Leaders Series: Klara Sok @ Conservatoire National des Arts et Métiers

Issue 27 — April 3rd, 2017

This series highlights the unique stories of leaders from various communities across the growing digital currency and blockchain technology industry. The goal is to showcase the fantastic work these leaders are all doing at different levels of their respective organizations, and to encourage more people at all stages of their careers join the revolution we’re creating, together!

Klara Sok is a PhD candidate at Conservatoire National des Arts et Métiers

She’s been using and studying bitcoin and blockchain for nearly 4 years.

How did you get into bitcoin?

I first heard of Bitcoin while I was living in Buenos Aires, Argentina, in 2013.

At that time, the Argentinian peso was continuously losing value against the US dollar, as a result of inflation. The country was suffering from a 25% annual inflation rate. Some regulatory restrictions limited foreign currency access to the majority of the population. All this led to an informal forex market, where people could buy US dollar, euros or Brazilian Real (these were the main traded currencies) in cash from informal street agents. This informal market was called the blue dollar market. Accessing the blue market was quite easy but it came at a very high price: one had to pay a significant premium to the official exchange rate.

While casually chatting with friends about Forex might appear quite nerdy in countries like France — where I live now, speculating about forex markets and the future direction of currencies was a daily discussion topic in Buenos Aires, for obvious reasons. Someday, a friend of mine told me about people looking for bitcoins. I asked “What’s that?”

Why were you in Argentina?

I was in Argentina for a sabbatical year in order to learn Spanish and enrolled in some cooking school with the idea of launching a private kitchen AirBnB-like website. I was definitely NOT following the latest technological advances in cryptocurrencies. When my friend explained bitcoin to me, I felt so amazed, fascinated by it that I decided to spend more time understanding it and learning about it.

The Argentinian monetary context at that time helped trigger my interest in bitcoin. Most of my friends were actually suffering from hyperinflation and some of them were genuinely interested in finding some bitcoins. I was amazed by the idea that some electronic money on the Internet could actually be perceived as a serious alternative for savings diversification.

I then subscribed to informational social networks trying to feel the interest in bitcoin and actually discovered a whole new space that was unknown to me before. Admittedly, I felt like an alien landing in a new planet with inhabitants having completely different codes and abilities. I kind of felt ashamed to be arriving so late, and started to dig into historical public mailing lists. Seeing that people were actually excited about bitcoin for more than four years already rung the alarm bell.

The distributed consensus of Bitcoin but also the organization of open-source software development and the collaborative aspect of peer to peer production were what was keeping driving my interest. I became quite passionate about it, and started wondering where bitcoin could lead globalization, capitalism and the internet going forward. I was also wondering how businesses might integrate bitcoin, and how states and governments might react.

I couldn’t stand the idea of missing something that I felt had so much potential. I soon made the decision to dedicate most of my time following bitcoin developments and catch up as much as I could. I applied to French universities for doctoral programs, as I thought research could be a good way to combine my interests and it was time to end my sabbatical. I got a scholarship from the Conservatoire National des Arts et Métiers and now am in my third year as a PhD candidate. I take a social science perspective and focus on disintermediation.

What did you do before you got into researching bitcoin?

Before leaving for Argentina, I was a portfolio manager dedicated to South-East Asian and Japanese equity markets for Rothschild. I also worked as an organizational design analyst at the Boston Consulting Group.

What’s been the most interesting experience you’ve had during your PhD studies thus far?

As a researcher, you have the opportunity and the responsibility to confront a large variety of perspectives regarding the subject of your research. Being a researcher in social sciences leads you to meet up with the people who are actual actors and builders of the system you’re studying, which is a real treat for me. I meet up with great minds working in the bitcoin and blockchain space and this alone is already an amazing experience. It’s wonderful how open the space is, contrary to what might be perceived from outside.

As a researcher, contrasting different perspectives, comparing the views of tech wizards, business incumbents, regulators, and user communities, as well as following their respective evolutions, are unique opportunities I wouldn’t give up for anything else.

What is your research focused on? Why do you feel passionate about this?

The focus of my research is disintermediation. There is a tradition in industrial economics of studying disintermediation as an economic phenomenon, namely through the development of the Internet spectrum. Furthermore, I have a great interest in understanding how peer to peer production, namely through open-source software and collaborative forms of development, is gaining traction. I am now working at articulating a theoretical framework linking peer to peer production and distributed autonomous consensus mechanisms as incentive-based security mechanisms.

My objective is to provide a high-level theoretical framework that would translate into some type of toolbox highlighting the benefits and risks of disintermediation, with case studies supporting this framework.

As you think about the evolution of the bitcoin and blockchain space, what do you think is limiting the growth of the space?

It is quite hard to say what such a heteroclite and distributed ecosystem lacks today as it would imply knowing exactly what does actually exist. Part of me would say that more collaboration between different communities could lead to higher performance in innovation. On the other hand, adversarial mindsets and intellectual controversy also have their advantages as part of the proofing process for creative thinking and actual product building. I totally understand the wish of businesses to ramp up blockchain based systems quickly. However, letting the ecosystem evolve at its own pace offers a greater opportunity to experiment with different options that might eventually be of greater value in the longer run.

Diverging views might appear in the short run as something dangerous, hurtful, and destructive. In the longer run, however, I feel like it might be good to let innovations grow organically, branch in one direction and/or another, while providing enough momentum to provide fuel and space for it to grow. Allowing the technology to develop in a secure and safe way for the greatest good will allow people who chose a less successful path to “recycle” their skills in new endeavors in a nimble, smooth and inclusive way, free of path dependency. In my view, open-source software development lowers the opportunity cost of trying something new while increasing the odds of finding something great.

I forget which VC said it, but I think the phrase goes that we always overestimate what will happen in five years and underestimate what will happen in twenty. How do you see this playing out in bitcoin?

This VC seems to be full of wisdom! If she has been investing for more than twenty years, as this expression might suggest, I guess she already went through more than one technological cycle.

My perception is that more and more experiments will flourish in the next five years. Lots will likely “fail”, as experiments, leading to lessons learned for the whole ecosystem. The openness of the informational world today will accelerate the process of learning from others’ experiments. The likelihood of temporary failure will drop, while information sharing and education grows exponentially, and those who’ll get the most successful will likely be those who will have been attentively participating to the space over time while being able to keep listening to alternative perspectives and watching projects to learn from their successes and failures.

What changes do you think bitcoin or blockchain will accelerate in our world?

In my view, value transfer applications, be it tangible or even intangible value, as long it is attractive to others to the point that someone would want to steal it, will be the killer apps.

New gate keepers might constitute new intermediaries, such as oracles, blockchain security providers, key keepers, or even network operators and advisory services enabling users to interface with distributed infrastructures might in my view benefit greatly from the blockchain boom.

Energy production, usage efficiency and waste management research and development might also indirectly benefit from the growth of blockchain networks. New economic alliances and vertical integrations between different types of infrastructures (power, network) and information and communication equipment might appear.

Last but not least, I perceive bitcoin and blockchain technologies as ways of increasing the security of exchanging by decreasing the unit cost of acquisition of users participating in the security of the system. Not to be misunderstood, this doesn’t mean that it will decrease the overall cost of security in the short run, as this overall cost is a function of the total power put into security for the system. While security cost might rise, opportunities for offsetting this marginal cost increase might appear and innovative businesses might develop there. A new disintermediation cycle might then appear, led by economic need and open-source innovation.

Connect with Klara on LinkedIn!