Devcon3: Day 4 Recap

Protocols

As CEO of parcIT GmbH Christoph Mussenbrock explained in “A Standardized Business Process Model for Decentralized Insurance,” protocols are what allowed for rapid communication and quick thinking when Captain Chesley Sullenberger’s plane was unexpectedly forced to land in the Hudson River. Likewise, he said, blockchain protocols must be established to prepare for unforeseen difficulties.

Mussenbrock suggested a set of protocol standards. First, he said, a protocol must be minimal, meaning that it must not have a high overhead. Protocols must also be complete, covering all of the main cases. Furthermore, protocols need to be robust – one dysfunctional component should not derail the entire system. Importantly, a layered protocol allows an actor to check for the simplest possible problem and sequentially move on to the most complex. If your car won’t start, then you check if the battery is dead (and a series of issues with other simple fixes) before you resolve to take apart the engine. And lastly, a protocol needs to be generally accepted so that everybody agrees on a standardized set of approaches. This allows for mass coordination without redundant or unnecessary training.

Supply Chains

Coordinating information sharing and enhancing transparency are lofty goals that might be achieved through blockchain-based supply chains. Head of Distributed Ledger Technology at AlmavivA Giuseppe Bertone presented on “How to build a real-world supply chain ecosystem using the Main Ethereum Network,” explaining that the Italian Ministry of Agriculture is investigating a blockchain solution for the nation’s massive wine industry. Each year, Italy produces more than 500 million liters of wine.

“Traceability” could allow the disparate stakeholders to understand the journey of a bottle of wine – from the grapes in a vineyard to the kitchen of a restaurant in Florence (or even globally). This is an industry where a blockchain makes a lot of sense because of the multitude of actors. Italy’s wine industry requires producers, associations, bottlers, government organizations (which certify taste), retailers and wholesalers, and consumers.

Provenance

Blockchain developer Thibaut Schaeffer presented on “Building consumer facing interfaces for trust in supply chains.” While the opportunity for an identity framework and improved business transparency is very exciting, it felt like a cost-benefit analysis of some sort was missing. The way that producers and consumers understand the origin of a product can be very different. This might be personal bias, but my impression is that consumers care most about identifying tags (e.g., is the meat that I’m buying organic?) – by comparison, businesses are far more concerned with granular data (e.g., which specific farm did this meat come from?)

The distinction between consumer and producer interests seems benign, but signals a fundamentally different mode of thought. Consumers want touch points that are quick and easy to understand. In the blockchain world, it’s worth asking, whether consumers care enough to pull out a QR-scanner to find out where each product is from. Maybe they do, but also, this technology could appear in a very different way than it’s packaged today. Imagine if there were grocery stores that incorporated augmented reality and products were arranged in a color schematic based on provenance. There could be a readily intuitive ranking system, which could also influence pricing models.

Schaeffer said that Provenance has already worked on some supply chain improvements, including Indonesian coconut production. Apparently, some of the farmers involved in the test reported that they did not receive full payment (only a small deposit). Because of Provenance’s involvement, when this was discovered, the farmers were appropriately compensated, and the coconuts were certified as fair-trade. This is evidence of the real-world impact of blockchain technology.

Swarm

Although I wrote about Swarm on Day 2, R&D team member Aron Fischer expanded on the chequebook function in a breakout session on Day 4. It’s a peer-to-peer accounting protocol, and it’s brilliant how the system of accounts minimizes transaction costs. Imagine that you and I each had a business. I sold apples and you sold bananas. We both want to buy from and sell to each other. But instead of depositing checks each time we do business, we just keep track of our debts to one another and we settle our balances at the end of the month. We save time and money because we don’t have to go to the bank every day (think of this as a transaction cost for recording to the Ethereum blockchain).

Fischer explained that cashing cheques frequently offers higher security guarantees, but the tradeoff is higher transaction costs. Another interesting point was that Ethereum’s transactions become something like an on-chain credit history.

Dai and Stable Coins

The idea behind Dai is to provide a more useful digital currency that is stable against the value of fiat. Dai symbolizes dynamic autonomous interest rates. It appears that the project released its “purple paper” in August 2017. It’s not exactly clear how this works – but Andy Milenius proudly announced a forthcoming December 2017 release. One important term to keep an eye on: PETH, an abbreviation of “pooled Ether.” Check out makerdao.com for more information.

As we leave Cancún, my heart is heavy, but my mind is racing. The immersion that we’ve enjoyed over the last few days has generated countless questions and fostered many new friendships. I’m blown away by the global nature of Ethereum’s development community and I’m inspired by the collaboration that has taken place. Furthermore, I am grateful for the chance to be part of this world – where I can enjoy the intersection of technological practitioners and theorists, creators and regulators. What an incredible time to be alive – we’re so lucky to be part of this passionate and good community. Of course, it’s a ways off, but I can’t wait until Devcon4.