanding and appropriately supporting reflecting the legal requirements and constraints in the system and identity is really our destination Michael Casey will help us walk through a lot more of that in terms of looking at how we can possibly utilize blockchain and other technologies to have a more usable and reusable resource that represents people's individual identities not lock solely in like a Gmail works or MIT or my employee identity or a government issue identity these are great but they are not the underlying root identity that we are free people and free markets or something about us that can sense to be governed that is outside of the system that we're governed by and so what is that thing that is just uniquely ours sort of like like our personal data that we went into as an asset class an emerging asset class our identity is the underpinning it's like the cornerstone of personal data in a certain sense and and so we'll talk more about that and some really exciting things we're doing a digital currency initiative that we're involved in in different ways out in the market to deploy self sourced root identifiers that are verifiable on a blockchain and can be used as like a seed or like a breeder document for I-9 kind of documents for in-processing like first day onboarding of new employees or like you know your customer it kind of rules if you're doing an open account in financial institutions subject to that on and on so that's very exciting we're not mostly going to talk about that today but we will get into it and I'd like to welcome now also Brian of TR Labs I bet your ears are burning too I just gave you mad props for that great collaboration we did with the legal analytics prototype jam at the ADA so thanks again that was terrific and welcome oh thanks yeah it was fun good stuff great so let me flip back now and Jonathan asking I know that you're on after Michael Casey but I just want to if you are available now like signal to say a few words to say a few words yeah don't mind it would be great if you could introduce yourself Jonathan is like the unseen second pillar in a lot of ways of law.mit.edu he's the progenitor of legal hackers and basically shown the light in my view like a very MIT friendly way to go forward with modernization of law and I just wanted to give you a chance to say hello I know you'll be holding court a little bit later holding the floor and leading us but please won't you introduce yourself also for the others Lynn and Brian and people in the room and a growing number of people watching don't yet know you and I should well hi folks I'm Jonathan asking I'm lurking in the background multitasking a bit I was on a couple earlier calls today with Daza included I'm a tech law professor of book and law school spent last spring with Daza at MIT we're trying to work on as many potential collaborations as possible at the intersection of law and technology using the law to morphing the law to try to improve the plight of tech ventures particularly bootstrap startups and then also trying to use technology to improve the law and legal process that's essentially my sweet spot that's what I hope to engage you all on this afternoon I'm terrific thank you Jonathan and Larry I don't feel like you really got an opportunity to say this yesterday but do you mind if you're there and you can introduce yourself today and in particular letting people know what's cooking in Nashville this spring with the legal hackathon and the unconference if you're able to if you're not that's okay but there's something cooking and I'll bring Larry in to talk a little bit about that and now just moving to Lynn again thank you for the presentation yesterday and I wanted to ask today as we get into supply thank you as we get into supply chain and basically commercial transactions is what we'll be talking about with Michael Casey I'm just wondering if you had any opportunity to reflect after speaking yesterday first of all like maybe one of if you had any supplementary remarks or things that you wanted to ask or maybe encourage us to think about but in addition in particular looking forward to we're about to do a deep dive with a person who's really at the center of a lot of things is Michael Casey character into basically a transformation of supply chains and supply chain management with new technology like a blockchain to make it easier fundamentally to to basically encapsulate digital assets and to exchange them that's a big part of what they're talking about I don't know if that's ever come up with you or if you've ever been involved with supply chain stuff but if you had any if you had any like thoughts or ways to help us extrapolate from what we learned yesterday about valuation of digital assets and what we're about to look at today in a context of a supply chain be interested to hear it I haven't I haven't heard of that before yeah I haven't either I mean the principles that I talked about yesterday would still apply and the advantages and benefits of the of applying this kind of technology to supply chain would be in having more efficient business models faster turnaround time lower costs and all of those would fit into an income approach of valuing whether or not to invest in the return on investment from investing this kind of technology for a supply chain so that's where you would apply the principle cool so that would be investing in supply chain investing in the like the thing that is a supply chain makes perfect sense as opposed to being an entity that needs a buyer and or a seller that's looking to well by invest let me ask what you mean do you mean join and like invest your resources and select a supply chain to operate through for moving goods and services or do you mean I'm an investor with a portfolio or like a different type of investment I meant a company investing in its own supply chain so how am I going to move my goods from all along the value chain so operations basically almost selecting excuse me one moment I'm just attempting to activate a live stream of the rooms partners with you monitor and make sure it's operating well somebody's calling me okay so I'll keep that in mind well I guess let me I have to just go one level people sir what does that so one a company might use some of the valuation approaches that we learned yesterday with respect to their digital assets to evaluate what like selection of a supply chain partner or like maybe tuning or like use of a supply chain she to what you're like they're selling through a supply chain or buying or something different yeah so I mean it could be any of the above but if you think about the typical way that a company gets it let's just say a manufacturing company going to get its raw materials to its plants and then later for building its products it has a current system in place that current system costs it has reliability it has issues sometimes lack of reliability it has a turnaround time there are already supply chain procedures and algorithms in place to try and optimize how much do I order of each thing and it depends on how reliable and how quickly I can get supply and that determines how reactive my ability to produce product to demand or to change what products I'm producing in my factories all of those systems depend upon your supply chain processes and so to switch to something a new supply chain software platform that's going to have these kinds of advantages is going to require investment on the part of that company into just the disruption of changing platforms testing and learning platform and then investing in how to reap the benefits of that platform changing everything else about how their business runs to take advantage of that platform and all of that requires valuation analysis that is usually done by the CFO of a company and trying to decide whether to change their operations and how to do so and on what schedule and pace yeah okay I got you so you were quite literal in terms of like just the decision and the intelligence that you would use and basically selecting and setting up and managing and evolving over time a supply chain this evaluation is critical thank you for clarifying that because I just want to highlight for everyone new folks and for the record for people to see this later one of the animating questions I'd say one of the motivating questions for me this 2017 year of research is how can companies and government agencies but companies private companies in particular utilize the data science and basically analytics including very much like the type that would assist as an evaluation of digital assets to basically architect their company and the flow of digital information in their company such that they do a better job of digital asset management of you know like records management of keeping track of all the record sets they have all the data science they're doing all the digital assets that they have and that they are all the software certainly but I'm really talking about the other classes that are the fuel of data science all the data sets the formats there and where they are how accessible they are some metadata about them obviously you can kind of pull them in quickly to think of something or you could almost like exhaust if you get this right theoretically do your SEC filings tax filings other regulatory filings if it's tuned well and if you could do that well you could do a lot of decision support such as well should we go into this should we go to Arriva or should we do this supply chain you really knew your digital assets and you knew the flow of information you can understand the HR and the methods of people department by department how they work their cycles of purchasing like the behaviors they have before they might not to purchase certain types of things their budget cycles and operations when they'll need kinds of when you're going to be selling certain kinds of things down like a demand channel all these things are can be understood much better by having access to information that your company is some of it is very valuable information inherently for sale but something that may be very valuable for selecting a supply chain and for doing valuation in part of what dimensions of a supply chain are most important to you I know when I used to be involved in doing supply chain stuff we would have these ginormous scorecards sometimes like hundreds of layers deep when we have to do check boxes of basically scoring on many different axes for price and performance and features and functions and on and on down the line in the catalog like how they do catalog managing how much you can get into with EDI you know it's not just what the vendor bid at the end of the day like a hard cost a lot of it has to do with how much you have to tune your company how much resource how much staff time how much you have to contort yourself to fit into a supply chain and then to begin doing business that way and there's a value to that I think there's a lot too utilizing these methods of valuation of digital assets better across an enterprise including for I would think of a kind of a strategic operations oriented decision like supply chains like selection and management and evolution so I'm glad that you said that and that you went there that's where I want to be basically in this course doing a better job with basically information management and data management and showing companies ways and being examples and prototyping ways that you can take all the data that your company creates and stores make it accessible potentially for doing data science and analytics and then potentially be able to use that as part of decision support like well actually supply chain selection is not bad I'm giving Michael some interest in and I've got a little bit of background and it's a real question that's data that's largely can be data driven by the way I just think in a practical sense maybe it could help you figure out how much should we charge for this digital asset you know when we put in a catalog in a supply chain or like which category should we tag it in so when people are looking for it like would they ever find it you know like the beautiful insight you had yesterday Lynn on the accidental like hundred million dollar um like um like throw away waste of like one scientific project and drug discovery turned out to be like you know like the empire to be built so I'm in a different context I think stick sticky notes I think have something similar there's a few stories yeah um you know similarly you know gosh like can you imagine if you you know the insight you could gain from just understanding how the uses of your digital assets are for different context different um buyers and how they would um how they would find it but how they would use it that's in inextricably part of making available in a market through a supply chain especially B2B so they can propagate it out to their market so I think there's a great deal of wisdom in the connections that you just said I certainly hope that we can play again or maybe you'll come to campus at some point Lynn with some people that actually do this kind of stuff and we can do some exercises and learn together and you know maybe hack something which we love yeah it'd be great um thank you well are you ready ah well I was ready to say not very good at all I had to just start with an apology I'm sure there was a link with slides and then I'll take a moment do you want to take a moment to kind of get ready or do you want to okay so as you have I'll throw out some ideas Delighted rather informal check but I think it's do you mind so let me do some instructions I'll probably ask you to just sit right here in the hot spot so that everyone can see you so the introductions are first of all we're joined by Ron Daly who I just want to recognize who's a new colleague in a different context of life than MIT thing but who I invited to join today at least to join here the discussion and be part of of it and also we have to see how the time goes Ron but if you're or okay first I'll introduce you and then I'm going to ask about like programming and so forth because I'd love to hear from you as well but basically Ron runs an innovative company that basically has a digital service usable by credit unions and banks to provide a lock box service like a safe deposit service except it's digital fantastic because when you have all these visible digital valuable assets so like for me I've got a lot of papers I've got the results of data science I've got even like precious family photo like digital photo albums and little hacks I did like my first script that actually worked things that are valuable for a variety of different reasons but definitely you know final versions of things I've said my contracts my existing customer agreements my applications my lease medical records on and on like where do we keep this stuff now no we're good I don't remember and I can certainly not have access to most of the stuff I've done in my life it's locked in servers that have long since in landfills and so he's got a way to solve all that and he's been successful in his company and deploying it out to some credit unions so it's available I actually am a customer as well as like a bit of a fan through digital credit union where I have an account and they actually provide this to their members and so like I use this service myself as a consumer but the reason I've asked them to join us is because at a higher level it just represents an important type of capability in human dynamics we call personal data store, PDS and so Ron I'm glad you could make it I'm glad to at least be able to see your face and to have your name be heard and people see you and hear you may ask if you don't mind saying just hide quickly because we're about to roll into Michael Casey's time but also I'm just curious what your timing is today and if we could bring you in after maybe between Michael and the mock trial or at some point to talk a little bit about you know this groundbreaking new kind of service that fills this like kind of gap in the economy for as a place where people can maintain and store and utilize their digital personal data so your timing is the second question but number one welcome Ron please introduce yourself and floor is yours okay well thank you very much I appreciate the opportunity you can hear me okay right thumbs up great yeah so my timing is your timing I'd love to participate I'm in a learning mode as you are as well so I like to share what I'm doing and hear what other folks are up to as well and so what Daza is talking about is basically total information privacy and how we're able to transform the cloud as everybody knows it with the Dropbox in the box.net and all the places that you store stuff into an online identity hub or personal data stores so I'll be happy to follow up wherever you think I want to fit into your agenda would work well and I'm all yours listening for everything else outstanding thank you for joining us Ron and so maybe we'll you can pipe in from time to time when we're in discussion or I might you know in a polite way call upon you the answer pass is always fine just so you know like you're not sure to say or you're cooking eggs at that point or whatever for any reason you can just pass okay very good great all right then so let me quickly look online to see if anybody is posed a question or a comment or a thing I need to know about nothing new at some point if we get their decentralized platforms and autonomous vehicles there's like someone that keeps asking about that so it's not like a broad question but someone's really deep on it we'll see if we can say something and so no further do I have to say my current you know Joey Ito is a high he's a great guy he's one of the you know I really respect St. Pentland so many people at the media lab but I'm current I'm willing to say there's nobody who I'm more fond of or there's nobody who I think is like you know a more relevant and like you know I'm with a contributor at the media lab today and who has been a better collaborator for the stuff that I'm doing Michael Casey who is at the digital currency initiative now that we house in the media lab and he's been just awesome to have here I have to say real fresh air and great stuff and connecting us with great people like you're Brett and we've got a whole thing in a radio show for a while on like digital assets with Brett King and so many good things is going from this guy and so now you're grateful that you've been willing to come today to talk about something that you're trying you're getting your teeth into blockchain and supply chains right and so welcome first of all please if you want to make some remarks and talk with it and then we can engage folks in the discussion sure all right let's get in the hot seat bring that over here I'm glad you set me up with that glowing intro because as I say I haven't had all these notes I've got no slides for you this is very informal and so maybe by raising the bar up there I can actually bring it down a little bit by not necessarily living up to that but I'll try to make this useful it's and also the caveat is you know we have a person here with the deep knowledge of the law and you know and where our kind of digital computational structures work into that I am neither a technologist nor a lawyer I'm actually a journalist which makes me by the standards of most Americans one of the most you know hated people in the world at least in terms of the world's getting up but that background has sort of helped me formulate some ideas about the structure of the global economy where I've spent most of my time writing about I'm very interested in development work in the developing world and I am particularly interested in things like financial inclusion and the challenges that existing institutional structures pose for the inclusion of those who are outside of our kind of mainstream economy to do that and this is why I got involved in the digital currency initiative it's why I got interested in bitcoin it's why I've become interested in a whole host of blockchain applications for this because I do believe that we have a chance to reimagine structures around which our economy functions as a result of this distributed trust architecture and therefore there are some sort of exciting ways we can tackle these deep-seated problems of financial inclusion and poverty and development that I think matter so much so that's the framework for where I come at this supply chains are important in this regard of course because they are pretty much everything to do with the real world economy you know we have we could argue we have supply chains not just in the manufacturing sector but the services sector as well regardless of not just talking about material goods but in fact you know relationships between different entities and sort of different silos of trust right so this is a fundamental problem across any you know association of competing or collaborating entities when their interests aren't necessarily aligned whereby information and the sharing of information between them particularly anything that is sensitive to their businesses is a challenge and that creates friction and those frictions create costs which again create their own barriers to entry because if there's a lot of cost in the system it's now expensive for me to get in so this manifests itself in all sorts of ways that make it harder for particularly smaller medium enterprises to just generally somebody on the outside so these are issues that I think we can start to at least consider how a distributed architecture for data sharing and one that tackles directly the problem of trust can deal with this and there's other aspects of this that are important and that is fundamentally resource usage so the idea that supply chains manage through a centralized process where everybody is looking after their inventory and their business processes in a way that is siloed and protected from everybody else means that inherently one that we are not using resources to divest their advantage because we don't know what the other guy is doing right so how might we construct scenarios whereby the data surrounding whatever inputs we're putting in whatever outputs we're pulling out can be shared without undermining my competitive position so this is this kind of holy grail that comes with that and you start to dig deeply into it it starts to look pretty sexy not just from a macro or micro economic efficiency perspective but also from an environmental one right so some people are looking at things like the circular economy concept this idea of the perpetual recycling model where wastage is reduced to as little as we can possibly make it and seeing that the blockchain run supply chains may be critical to that so monitoring where inputs are where the where the waste is where the recycling is all of this in a way needs to happen in some sort of distributed trust system because each again each player along the system is operating with their own sort of self-interest and therefore concerns and we've gone through I take it discussions of the blockchain how it deals with trust and trust constraints I just assert that it does but if you don't mind backfilling it let's start with that because that's the fundamental problem we're trying to solve here it's always to me there's people who talk about block chains in all sorts of ways and certainly when different industries different businesses talk about how or why they think this technology is useful to them they tend to talk about their business processes and they use words like efficiency and you know reducing reconciliation costs and basically processing kind of language but in reality you're tackling the trust problem it's the absence of trust or the difficulty of mediating trust between entities that ends up creating all those frictions and means that you get inefficient processes and so you know the reason one of the reasons why banks are very interested in the distributed ledger technology as a way to deal with settlement and clearing of securities is because they're sick to death of all the reconciliation work they have to do every time an end of day process needs to be done around all the batches of trades that have been done in the day whereas if you were able to do this in a real time way so that you can share information amongst each other you would reduce the reconciliation cost but again you need to figure out how to deal with the trust problem so there is this structure to it that is a blockchain that allows us to deal with this because the issue is a need for proof that the transaction record of everybody participating in this common ledger is done in a way where there is not some double spend and this is the bitcoin problem that was solved whereby Satoshi Nakamoto who is the inventor of bitcoin grappled with the fundamental problem of money which is to say you can't have a double spent dollar the double spent dollar is no longer a dollar how do you prove that that transaction hasn't happened twice and it turns out this concept is really kind of pretty valuable for how you manage a ledger that is relevant to everybody's transactions because now you've got this ledger that's distributed amongst all the parties and you're able to basically assert and prove through this kind of collective consensus mechanism that the sequence of transactions that everybody is abiding by is the final record of truth it is the accepted state and therefore anybody that tries to come back and manipulate that data is ultimately going to be found out is the way to put it I suppose so now you get this potentially immutable record but it also creates the capacity to sort of operate in a way that isn't necessarily going to divulge information I can be very selective about what information I've provided this environment if I manage permissions to that ledger in this structure so it might be that I people often make the mistake that a blockchain is some sort of common record that has everybody's data all the way through it but it's really about managing how and what we share and so what you're getting at in terms of I think in terms of the supply chain structure is a permissions environment where the right to change data in the settings are what is being managed by this architecture not necessarily the data itself so you end up with the capacity to sort of selectively contribute information or not and then information is either something that is valuable to you but is also valuable to the whole so anyway this structure allows us to deal with this problem because there's degrees of encryption that you can bring to it so that computation can be done on the entirety of the data without necessarily divulging a lot of details about who you are and as a result you can reach this kind of holy grail of collective trust in the the entirety of the data while also sort of protecting anonymity and so maybe you might just mention Medwreck or Nick Blackhouse so people can have an idea of what that could be so there's a couple of projects here at MIT that have worked directly to that so Medwreck is a good sort of use case practical example for this so the idea being how do we manage medical records in an environment in which clearly there is great sensitivity to the details and now records reside as we all know some of it is at the insurance firm some of it is at the lab some of it is at the hospital and the doctor has got a bunch of them and at all at any given time we're constantly having to share this data owned by these institutions it's not owned by us but we might be at a construction environment in which me as the owner of that data that we transfer that right that title to the patient now the patient can selectively direct and give permissions to different entities to share with each other and then you can wrap into that this anonymizing features and that actually brings us to one more powerful applications that's been developed out of Sandy Kent Lane's lab called Enigma which is based on homomorphic encryption which you might do a better job than I do to explain but I like to think about it as the basic idea is the what do they call the game the secret the shared secret whispers concept right no telephone yeah well telephone games normally you kind of make a mistake and see what goes to the stake right now this is the one where it's a shared secret basically okay anyway basically so if you want to know what what the average salary of this group is right but we don't want everybody to divulge their salaries and count it up we can right I can just start with a random number called 15 and then we'll add yours and yours and yours and you'll just keep it up and we'll just keep going around and eventually we we get to the end we take out the starting number and you basically then you can figure out without knowing what everybody else is what the average salary is right so this is how to structure a kind of a mathematical function it's a pretty basic one but this gets really complicated when you bring high level computation to it whereby a certain fact can be shared without and it can be you can allow for computation of the whole without having to do it on the individual so this structure this homomorphic encryption structure is really useful for some of the things that happen at least in a blockchain environment so enigma is an attempt to layer into a blockchain setting this capacity for all the actors in there to contribute what is effectively an atomized data to a system that is constantly being able to prove the legitimacy of what everyone is telling right so no one gets to know what is going on so these structures are very useful for things like medical records they are obviously very useful in the financial sector where the last thing that any bank wants to do is to have even if they are participating in a distributed ledger environment to provide all the details about what their trading positions are right so how might we share the data create a reliable trustworthy distributed ledger under a blockchain environment but also protect what happens in these are the kinds of ideas that come up so anyway this is the kind of framework I think in which it is important to think about how supply chains are useful so I like to think for example I mentioned that we have this problem of resource management there is a whole range of problems that need to be tackled in supply chains so one is this resource management issue there is a lot of uncertainty environmental concerns and the like there is a big issue from the consumer side of visibility and there is a certification problem that comes with that so the classic example is organic food how do I really know that the organic food that I am getting is truly organic and there are what we will gain called trusted entities certification type of authorities that will go out and certify that this farm here is actually abiding by certain practices and so forth but it is like periodic audits and there is no standard it is all over the world we don't really know a lot of the organic food that is coming out of China right now has its own sort of a case of structure but we are relying on this domestic jurisdiction model to go with it so what if we could imagine a world where there is so much more visibility in terms of the processes that are going on and whereby whoever the certified entities or individuals that are participating in the supply chain can be proven to have certain quality and have been proven to carry out certain processes and perhaps even with the quality of senses and the interface between hardware and the digital world that we are now creating with these RFID chips and all the cool stuff that happens down in Caleb's agricultural projects how we might actually be able to take real world data from the physical world and feed that into something that gives us proof so these are the things what you are referring to is basically like what Michael is referring to is like a box for a hydroponic aquaponics I think growing and it is more or less a box of sensors one would look at it with a lot of inputs and outputs and measure all the frequency of light and so these additional sensors per every single individual plant for growth all the output of like the waste products or whatever the carbon or different things they put out exactly how much nutrients they get in the precise yield every single thing is measured and that alone is a lot of breakthroughs with plant formulas and different combinations and different tuning of the cost so many things you couldn't have expected so stop like that to a business enterprise and industry market so you can now see how we take that and we feed that into our distributed trust structure and all of a sudden we have this visibility that is not just available to the individual firm or the farmer it is also accessible to the end consumer in some way or to other suppliers and vendors along the chain there are issues that I will come to in a moment if anybody has got a legal mind here to help us grapple with and that is how do we deal with how do we prove and trust the actual machines themselves because it is all very well to say we use the sensor it could be tampered with so there are all these breaking points along the way and we need to think about something so nothing is perfect but there is a concept at least that we are working with here and then there is just a fundamental problem which again comes up over and over again and I think to me it is the biggest barrier to entry to the global economy so something like 50% of the world's SMEs small and medium enterprises that are involved in export of some form don't have access to letters of credit so this is because it still the global letters of credit system is still based on an archaic model with bills of lading and purchase orders and things that are built on multiple duplicate and triplicate versions of pieces of paper and there is an enormous lack of security around the issuance and the leveraging and utilization of those pieces of paper so if I am a farmer that gets for example in Mexico I am working with a Mexican government on this I am potentially working with this problem a warehouse receipt that certifies that I have X amount of corn sitting in this particular silo which is a standard structure for how finance is supposed to be distributed into farming communities how does the bank know that I haven't just pledged that same piece of paper two, three, four, five times and I think it was a $10 billion fraud that was unpacked in China by these corrupt traders who were just rehypothecating over and over again massive stockpiles of copper so a lot of the big sort of shadow banking crises of a few years back in China really came from this fundamental problem of being unable to protect against the double spending this idea of double spending Bitcoin was the double spending of an invoice the double pledging if you like how do the banks respond, the banks say well, you may well be an honest guy but how do I know that you're not and so you're not getting my letter of credit here or I'll just mark it down and it'll be worth like $0.70 in the dollar or something risk discount massive impringence that the poor place because they can't prove that they are actually good borrowers based on these data so trade finance suddenly becomes a really useful application of some of these things if we could take the data that's being produced from these now automated and trusted distributed distributed trusted systems spit that out in a way that I know now this can only be once this is true data and it's only being used once in this capacity perhaps there's a way to unlock finance right so they've got these banks that are working on this in Asia in particular Standard Chartered and DBS have rolled out some prototypes on this there's a lot of interest in it but it's really the actual supply chain management that I think is the most interesting and I think about a couple of really big problems in that regard that are interesting so one is I call it the Walmart problem right so you know Walmart of course it's really most importantly a supply chain management company that's what it is and it figured this out a long time ago that information was power in the supply chain and it owned the vendor management inventory system that was extremely valuable to small suppliers in China and everywhere because they can now have this big outlet across the United States and other parts of the world and be able to see in real time where the goods are being sold because they would own that space on that shelf and the biggest problem of it is a much bigger structural one and there's the dependency that these little guys have on Walmart and the ability that Walmart therefore is able to use by driving down prices and forcing them to commit to that relationship right so I like the idea that supply chains themselves can be decentralized in that political sense so no longer is a supply chain managed by Walmart or by you know whatever big company you want because it could be the buyer or the main supplier and either way it's the biggest guy in the chain that sometimes sets the price and sets the terms of how the supply chain is managed but now we imagine a world that's much more decentralized and distributed and you throw into that things like 3D printing and everything else and you've got this fluidity now in a global e-market place where all these participants are able to have ownership of their data and ownership of their inventory and not be beholden to these big players so we have a really interesting potential at least now what's very interesting though is Walmart and others are some of the most aggressively pursuing this and interestingly not just because they are as you would typically imagine these days trying to co-op the technology and prevent it from undermining their business model although I'm sure that's part of it but also because they see a huge competitive advantage for themselves to compete with banks because if you are again a big player in the chain and you are you basically manage your payment terms as a tool for how you relate to your suppliers that those terms are also bound by this risk factor so not knowing really how reliable your suppliers data is whether they themselves have got letters of credit that are outstanding 2-3 times so both means that Walmart and others are limited as to how generous they can be in their 30, 60, 90 day terms but if you've got this visibility, you've got this capacity now to really get a greater picture of where all of your suppliers are at maybe you offer them 15 day terms and that locks them into you you can negotiate on price on that but it also shuts out banks, you become effectively a banker so that the payment terms within the supply channel are being a liquidity tool that kind of like shuts out the banks from the process so these are the sorts of things that kind of evolve out of this, the other thing to remember is I just mentioned 3D printing, I think we need to think about the context of why this matters 3D printing is going to completely upend the world supply chains that already probably is and that's a huge deal for ports for example who relied upon the specific geographic location that they have in the world to determine how successful or otherwise they are the process in the world's shipments but now 3D printing is going to make this thing completely fluid and dynamic and unpredictable what is it that a port can bring to the table, so you're finding ports getting very interested in this idea that they actually turn themselves into logistics managers and actually I'll get into a little bit later it's the reason why this matters because there's a whole question about certification and authenticity and sort of the weight of trust that they can bring to it, I'll get to it in a second now, so these are just challenges in the world's facing and how this might get to tackle that one other one, well I'll throw it at one, is there a question? I wasn't sure if I was I thought you were going to say another note take notes as much as you want note away there's also this 3D problem in global supply chains that I think is really interesting and that is the problems we face with the way that our maritime laws and property rights exist whereby ownership of goods shipping from say China to the US are owned by the ships in that transition, obviously in a kind of structure that implies that at the end of the line there will be a second, third sale and that's the way it works, but those goods are truly the possession of a ship we kind of saw how problematic this was last year when Hanjin, the big South Korean shipping company went bankrupt, but now you had all these ships on the high seas that could go into port, but just as importantly they couldn't liquidate their goods and both exporters and importers were stuck in the middle without a claim on what was ultimately their loss so we like the idea that maybe once we placed and you guys have been talking about digital assets right, so a token is a digital asset that is attached through some reliable real world oracle, in this case an RFID chip or something like that in a GPS sensor or something, so I know at any given time where the box of apples that I'm buying is in the world right that now translated into a blockchain environment is a tradable asset of some sort so come a kind of a Hanjin like crisis suddenly a market emerges and maybe I need I'm a bit worried that Hanjin is not going to get into a port and I'll just offload that particular consignment at a discount to somebody who's willing to take it off my hands but it's a much better solution than all of the uncertainty and not only that it frees up the process and now the ships just become a service provider that is what they're really supposed to be. I thought the problem was that they were involved in support because we've seized inventory of ships. Can you repeat the question please? The problem is that creditors would seize both inventory and the ships, right? You could try to sell the goods that are in ships and ships but if Hanjin have no rights to those goods then somebody can't seize those goods because they don't know that you they've got a claim against anybody if I'm the owner and I've got no party to bankruptcy and there's no credit or relationship with me, they can't take the goods off me so the idea is that the ownership now is secondary to the service of the ships provider. So you could seize the ship and you could take whatever acts as you can relate to that the assets connected to the service but the goods themselves will no longer be part of the equation that's the idea. I guess then you have a logistic issue right because there are stocks that are going to take those 10 years and 10 years. Yeah, but you're going to have that anyway, right? I mean, I don't know that that's... Only if you saw any of the same kind of irony. Well, true, but that might be certain ports in which therefore it becomes a problem that you could go to and so forth but I think the main point is still that that you can have this ownership transfer at any given moment and you're absolutely right. What you're trying to do is just create a market that because... Yeah, they're all distressed assets, right? So if I've got some problem with the rail gauge in some place, I'm only going to pay 25 cents and I'm going to have to figure out somebody who's got some jury rig solution to my problem I'll pay a lot less for it but the bottom line is you're creating a liquidating market and that's the interesting thing about it to me. So anyway, that's just one of these other issues that I think is important to tackle. Just for folks that are online and also for posterities both of us may have students and others we'll refer back to this talk later. What was brought up was what about if the ships are seized fundamentally in port isn't that going to be complex and then further confounded by logistics so they're maybe in a different port now based on how this has gone down how are you going to get those what union and what port and when are these available how are you going to truck it out to what warehouses and all that stuff and that was a context in which Mike was talking about nonetheless isn't it still a lot better when you're the beneficial owner you can eventually get it out it would be an addition direct bankruptcy discounts would be the discounts for like well this is how much it's going to cost me and the uncertainty of how long it will take before I can get it to stop and secure creditors within the rest of the equation but that was the basic how wouldn't it be great if we had a more subtle method to express ownership of like cargo and goods and transit isn't that a great fit for blockchain yeah I think it is yep okay there's a pitch at the end there so anyway these are kind of some of the issues that we could imagine tackling so I come out of that perspective and as I said I'm not a lawyer or a technologist so where I'm going to go now with this are just throwing out some of the problems that we confront and then maybe you know you guys can come back and help us figure out where we go with this but I've been working with a group in Hong Kong called the Belton Road Blockchain Consortium and how many of you know what the Belton Road project is anyone heard of this it's amazing it's China's biggest best kept secret the Chinese Government and it's very interesting right now in the context of how China is trying to assert itself as an international player you know time when the other big superpower of the world is looking to try to become a non-international player has this big plan that I like to think of as a kind of a Chinese version of the Marshall Plan it involves 65 countries and they all sort of follow supply routes one of them is the old old Silk Road supply route others go through Singapore and some of them get up in Africa but they all kind of gear towards Europe and eventually the United States but China is sort of seeing itself at the fulcrum, the base of this and it is investing in the development of new technologies high tech manufacturing and you know basically trying to build these countries up obviously to sort of assert its sphere of influence and set the terms where this goes it's a very outward looking Chinese strategy doing stuff like this in Africa and elsewhere but this is a very specific project involved with the supply route and supply chains that pass through all these countries the problem that these guys in Hong Kong have realized is that you have multiple jurisdictions with varying degrees of trusted rules of law so I hate to pick on Kazakhstan this is what I didn't do it, let's say someone else I don't know, Afghanistan unfortunately it's up in the stands but these guys are but there's you know, how do you trust the rule of law in these places how do you ensure that when my goods are being transferred from one owner to another across the supply chain that I can feel confident that Titan is being treated appropriately whatever rights are caught up in this contract I have the capacity to assert in some potential way it's a fundamental issue on a supply chain and the resolution of these issues have been developed over the years in all sorts of ways one of which of course has been to make ships the entity in the middle there that has to be the party then rely on Singaporean law when they get uploaded there and then I can rely on the law of whatever the flag the next ship where it's a Greek ship is getting up to Europe the solutions have been to this fundamental problem of the inconsistencies of rules of law around where things are to have these trusted third parties a port a ship, whoever take ownership and possession along the way and we've all agreed to whatever standards and maritime laws and so forth that apply to that but how do we do this now if we're going to have all these high tech transactions 3D printing working through these these land routes in particular it becomes much more difficult so these guys have said well so what they need is an alternative governance system that's what the blockchain is it gives you a chance to govern these relationships and assert if not the law some, you know, agreed upon set of rules and standards that will automate itself through the smart contract structures that you build into it so they're building, they're focusing on how they go about designing this and the reason why they're excited about it is because they're in Hong Kong and Hong Kong plays this critical role in global finance and global trade and it all comes down as far as I'm concerned at least now the reliability of its legal system so those soaring towers that you see in Hong Kong are there because bankers feel that they're much safer holding whatever property they own whether it's the bonds or it's some sort of package of IP in Hong Kong because they can execute those right then in China, right so Hong Kong's played this critical role of being an intermediary between the West and the East so Hong Kong's role now as an entity in designing the supply chain structures that would run across a blockchain, a Belt and Road blockchain becomes very interesting because at some point you have this this connection between whatever is happening out there in the physical world and whatever is being translated to this digital architecture also comes down and is into some legal jurisdiction so that you've got some setting in which if there's a dispute you can still fight over this because I'm certainly not a party to this the code is law idea that everything could be deferred entirely to a software structure we saw this with you guys know about the Dow we could go right into this should we go I would like to maybe see if there's some questions and then the Dow will almost certainly be the answer to almost anything Okay, it gets a good way to do it, yes, you're right the Dow works as an answer so the idea that you could defer to the software and this blockchain architecture the final ruling is very problematic in fact it's impossibly problematic to have the capacity to sue somebody in a real court so how do we connect all these pieces together Hong Kong suddenly becomes the place that would do things like issue the tokens that reside across this blockchain and become the vehicle because those tokens will now be wrapped with Hong Kong law so you have this interesting sort of idea now the reason I'm just raising this is I'm just saying it starts to give us interesting ways to think about the questions that come up around this architecture now another thing we touched on this a moment ago well, let me just before I get to this other issue what is title in a digital asset context what is the and what is possession when possession is title so questions around ultimately in bitcoin it comes to do you have do you know the secret key so possession of bitcoins is not literally a bunch of coins it's not a piece of information on your computer it is literally that you have the ability to execute your private key in this transaction and move the bitcoin that's what possession is well they could and then that's a challenging notion because how do you protect against one or the other executing that one of the things is multi-sig technology multi-signatory so I like to explain that around the image of the classic I don't know if any of you guys are rich enough to have a swiss a lock box in a swiss bank I certainly am not but you see all the movies right you go in there and there's two keys right the nuclear devices as well that's a pretty straightforward idea but there is no one person can take it you need to have both at the same time and you can have all sorts of structures around that where I might be two or three and I might have one key in cold storage and one that's in hot and then if I want to keep the banker out of it if I have these these are the sorts of concepts that get used in bitcoin and there may be things that we would apply to and I'm sure they probably will to some extent apply to the security of a supply chain blockchain as well but there's still fundamental question is relevant right what is when do we recognize title what is it in this digital asset environment these are questions that are going to have to be resolved before really we can suddenly say hey we've got this perfect solution to manage all the liquidity issues I was talking about before so these are questions that come up right now another one we touched on a moment ago is the machines themselves if we're going to have this these devices play what's called an oracle role the oracle is the trusted source of information that's spitting out digital data and it's landing into a smart contract that if it is of a certain quality triggers some execution of a contractual obligation so a classic example in a financial contract would be if I've got a Bloomberg feed and I trust that Bloomberg feed and it's telling me what the price of AT&T shares are and I've got a a very simple smart contract which is ultimately a derivative option attached into a blockchain so AT&T suddenly price hits $100 it automatically sends money to whoever it is has the call or put option on that thing right so that's the oracle in this case the Bloomberg feed is the oracle what is our oracle in a supply chain environment we just talked about these hydroponic plants and all the multiple sensors in there so they are in some respects an oracle in this context they're telling us the quality of the information of the real world they're spitting that out into a digital environment and we're building our supply chain on that how do we know that those devices themselves are trustworthy this is the fundamental question or a fundamental question there's a number of fundamental questions we're doing science yeah so how do we these are big questions and one of the terms that's coming up I think is a great one I heard you guys talking about you know identity before as a concern and you know the term KYC right know your customer is a sort of a fundamental aspect of how banks go about other institutions identifying their customers and feeling that they can is this word again trust them right well we're going to have to have a KYM concept in this world know your machine so know your machine is going to be important it's funny when I talked about this in Hong Kong when I was there a couple of weeks ago I gave a speech I gave this story about how do I know for example in a this internet of things world that my fridge isn't being ripped off by some automatic milk delivering robot right which how do I know just inevitable how do I know this so the blockchain is important to that but so too is the knowledge around the devices and somebody immediately tweeted out KYF know your fridge know your fridge so anyway these are these are sort of questions and so what is the structure on that so this is trusted computing modules right Intel has got very sophisticated technology that the more you dig into it there's still some way that at the fab potentially apparently at this microtransistor level they've got backdoors that could still be there right so there's I'm sorry sorry sorry that's the best thing about using your own gear sorry people not now yeah so basically yeah you've got this big questions and that itself is a supply chain question right what sort of processes are in place to prove that the chip that was being built was being fabricated within the right construct to give us confidence so there's a huge you know pile of details that need to get resolved around this KYM trusted computing concept and then you know the role of some of these other service providers like cloud service providers and so forth how do you what is secure hosting and things like that that are really critical to all this so these are just some of the core kind of legal and infrastructure questions that I think are critical to how we're going to interface the real world of law and the real world of physical objects to this potentially very liberating and I would say you know encouraging new architecture for managing trust in these environments so I'll leave it at that maybe that's something that we can ask questions around because I think that's where we get kind of into the meat of what you guys are talking about absolutely that was great well thank you awesome so we were some people trickled in a little bit as we were going also I want to double check that I kind of crocked what you were saying so the fundamentals of what I gleaned from your remarks were was part of the idea of looking at blockchain as a capability to refactor supply chains is based on the observation that supply chains fundamentally are about resource usage and allocation and management and A and B there's a need for efficiencies there many of which and many of the current methods are unchanged even if they've been digitally paved over but based on assumptions of the like medieval times in some cases we take three months for a ship to go across the Atlantic and we're longer and there's an aspect of them that requires transparency certification, proof of things that may also be a good fit for capabilities or ways that you could create capabilities by orchestrating or combining properties of blockchain and other business methods and then finally there's a problem which is access to capital, access to capital and access to credit which is also potentially you can make a dent in that you've got capital with an O there we're talking about like storming the capital we are some people are thinking about that and so see you had to know you were going to say repeat the horn at the right time but it's brilliant yes we love the Beatles but basically what we've got here is looking at the promised land and the land of course is liquid and you're talking about the liquidity of all of them almost like dynamic real time reconpopulating or reconbinatorial supply and demand sequence itself together self-organized and on that point we start to think about whether this is ultimately an internet of things solution we're talking about devices that are now able to move and transact with each other in a much more fluid less friction wise way it's the capacity for microtransactions and it's like you're finding prices at a much more so there's the ability to with a lot less cost and that means in theory that markets become more efficient transaction costs go down you can therefore find price discovery to your point what is going to be the right price when I've got 100 prices and I haven't got the right range rail gauge then that price arguably gets quicker because there's no intermediary in the middle that's charging me for the liability of taking on that trust it's all being distributed amongst a network and therefore the actual transaction costs are lower so that feeds into this idea of liquidity and the combinatorial demand supply almost biological things that come together and they double heal they do some magical things you start to think of it as being kind of this complex system that is following a set of governance rules but working on its own self-correcting and self-feeling market self-organizing set the rules and the market works around that just so that's exactly what I was using those words to see if I was tuning into your frequency range seems like I'm there because where your head is well equipment we and then I guess the last big feature and also maybe like benefit you know they're really bound by jurisdiction lack of the ship and governing rules has a lot to do bankrupt everything else on to this so you know quickly is there an opportunity to have like predictable legal output you have flexibility with the system and then and so so the two things that I was going to just say to so everybody thinking of on comments questions I do a lot of people thinking especially online we've got some big thinkers but the two things I was going to say one of them already was there's I know from contract systems supply chains are not the best example because they're usually free negotiated things but other types of systems where people can more quickly almost like negotiate a little better at least do some price finding and some other negotiations at scale it's I think pretty well established for a long time now with the more parameters of value you have the more optimal deal-making so if you have one correct one like vectors say like I meant vectors if you have one vectors which is price okay well that's like it can only be as optimal as price is important to everybody and but now if you have price and how fast we deliver it you have price and what is quality you have price and you know payment terms are big part of how you break price down a million ways so the more vectors and communications of vectors you have the easier it is to make more optimal deals supply and demand the light and the other thing that's kind of correlated to that is more important that you just brought up is the smaller the deals you can make the more micro transactions so there I think there may be some combination of before the fluidity of deals right so you imagine like high speed trading or high frequency trading in the stock market right is this sort of like finding the price and there's all sorts of debates that with a high frequency trading brings more or less liquidity to the stock market I think the answer is that it brings a lot of liquidity most of the time except when they turn off machines and then it creates disaster so there's this but at the end of the day like it is creating liquidity and so the idea that we might actually be able to not that this is good or bad but you could high-frequently trade digital asset so the rights to a particular shipment of apples suddenly is traded in this environment until we find price discovery and the idea is that that just becomes so this is this micro transactions it's kind of like it's micro trading in a way right micro trading so I'm going to go out with my a taco stick yeah I think of course so that's a few minus reasons and financial background can you go on with me for a sec yeah what do I do thanks yeah I'm learning to so I am in finance but my mother works for an exporting firm so I was actually still thinking you know hard goods and I was thinking this becomes a very interesting optimization problem because now depending on where your goods are and people are going to try to optimize to locate their goods where the demand will be potentially you know you may have cheaper or more expensive prices based on the transportation to the customer at the micro level which I guess has done somewhat ad hoc these days right in terms of inventory control and things like that but it could get a lot more interesting when you're doing it in the things level what I had started to think about but I really hadn't gotten very far was what this means when you're dealing with financial securities and payments and you know you wire many things back and forth and it's sort of free you know in the sense that there's not a lot of overhead of shipping and things like that so I think it's a little bit different problem I definitely trust this key and I know that most of the financial institutions out there are trying to experiment and see where it can help out with blockchain or equivalent can help out but I haven't I haven't come to any Eureka thoughts about it yet so Lynn in particular walked us through did you see any of the videos? I did not well it's there for later you can get some popcorn they call it the cave they have a DCS they walked us through some very sophisticated thoughts at scale on valuation, visual goods and exchange and life cycle events in companies like bankruptcy, merger and acquisition going IPO and Jonathan actually may have something to say I don't know if Jonathan if you were perceiving this but this year this time last year in this room Jonathan and I taught the first version of this and a Sloan team Sloan and others Harvard Law School put together a startup it was the I forgot what it was called it was a very clever name it was a credit for Exim Trainer Export-Import Chain it was a version it was a facet rather of the systems that you're talking about with respect to import-export and not necessarily having this letter of credit for the goods when they're in transit there's a lot of intermediation there they thought blockchain could reduce it and Jonathan I know was really seminal and his students in helping I know those guys so any questions comments and insights from our invited panelists out there in video land if there is just pipe up actually we have the volume down you can pipe up if you want and then let's come back to the room great, well speaking of MBA by the way we have a MBA Fellow we have a fellow in the Sloan School Sloan Fellow would be the fancy way to say that Sloan, so thanks very much for sharing and wanted to get a sense of so you mentioned a lot about finance, a lot about supply chain as well so I was hoping to get a real life example and see what your thoughts are so one thing that I thought about was seafood supply chain meets a lot of the criteria that you talked about from a micro sort of transaction perspective from a timeliness perspective people wanting to know where the fish came from how it was fish all the way through the whole cold chain sort of storage facilities and all that so there are some thoughts going on and if I were to pick a place for example in Indonesia where you have a broad geographical spread technology access may or may not be available right now so how do you see blockchain getting into this kind of environment to try to improve the way things are being done there in terms of sustainable fishing how to get governments involved, local entities involved, what are your thoughts on some of the successful examples that have taken place and some of the challenges that you see just generally digital architecture or digital infrastructure is going to be critical to how and where we can take this but I think it's reasonable to assume that there will be in relatively short period of time you know a kind of there already is an accelerating roll out of the kinds of to make this work you know we've already got for example on the internet connectivity side you've got Google and Facebook and others with these big kind of plans to sort of basically spread the world with you know internet and Wi-Fi capabilities and I think that the price for example of chips, if ID chips have gone so far down low and we have GPS capabilities that are pretty much anywhere so a lot of what's being done here in the mini-lab we do a lot of work around the developing world and so there's an enormous number of projects here that are focused on Africa and they're focused on India and places that are deliberately off the beaten track and don't have the kind of architecture that we think that they need nonetheless they're all being built on the notion that you're going to be able to deploy this stuff now because there's all sorts of work around to it one of the things that's still going to be challenging though is and this is again these questions I keep wanting to come back to is there is still going to have to be some level of real world trust you can automate a bunch of it and you can have trusted computing modules working on these areas but at some point retain the machines is there some point at which you need to know that every month something has been done maybe that's an auto cleaning this is a question of automation and perhaps as you move out of these regions of automation you can do you can rely on individuals so how do you trust the individual is there a do you go to a KYC or this is not a KYC it's a KYF whoever it is that's coming in to do the work to maintain the machine what commissions do they have is that all being tested and proven in the blockchain these questions I think possibly are as important as the digital infrastructure question because you know remote areas don't have the same capacity of oversight so it's a challenge but I do think that you're right I've heard people have already started to experience phishing as a route you've got people working on in Hong Kong they're trying to explore a halal food chain concept so how do I all the processes along the route have followed whatever halal requirements the UAE has for its food and so forth so these are definitely and I think the thing about fresh food like phishing is that timeliness question let me just throw another one out to you 3D printing is now a NASA is building rockets with 3D printed paths so this is just critical to the way that precision manufacture is going to go it's ironic that something that we think is basic is 3D printing actually has its most important usage in some of the most high tech and mission critical exercises precisely because you can make these parts quickly and relatively cheaply but they can also be very very strong because you can build a part that will have this architecture that is so much more stronger because of the way it's somehow woven together that you can never manually do these things only if you could possibly build this thing so you get lightness and strength but this is what's happening in the real world so what if I'm by borrowing this from a company called MoMOOG which is a lot of customers in defence and aerospace and they know their industry is going from the physical supply chain that they used to have it's going to get more and more 3D printed so they said well what do we do if we have a 3D printer on an aircraft carrier in the middle of the Pacific and then a F-16 with a broken part lands and we have to print a new part from somewhere how do I know that the software file that I'm downloading hasn't been hacked by North Korea Vladimir Putin's people how do I know that in itself becomes part of the equation it's not just the management of the parts the physical processes involved with that it's actually two computer files at what point who worked on it who put the code who didn't when, how on the blockchain stuff it's like one thing that could be managed by a distributed trust architect I get very I get very sort of like boring and generic but yes one thing that may need to be managed by some sort of distributed trust architecture right? Distributed trust architecture helps you with the transportation of the information of the goods it doesn't prevent you from still having very strong encryption over the information that you're sending so is that as much of a problem meaning that you know if they would have to not just hack the blockchain but hack the encryption presumably if you're buying an F-18 you're going to want the definition of every part to be in the defense department and that's where your message will come from for example arguably it won't go through any getting to the ship in the first place so I'm just curious it feels like often we talk about blockchain we talk about transparency of transactions but it doesn't mean the information has to be transparent you're absolutely right I mean that's exactly what it is so I think if we get confused with this on the blockchain right because you're just taking all the data and you're dumping it into the blockchain well you're not really keeping a record of who or hasn't had access to that data so it's the exchange of that data so we don't know what the data is so at some point we knew that Michael transferred access to that data to Mark the data is not on this it's the sharing of access and the sharing of rights and it could be that I'm sharing data also on the blockchain to some extent but it might not be it's really keeping a track of what exchanges happen it's exchanges of rights in many respects right so I was thinking through one thing what you were talking about which was about the authenticity of the truck so if you can take a container that's going to be loaded on the ship on the port or you can seal that container so you can guarantee there doesn't have to be anything in that container while it's part of this journey because there's a pallet inside the container of serial boxes that are in shrink wrap no one is guaranteeing that once the data is sealed in the container someone is not opening it doing something to it we should be crafting it the same part of our niche is there identifying the pallet so the guarantees that you know where the pallet is doesn't really guarantee that you know where the pallet is everything is there exactly so this is the the big caveat that I bring to any conversation around the blockchain it's just a record of transactions it doesn't we still don't know how necessarily we can't solve these real-world problems with the blockchain we can solve with other things and those things might be that there's a foreman from the port who is a very reliable employee who can't do something to protect on the image and supervise it it could be actually an organizational structure and a legal framework that gives me that trust or it might be a series of RFID chips that have been proved to have a trusted model but either way it's not a blockchain, that's not the blockchain's solution but different parts of that could be managed again but at any given time you're still extrapolating this real-world problem into a solution that manages aspects of that real-world problem there's always a trust egg with it I wonder if there's a way to to have the real-world assets and the the integration where they really can't be separated so that there's essentially authenticity of the asset and it's an integrity factor so the digital asset yes I think because it's may offer the direction for this so one direction to go that I was thinking Michael was speaking initially but I was getting ready for today thinking about where your mom or whoever it was basically like boots and office furniture and mops and buckets and crates using blockchain for the paperwork almost in the deal stuff and accounting but actually in fact the system or supply chain especially international exchange overlay of it for digital assets makes a lot of sense I'm glad you highlighted that and so for digital assets it occurred to me that there you know with code signing in particular there's an opportunity to inextricably link the proof of the origin and the version of a digital asset which can be hashed whatever the digital you can hash it and you can enter a hash or an encrypted hash onto a blockchain and you can and you can reference the block and the transaction that's been entered into in a transaction for the purchase and sale or you know there's picture some supply chain thing so I think that there's unique opportunities to inextricably imbue almost or like embed like marvel in like the authenticity and a bunch of these properties of security and hasn't been tampered with in origin and so forth when you have digital goods at issue because of the nature of the blockchain and almost everything I do by the way is not a cryptocurrency cryptocurrency transaction or even it's really just utilizing that one trick like you know hashing a version of a statute hashing a version of a contract or some like I did file my regulatory permission commission at a certain time is what it said and bring that hash onto a blockchain or any which way you can with a big coin or a blockchain so you can prove it that that occurred at a certain time a lot it's got a great property connecting that property of blockchains with blockchain transactions and levels of labor supply chain management could be could be a killer app is that responsive to what you're asking? You don't even typically attach a reference to this so for example you were talking about hashies in a way. What was the problem that you mentioned before? Oh um Don uh excuse me I'm actually on mute right now he has got something called virtual strongbox it's for personal data primarily but imagine that you have a virtual strongbox that you want to go from point A to point B and so if you can find out some tag that you're looking for a blockchain record then when we get to point B we can go to that Yeah? I just want to say one great thing there's an important distinction between what digital asset like bitcoin is compared to the sort of digital assets we talk about now there's still to be a little bit pedantic there's still even in a digital world a real world trust problem that still has to be because somebody's issuing that asset so the issuing could be I am declaring that a certain amount of gold that I hold can now be traded but at the end of the day you have the trust that I'm going to stand by that promise right that's a really blatant one but it's also just effectively when you're taking some property and placing that into a blockchain that person who's doing that where you are taking what is already a digitalized version and hashing it or at least giving that instruction to happen it might all be happening through a bunch of keystrokes in a digital world but that is happening whereas bitcoin is quite different because bitcoin is native to the actual blockchain itself it's spitting out this asset which is bitcoin and the very issuance itself depends upon this algorithm right so to the extent to which issuance of the digital asset or let's just sort of the creation of the digital asset giving it a life is dependent upon some human action and there's killer trust problem it doesn't mean that's a problem I don't personally think that's an issue a lot of blockchain purists will say well that's why you can't use the blockchain because you've destroyed the whole thing now you have a trusted entity in the way well my answer to that is well yes that's how the world works we have trusted entities and if we trust that entity there's a way to know that that trusted entity is behind this and I can take that digital asset and claim against that in a court somewhere then you still gain enormous benefits the ability to be able to trade this thing back and forth but we do have to be honest and recognize that there is still this real world trust problem that comes with it it's just a feature of what it is Ron excuse me let me get your volume up here we go we didn't hear anything at this point due to our volume getting down to apologize but we have invoked your name you have the right of response but also I'd love to hear your thoughts on this because it seems like your service could be very relevant to this extrapolate personal data what are you thinking? yes absolutely well thank you very much and I appreciate the conversation that you're putting in I think it's very interesting on the fundamentals and what you have going on what our company has done is what is secure hosting and what is a trusted source and so I'll tackle these in two different ways one is that the cloud as you know it today in the Dropbox and I heard the name of Box and all these other people out there really don't provide the privacy or provide the security or the secure hosting that would be needed in a transaction that we're talking about where we're protecting a digital asset and realizing who has access to it and how is that traded or how is that shared across the world right so we started looking in 2011 about this issue of secure hosting and what could we do to create a system that had total information privacy where the owner of the personal data store was the only one with the two keys or the three keys or the encryption pieces that could get to the information that was in there right and have access to it they could big screens no carry on yeah I want to make sure sound check that's great hey everybody so could we get into could we build a place where the consumer had their identity had all their digital assets that were either blockchain certified or not in one place that is just as global as the conversation about Hong Kong being the global destination where you could find the transactions or you could find the identity of a person you know could we create a secure data store where could be safely stored and accessed by the consumer and shared out to the banks or to the to the hospitals or wherever it may be so that was the challenge that we set forth back in 2011 we were able to create a secure hosting environment with patents and and processes and infrastructure that pretty much moved us away from the cloud as you know it and start down the path of having conversations with folks in the blockchain folks at MIT media labs about well if I could get a digital ID signed where would I store that or where could I keep that so that I could share that every time somebody need to know who I was that I could present that to the bank or to the hospital as the next form of ID going forward the next type of driver's license or passport or whatever it may be that's been certified by a trusted partner and so you know in looking at this entire process who better as trusted partners than financial institutions right individuals trust them with their money they trust them for advice they trust them with their wealth management and so there's this theory that's been in the process of getting a digital ID that allows us address but you know a financial institution is a perfect place to to say yes this person came in and gave me all the identity old identity papers and now I'm going to create this digital identity certified by blockchain and this financial institution that it is valid now again and it hasn't been altered for a loan and for a mortgage loan and what you get to is a point of where mortgage loans cannot be signed electronically signed and traded on the open market they're not going to be bought they're not valid instruments it still has to be the old paper you know 50 copies sign it and then pass it around because nobody knows who the original where the original is but blockchain and the identity hub and the personal data store and the trusted advisor starts to change the model that I could do an electronic mortgage loan sign it with blockchain certify that that's the only copy or the original copy and now I can securitize 10 of those and go to wall street and say we can start trading them so it starts to open up the paper work and the processes of what the modern age has yet to transform and lending or know your customer kind of model secure hosting and the blockchain starting to open up thinking along the lines and innovations along those lines it's fascinating and it's interesting some people thanks very much for that Ron it's exactly the way that many of us are imagining the roles that we played by what are effectively certifying authorities in creating this this bucket of trusted information and then how do I store that in as you say trusted hosting secure hosting setting and then blockchain comes in as the mediator of how that information is shared and how access to it is managed and so it is that I find the banks an interesting interesting thing to think about because people say that the most trusted will be the least trusted and the most essential problem that the Bitcoin world is trying to face but yet it actually is absolutely true because it is precisely the role of trust and the mediation and management of trust that is the essence of banking so even if we say I don't trust banks it's the marginal aspect of how they're not living up to this massive expectation we place upon that is the problem not that they aren't trusted as a whole so they actually do are constantly providing the service of trust so some people say that the future of banking is actually to is in ID but they the rest of us are going to transact amongst ourselves we will own our digital assets our digital currency and intimate with each other but how do I know who you are and can I trust you and what is the authenticating body behind that it may well be a bank right so the banks role in it ends up being this how we make that mobile and versatile and we don't we get away from what is ultimately a very constrictive KYC system I mean the post dot world is a problematic KYC system and it's solutions like this that pave us the way towards a much more fluid model I think institutions that were designed to build to the places between people to and so what is the effect of domain knowledge that basically hit upon what I think is the message I when I go out and talk to institutions about what their role may be in this blockchain it is often that it is often that it is often that multiple voices multiple voices multiple voices multiple voices multiple voices what wellspring of trust do I have what reputational power do I have and how can I leverage that the bitcoin purest of the trustless world the reality is creating a system in which the ultimate currency and so you know one of the things that I know is looking at how they imagine their future as a logistics manager in a blockchain environment decentralized supply chains and 3d printing and so forth is the port of and the conversation we have with them is like how long have you been doing this stuff probably the oldest maritime nation in the world so Rotterdam has got like however many 800 years worth of trust and reputation that it can draw upon to now translating to this so it is very much spot on because not only are they going to be able to now be trusted at the gateway and entry point it is things like digital assets that are going to be the value that is captured by that asset contingent upon the reliability of the certifying authority and so now this asset is attached to the port of Rotterdam that is actually a pretty cool business model it might not be a port that isn't so trusted because the data is now not going to go through that we are talking about data 3d printing is going to be now relocating to places where there is trust obviously there will also be close to things but you will think more about what your entry point is less about geography than you will about the kind of more of a ephemeral kind of idea of trust one other thought on actually never mind I will say it now because there are people here so identity is very central to my own work and stuff that we are doing that we focus on research and academic projects we focus on law.mitp.edu banner and computational law a thought about the potential role of identity with respect to refactoring supply chains on blockchain and what Ron said quite rightly about the role of banks banks have a big role with supply chains all around what their role will be in a future system so in addition to offering financing directly and also the kind of almost introductory or like gap filling in terms of letters of credit which are more than what there is a sack of money perhaps we look down to identity of businesses and identity of individuals that are making signing contracts and new operations on behalf of businesses we have a lot of transactions that depend upon Ron's approach an approach of companies that do personal data storage generally may be critical because at some point in a stack it has to be an end point of someone that does that you can go to with an API and otherwise to confirm that this person is Michael Casey and we think that blockchain can be very important because it can be a source of trust that's decoupled from institutions that are at the wrong level and in some cases have conflict of interest whether it's government, Google, your employer or otherwise we think that individuals have an identity that sources like before and beyond those things and that we into a blockchain can by this concept Thomas Hart-John and I used to call root ID and we're now calling self-sourced ID like three people identify themselves you can create an address in a blockchain and you can prove control of that address and then for like possession and use of the key behind it on transactions going forward attach it to a KYC bank account attach it to a Kerberos account here at MIT, it's attached to Google Is there anything for planets doing crowd source like your identity yeah, very critical there used to be one name on block stack well, either that or it's coming out of U-Port U-Port is about U-Port so you can imagine now talking about U-Port and U-Port, they were really terrific last year in this class five different classes up from Brooklyn to lecture on aspects of things and U-Port's looking great so you can imagine a service of a bank that would be critical to stitch these things together even a bank that wasn't a financial factor, being an identity service where you can now authenticate maybe even get bonding behind this is Michael Casey with these identity attributes with KYC, we've connected stories of after credit union is the same as this like Google business apps address and this other address that maybe is integrated in your supply chain and then how do you know it's still Michael Casey okay, well what I just said initially we've enrolled we've enrolled a person, we did KYC, we did I-9, not how you authenticate it's still that person right now and somebody hasn't knocked Michael on the head and possibly even someone stole his Grinchill or something and walked in got forbidden, anything like that happened the way you could do that is like now personal data services a place where I'm putting my photographs I would like to be able to put my telemetry from my geo location because you had a lot of my planet is this amazing integrated personal data app that permission access calendar what you're aware about, your contacts your photos, a bunch of things scroll through your life on a timeline or a map and tags it's awesome I would like to put that kind of thing like in a bank vault, like the underlying data and then I would like the permission to perhaps like my planet and then I would like places like my bank to authenticate someone at a high maybe high risk, high value, mission critical sensitive kind of thing like a supply chain big kind of thing I'd like them to be able to look at the telemetry and be like well whoever has this phone and who went to Starbucks this morning and that was over here this bed at this well last night has this kind of like gate there's a lot of information on a phone including a thumbprint reader that we could leverage through a personal data service for a high grade I'm going to say but yet extensible enrollments for like wait like this is the right person the right account holder and it's still that person right this second at the end of the day everything I'm doing now is like he's getting involved he's the one making Andrew Coe trying to do brilliant undergraduates helping actually we want a key involvement it's the key that you use sort of blockchain to show it's still that person with this address in the blockchain I think that's going to transcend a lot of these other systems that come and go and have pros and cons we think that keeping as a root kernel is going to be important but you know the blockchain doesn't just run over to your house all by itself and like say yep that's Michael Casey at some point we need somebody to put it involved and give us permission access something like Ron's company or maybe Ron's company exactly among others in a vibrant market so perhaps this is a way that identity can play into blockchain refactors with blockchain and provide a new role for financial institutions to be a provider of the identity that's so crucial but speaking of financial institutions I think what happened to the others we have a person in the financial sector then we might get to legal handling with solution for legal hackers we've got to ask you to do a perfect approach we were talking earlier about I guess the context of this example I'm going to explain to you in the beginning of the transaction we thought some of these are that a lot of financial institutions are leveraged so the assets the real assets that they can have are not really any of the large industries that are really likely so if you're attending a deal if you want to do a little bit of a deal is there a way to actually in any respect attach financial institutions to these records I just don't know a lot so I think we would treat I think the two separate questions are two different scenarios the first one I think we would just treat the leverage of the participating institution it's balancing basically as a kind of a secondary question whether or not it's going to execute it could be an ongoing know-your-client where the folks that know what the current balances are are able to provide that as part of the you know I've come up with the three thousand foot level one to have these people bring me down I like to think about the idea that what the blockchain can be is a triple it's a third triple entry so that you've got the devil's credits that's your classic double entry your third entry is this constant hashing of that record to this ongoing provable third so that gives you something to think about when you're saying how might we take the financial data around an institution or any company for that matter and have it no longer being ordered every three months but actually on an ongoing basis it's constantly being de facto ordered by the blockchain so you get this idea of proof of reserves and proof of the things that become proven because once we create this sort of destruction as we're talking about here we can trust whatever hosted repository is managing that information then in short maybe to bring it to the second part of your question that we build a smart contract that has a whole set of different parameters attached to it okay, not only is it if X then Y if AT&T 100 pay DASA but also if X is $100 and Y has no lead attached to it then pay DASA so or if the capital adequacy ratio of bank X is within its buzzle or climate then yes, it can participate in this trade if not then not you can have a regulatory framework that governments might want to impose upon this into some sort of structure like that where all these transactions get regulated with all that data being fed into the smart contract in a series of we're talking about the different vectors that will determine what you can do with the pricing and the market will be determined by all these things so maybe as well it's not pay 100 it's pay 101 because there's a risk associated with whatever established parameters we have associated with the assets and the liabilities and the fallacy of that particular so they're just multiple ways which you can conceive of it this has been what did that kind of scratchy edge a little bit so I'd like to show and also Ron just to circle back so I said a lot of stuff and I think I said the name of your company and you personally like five times so I don't know if you're sort of like boiling there like I need to make clarifications and like and a reclaim or like corrections or anything or but like please let us know I think I educated really well with some of the projects we've been working on so you've got it exactly right to where the banks are the trusted advisors and just imagine the day when no one had a driver's license right and so there somebody had to start be the first one to issue millions of driver's license but once they're issued they're going to keep you know that identity can be blockchain proved that it's still valid or runs through it so again the opportunities you know where we work with we work with trusted financial high risk enterprise IT like banks and credit unions and all the people that are concerned about security but they're also trying to deal with the convenience on the other side of the groups of folks in your room there where they want it now and they want to transact business now or electronically or automatically but the ID has to be the identity has to be the basis or the foundation so like you said the fundamentals there's probably four of them you're going to have a bunch of we're tackling two right now the secure hosting and the storage and the ID and the trading with the financial institution and we're going to see where this goes but it's really interesting what's the third did I say three two all right so we're three but we think that there's the opportunity because the security starts to open up the innovation and locking in the locking in the identity with blockchain really creates a new type of virtual ID that allows for virtual storage companies like myself with the with the new type of cloud storage and personal data store to take advantage of breaking the habit of you know 95% of the accounts and banks are open in person because they haven't figured out a way to open an account online because of that know your customer on the other side so the chases and the Wells Fargo's and the Bank of America have all of these consumers and show proof of ID like that's a crazy crazy model but this actually changes where things can go here here so thank you Ron I appreciate your piping it if nothing else just a double check if I was off base on anything so it sounds like it was like close and and it's hot it's a it's a right now thing in the market that may be worth exploring so I want to show one thing before we go further which is which one is this GTPA GTPA this one I hope that this is transmitting now can folks see an AIA document on the screen that we're transmitting I hope anybody run I guess yep great okay so this is an example of what what I've been first of all for you for the reason we do these things here with not inviting each other to speak of things just make sure we can touch base on certain things that we care about so I've been continuously asserting to you yeah I used to do a lot of this trading partner stuff and there's a really important thing like a you can think of as a trading partner agreement almost well there is a trading so here's an example of a pretty good example of like a fairly stable state of typical trading partner agreement template this one's aerospace instead of like to the scenario of like aren't there some industries where you have to have certification or certification you may have to have a certain like secret certain clearance level in order to see some of even just the designs of this stuff because it gives you such insight into weapon systems and other things and yes there is and so here's an example and almost all the identity federation agreements I do and the payment networks that have been involved in and other big multiplayer networks are similar to the supply chain thing you always start with some kind of scope like this covers you know the exchange of such digital information among you know whomever it is is kind of what it's about the purpose definitions are key something about like what are the systems we use we actually use blockchain and we use like these three like I don't know like crypto hardened like you know surrounded by arm guard like like AWS services to integrate our back ends with an oracle thing that's you know sort of whatever the systems are you say them data exchanges was a huge thing for like 20 years in this one EDI electronic data interchange and in fact there's all these specific standards and you can it's really basically goes a lot to like like transaction codes almost like with finance but it's usually some flavor of invoice some flavor of like you know like acknowledgement some flavor of receipt these types of things back and forth and you kind of define those means of transmission like you could exactly like it's these are generic for good reasons and you can plop and kind of paragraph by paragraph we transmit it you know through like mostly mobile phones and this SDK and blah blah blah depending on how you how people agree or maybe we specifically in this supply chain never ever presumed to ask people their means of transmission like we're not barbarians you do it but you can basically like some people don't do that digital signatures is usually a page or two like what is your encryption curve you'd want to know and like how do you if there's a certificate revocation list or CA thing you're doing or you're doing it or a direct key exchange enforceability miscibility so you can actually start to solve for some if you have people in a liquid supply chain of the maybe near future with blockchain that maybe with a click agreed to an overarching pretty light just a few page agreement how that supply chain works you can actually designate the controlling law and so you can start gathering the flags and it can sometimes say well it's generally Delaware but if it's this Canadian thing and trust is the one then then it's Canada or you could say it's whatever the flag of the ship is until such times it's important that it's always you know Uganda or just whatever you just say what you want and people now agreed to that to govern their transaction at the top level that's why we have these umbrella agreements liability and force major and basically signatures and out so for signatures you'll notice this one here is like a cut is a traditional like it could be you know 10 1st century contractor Humorabi almost we have like signature party a party B or 345 signatures no problem what's great about this these types of instruments however is the scalability that they can have if you allow it and so what you can do and this is the reason I use this now is a wise older on comptroller when I was learning these things fresh out of law school try to figure out how to construct it and how do you like endless attachments of like more and more signatures for a big for a trading partner system with a bunch of buyers coming together to try to force demand with a bunch of sellers and catalogs basically said no no no no what you do is you have a one page in agreement and it's like we call it a participation agreement now and it's just the major feature of which could be one sentence is like we agree that we will do X and thus trades under like this set of operating rules or this trading partner agreement as amended from time to time according to our meetings or the steering committee or whatever they agree now you have a signature on a contract that doesn't change even if you have one update your overall system from time to time maybe now you change digital signatures inevitably these things need to change and evolve to allow for liquid transactions underneath them you don't have to re-execute like a hundred thousand signatures or five thousand signatures every time you change the rules whereas if you make everyone sign the one contract it's brittle so that's like these are some basic trade craft things about how how this stuff works and how it can be applied I think very directly just like by putting together a supply chain or two or seeing who wants to play supply chain with maybe a phantom pilot system and then just like take some you don't even need me in the room honestly I'm happy to play but you can take any of these templates I just pulled one at random right now and kind of pop your terms in and you know if it's one or two pages that's way better than 10 pages 10 pages if it has to be and just make sure that one thing I would say is like this is really matters so that you don't suffer as I have and others have initially just don't make everyone sign the same thing don't do multi but we can do multi say again we can do other stuff you can don't don't I'm just saying like that you want an easy life do it slightly harder than the first entry and have them sign a participation agreement that incorporates by reference umbrella rules know that people fight over the umbrella rules like in governance and stuff and have those right and there's a risk of it run smoothly within that maybe as the silver road and so and then and then the only thing to keep in mind is just remember like what are the roles in this one so if you're going to have a buyer you're going to have a seller we have an intermediary which have the banks that maybe certain banks that do identity and you have like docs maybe it I don't know because I don't really know this kind of supply chain but you'll have plus you some number of roles is one participation remember for all and if you want it just a corollary just think well credit card holders and so maybe also work to banks and stuff so as an individual we signed a contract it's called the end user agreement or something like that it's basically the it's the it's the card holder agreement is what it's called now if you are a bank that that like it for a merchant you sign a acquiring bank agreement you're getting the money if you're if you're a bank that's give providing the credit cards it's an issuing bank if you're a transaction provider which this is we have a transaction provider agreement there's like a few handful of roles and they've got one lockdown agreement usually like in the appendix of the then current like rule so there's no and people will argue over them but you don't want to change those often you have to re-execute them and there's a so so that's the basic idea so and I just want to offer a concept that's a little innovative maybe to think about hacking and then I might go directly to Jonathan Askin who's really like the like grandmeister of legal hacking the concept is I would like just like a three layer chocolate cake maybe we can have a three layer legal approach so two layers is great but it still doesn't quite get to a liquid system so like an umbrella trading partner agreement an opt-in agreement is really good but now when you want to have these like dynamic like re-compobulating individual terms and capture the data of those terms almost like within the agreement maybe like like vector forward terms from the contract and liability things let people know what's going on maybe even change some of the terms based on volume of trade or other stuff you have to go one more level in my view and like that would be the atomized like if it was an old school the trading part supply chain it would be the transaction codes it would be like an invoice a purchase order that derivatives lawyers would pretty useful in this space they'd be very useful they've got this whole set of parameters around which they establish illegal contracts or when an option is triggered and some of these options that or high speed traders these guys have got very sophisticated multi-vector type of you know contracts that are running through their systems but will necessarily have had some pretty high powered lawyers create the framework for that just so precisely and so you could imagine in this system we're not going we're not jeans plastic with everything in the world but you can imagine every time there's a purchase order and a fulfillment or change of ownership thanks my brain that you've got that's like a mini contract almost the beautiful thing is they all don't have to be contracts they're just transactions that happen under your contract what's my contract that's right here I signed it my participation agreement and here's the master agreement it's just like a combination and now you're free to do these like one line transactions and you don't have to worry about liability and digital signatures and everything because it's it's under this umbrella and so similarly with payment networks like you do like a payment payor payee and like an acknowledgement you have like these transaction codes and you know Swift and chips and Fedwire transaction codes fundamentally in supply chains like a purchase order invoice a quote or this a shipping receiving whatever and then in my world like an EDI in the web you've got more or less at the high level maybe an umbrella agreement at the middle level you've got a developer contract so everyone that does an app has signed a developer contract every individual signed like their EU or I'm a customer if you're like a business trading partner maybe have a peer agreement and then the individual little things are when you click like the I agree to connect my like Dropbox with my Evernote now and I want like every I'm gonna pay Evernote $3 to do a thing these little like encapsulated few lines that give permissions and authorizations are they look to me a