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The Weekend Read: Nov 22

1. Identity

I have just returned from a week in London, where I had the pleasure of participating in the KPMG/HSBC Business Innovation Summit. I also got the chance to spend time with the newer members of the R3 technology team. Yet the main topic of my trip turned out to be identity. Perhaps a reflective mood was brought on by my airplane reading (Sapiens by Yuval Noah Harari, highly recommended), but it struck me that the struggle with identity, both analog and digital, has been a key driver behind recent events. The conflict of both state and religious identity as reflected in the recent horrible events in Paris. The nascent 'tribal' identity in the ham-handed student protests on US college campuses. The fight over one's rights to self-sovereign digital identity. We will explore this theme a lot more in the months ahead, both in defining the problem space and in looking for the right partners to experiment with in the realm of financial institution identity.

2. The Week's Links

The bearded bard of blockchain at Barclays, Simon Taylor, does my job for me with his post 10 Things You Should Know About Blockchains:

Transformational ROI from blockchain for corporates will take a good number of years. Smaller bits of ROI can be achieved tomorrow if you have the right buy in and strategy and partners.
There are strategies for:
a) Educating a large organisation
b) Delivering quick wins
c) Building a blockchain strategy
But they require understanding it first.

Nice to see that three of the four folks "who can make sense of this stuff" work with us.

Tim Swanson released his latest research paper on Watermarked Tokens (aka Colored Coins) this week. The paper can be downloaded here or here. For the TL;DR, IBTimes gives a quick overview of the main points, along with some interesting observations from a few of the earliest adopters of colored coins. The response from Flavien Charlon (inventor of Open Assets, featured in Nasdaq's Linq platform) was especially interesting:

As the interest for Blockchain technology in the finance sector grew, and as we started to talk to a number of financial institutions and corporations about their use cases for Blockchain technology, we realised that watermarking systems were often not a good fit for what they were trying to do. This is why we started to build Openchain early 2015. Openchain solves the same problems as watermarking protocols, but with a much lighter use of the Bitcoin Blockchain. This way we can achieve a much higher scale, and handle compliance in a much better way. I don't think Coinprism and R3 are the only two companies in the space to have realised this. There has been a noticeable turning point in the industry around mid-2015, and more companies are now building permissioned ledgers.

3. Ethereum: DevCon1 continued

This week saw a few additional features and stories related to the previous week's DevCon1. William Mougayar highlights bank enthusiasm for the Ethereum protocol:

Mougayar said banks know their business better than anybody from the outside and it is therefore their own responsibility to understand what the blockchain does. "It's easier for them to understand the blockchain than for a blockchain person to understand their business." He added: "The onus is on them to do these small projects so they can build the expertise and they can come up with insights."

The article attempts to paint the Ethereum experimentation as a potential "contentious issue" with two "camps" emerging: Ethereum blue sky experimenting vs R3 standards building on top of legacy systems. Yet it is very safe to say that our current and future work covers both of these "camps." A good illustration of this is another IBTimes article featuring, among others, R3 partners Barclays and UBS. The following quote from Lee Braine of Barclays captures the benefit of this dual approach:

You mentioned one particular avenue of experimentation. If we look at multiple avenues, then we can actually see them cross-pollinating. Effectively you have experimentation: you have Ethereum and other technologies that we can play with, we can experiment, and we can explore the functional and non-functional behaviours.
But in parallel with that, we also need a structured design method: architecture, design, and engineering. This is a common theme that we have been encountering over the past six months or so, that it's necessary to interplay both of these avenues so that the two can learn from each other.