2nd Global International Blockchain Summit Shanghai- Recap and Summary
After three days of excitement, jubilation and reflection at DevCon 2, it was the turn of Wanxiang Labs to complete the rest of the International Blockchain Week in Shanghai. They did not fall short of the occasion with a Demo Day that involved ideas and applications of Blockchain technology from all over the world and then two days of talks from industry leaders at the 2nd Global International Blockchain Summit.
These are the highlights from Day 1 & 2 of the Second Annual Global International Blockchain Summit.
Feng Xiao, Founder of Wanxiang Blockchain Labs, who took the audience by surprise by announcing Wanxiang’s plans to build a Smart city in Hangzhou in which this city will be an innovation platform based on Blockchain and Artificial Intelligence. This city will be deployed on the cloud and will house a population of 90,000. Their plan is to invest 200bn RMB over the next 7–10 years and cited an example of how this might work with Smart cars and battery usage that will be registered on the Blockchain. It is a project he thinks will truly change the world and if it works, they will hope to launch it across the globe. Feng stated ‘Let’s experiment because we can since the cost of failure will be low’.
An unexpected visit from BHP Billiton, the largest mining company in the world (and no, not bitcoin mining), announced it plans to improve its supply chain operations using Ethereum with help from BlockApps, a Blockchain startup, whom helped to develop the solution.
Tyler Smith, a Geo physicist at BHP, introduced Project Rai Stones, which is a production ready Blockchain based trading application for well-borne samples.
He explained the complex process of the current system where they track everything manually using emails and spreadsheets. Tyler envisions this will allow samples to be tracked more efficiently where the only thing that will be changed on the Blockchain will be the state. He said ‘Everyone knows the real time process of what is going on’.
Although a Geo physicist by trade, he told me: ‘I spent many hours after work for a long time understanding Ethereum and what it could do’. With plans to require vendors to use the app to collect live data of samples later this, it seems Tyler’s hard work has paid off.
Co-Tricity, whom is aiming to decentralise the power grid, sees energy meeting the Blockchain where prosumers, someone with generative capacity, can sell excess energy to local consumers such as a schools. Martin Lundfall and John Lilic described the workings saying it will pull data from a smart meter and see how much you’ve made and consumed and this will be put on Ethereum. Asking Martin Lundfall about the mechanism design he said ‘it’s about making the grid as efficient as possible and the need to create an application, rules of a game, that incentivizes behaviour that result in optimisation of the goal.’ Sounding like game theory application he continues to say: ‘An example would be of a power grid and incentivizing people when not to use electricity and they get a reward.’
Leanne Kemp from Everledger explained how they use the Blockchain to keep track and verify diamonds. The Diamond’s characteristics such as size, physical properties and dimensions are recorded and then a unique ID is made and recorded on the Blockchain. This means they can track items that are stolen if tried to be sold later and also check the provenance of the diamond to see whether if it was in a conflict zone or not. They currently have 98,000 diamonds tracked on Blockchain already.
Different perspectives With Regulators, Consortiums And ICOs
There was a stark difference between those who hail the decentralised notion of Blockchain and those who believe decentralisation is dangerous.
Lihui Li, of the Blockchain Research Task Force and Former Director of Bank of China, was from the latter, indicating that ‘decentralisation is not a good choice’ and that Blockchain applications need to comply with existing laws and regulations.
Shuo Bai of China Ledger also introduced their work around Blockchain. Dubbed by many of the attendees as the most centralised Blockchain ever, he believes that this will help with their privacy plans. Immutability, which is a core feature of the Blockchain, does not seem to be the case at China Ledger as they allow halting transactions, freezing smart contracts and only allowing regulators to view all transactions and balances.
Their Chinese peer, Zhen Xu, Director of Shanghai Clearing House, was actually more forward thinking saying that ‘we must upgrade to Blockchain technology’. Although he does not think complete decentralisation is feasible, ‘it can be done on a case by case basis’.
The regulator needs to be clearer, a claim that financial institutions usually make. The legal sphere is still divided in the basic definitions of the new technology, such as, if bitcoin is a currency or commodity, and by not regulating it, market stability is in stake (repeatedly mentioning TheDAO hack).
John Whelan, Head of Blockchain Labs at Santander, talked about the rise of Blockchain Consorita among financial institutions. He described a bank as a ledger, hoping that there will be a shared ledger trusted by all banks. He emphasised this more by saying: ‘It’s not about the coin, it’s about the ledger.’
As more and more institutions test out Blockchain related technologies, we could see more efforts by banks collaborating together on a smaller scale. They see a particular use case that is interesting to them and thus they examine it. They conduct a study and then invite other banks. He explained the story of how the Utility Settlement Coin project evolved which saw UBS partner with Clearmatics, a start-up that is developing clearing machines for financial OTC markets, and UBS asking vital questions if they can create a coin used by banks only and if so how can they do it. This then let to a study and then banks, like Santander joining.
We could perhaps see a consortium forming later down the line following the announcement made by Roman Mandeleil, Founder of ether.camp, at Devcon 2 announcing a partnership between Santander and ether.camp. This partnership would see ether.camp helping Santander to build a platform that will allow the bank’s customers convert money from their bank accounts into ‘Cash ETH’, a tokenised online currency which is redeemable for paper currency.
John concluded: ‘To get into consortia, start small, and start with the local bank across the street.’
Tokens issuing or crowdsales for example were also widely discussed, both on the presentation of Fenbushi legal counsel and the VC panel. Issuance of tokens may be considered an investment contract — triggering all the requirements associated with securities (disclosure, registration, limitations & liabilities), but could also be seen as a sale of software.
However Blockchain technology is hard to regulate. Other problems are jurisdiction determination, that conflict with the unified nature of the cyber space, and how coded smart contracts, a new form of contractual agreements can replace existing legal entities. Another issue is liability in decentralized endeavours.
VC panel included American firms Pantera Capital and USV together with Chinese IDG and Fenbushi Capital. Crowdsales again were discussed (almost exclusively until the crowd Q&A), as Joel Romero from USV even said that there is frustration for the lack of exits in the Blockchain space, while several crowdsaled tokens value have sky rocketed.
Crowdsales offers a solution for companies to get funded easily, and for founders and investors get a quick valuation for their stake of tokens. This can grow the project network effect and community involvement. Fenbushi Capital partner Remington On said that the challenge lays on governance, as new type of Blockchain organizations who are issuing tokens with value emerge. All agreed that the industry is still immature and much more experimentation is needed, before a new incentive structure could change our economy.
Written with Lior Zysman, a crypto legal advisor to Wings.ai.
