The Web Summit - Interview with Brian Behlendorf

We’re happy to open the series of our EXCLUSIVE interviews fromThe Web Summit with Brian Behlendorf, CEO of Hyperledger.

Brian Behlendorf is a well-known technologist, executive, computer programmer and leading figure in the open-source software movement. Since 2016 he’s been the executive director of the open source Hyperledger project at the Linux Foundation, aimed at advancing blockchain technology.

We spoke to Brian about Hyperledger, diamond supply chains, digital identity, and why PoW is similar to mercury mining.

• Before we switch to the blockchain and all its challenges, can you tell us what Hyperledger is working on right now?

Sure. Hyperledger is a part of Linux Foundation, and Linux Foundation is 15-year old nonprofit operating at the centre of many of the most important open-source projects in the world. Obviously, the Linux operating system, but also Kubernetes, which is a big part of the cloud computing world. Hyperledger started 3 years ago, to try to look at distributed ledgers and smart-contracts. Not necessarily cryptocurrencies, in the view of Bitcoin and Ethereum, but in integration and tokenization of a lot of the world’s digital assets and real world assets that can be tied to them, and a lot of these multi participant processes. We are open-source community, we have corporate members. But all of our software is available to public for free, without any obligation — for people to go and build their own blockchains with.

• Which companies you mostly work with?

Our membership includes companies like IBM, Intel, J.P. Morgan, and a lot of other large companies. In fact, there’s 12 now who offer blockchain as a service, using our products. There’s 80 more companies that offer products and services on top, from those companies to smaller companies, trying to disrupt their industries. It’a a rather global phenomenon, too. Companies from Russia — Sberbank, for example, is a member of ours. And Ukraine, and Asia — about 40% of our members are based in Asia, and about 20% are headquartered in the mainland China. Lots of interesting cases cases all over the world, and lots of participants all over the world.

• You’ve recently partnered up with Enterprise Ethereum Alliance. What is the goal of that partnership, what are your organisations working on together?

Hyperledger is not one single software piece, it’s actually a family of products. It solves this distributed ledger problem in a couple of different ways. In the same way you have different kind of databases out there. And one of our products is the implementation of the Ethereum smart-contract language. Smart-contracts that can be written to the Ethereum public network, also, now thanks to our work, run on private permission blockchain networks. So as the Ethereum community has evolved and professionalized, and many companies have started to get involved there, we felt it was important to build a bridge to that community. The EEA is very focused on standards, and it is very complimentary to our open-source software. We felt it was important to find ways to work together, as well as to send the message to the world that it is not Ethereum versus Hyperledger, it is really Ethereum AND Hyperledger, and we’re trying to figure out how we can provide as many options to the public as we can.

• Which blockchain use cases impressed you the most, in recent years?

I’m really a big fan of supply-chain use cases that have to do with bringing a layer of social justice and trying to address some of the real big problems out there in the world. Things like fighting slave labour. One of the big deployments of Hyperledger fabric is in the diamond industry, where it is used to trace the provenance of diamonds to ensure that they come from mines that do not employ slave labour, of are not used to purchase weapons. That now a default tracking system for the diamond industry. Nobody should buy diamonds today unless they can see the verifiable history of that diamond on blockchain. But the really big use case that energises a lot of us is the reinvention of digital identity. Instead of this Facebook model where everything important and interesting about you is on this remote server controlled by Mark Zuckerberg — let’s think about the world where all of your private information and all the things that define you are held close in a thing that is like a wallet. Which you can share with different sites and people, but you also have the control to pull it back. That’s how we get to not only the better way to do social networks, but also — passports, and driver’s licences, and diplomas, and healthcare records. It’s just a much better way to do this. And blockchain technology is essential to give consumers a sense of agency over that. And we have a big project at Hyperledger focused on digital identity.

• I recently met ex Prime Minister of Estonia, Taavi Roivas, who was able to digitize identity, voting, healthcare. And electronic identity is their main thing. Do you think that this technology, and the DI that is based on blockchain, can coexist?

There are a lot of countries that have pursued digital IDs, but they did it in a very centralised way. The biggest example Is the government of India which has a massive system called Aadhaar, which grounded 1.3 billion citizens with digital identity. The problem is when you centralise it, you make it a big honeypot for hackers, and you also put too much value in being an administrator of that database. There’ve been a lot of compromises and weaknesses discovered in this. In fact, the Supreme Court of India has ruled against the use of Aadhaar system in a lot of processes, because it cannot be trusted. Reinventing it through a distributed digital identity, through something where instead of being a central directory it is in the form of a digital passport, something that is given to you — we can solve a lot of those problems. And now countries from Canada to the government of Sierra-Leone, to Philippines are all doing pilots on this base, and more than that. They’re trying to understand how it works, but I’m very optimistic, this is how we can reinvent how a digital identity works.

• So you work with governments, right?

We do. We have relationships with government agencies in the US, in Canada, in UK, as well as in Asia. In fact it’s all over. We feel that there’s an educational role that we can play, but there’s also a capacity building. For many countries it took a while to understand how open-source works, and now some countries have been developing and supporting open-source as a primary goal. Now we feel the same type of education and capacity building has to happen around blockchain technology.

• I know that Hyperledger aims at educating enterprise businesses and making them realize the benefits of blockchain technology. But what will it take for a consumer to finally see, to understand the impact of blockchain?

Well, in many cases this technology will be deployed, and consumers won’t even know about it. If they buy a diamond in a diamond store, and if it’s a moderate size or larger, they’ll have an app that shows them — this is where the diamond came from. And they can have a confidence that if a jeweller says it is from a mine in South Africa it really came from there. Or the medical records will be more protocol. Or when they apply for a loan they’ll have a lower rate that they pay, because their credit history is verified. In many ways it will be invisible, but it will help a lot of the bureaucratic processes. The digital identity part is where perhaps it will be more visible to them. They might still not call it blockchain, but an e-wallet, but this will give people, finally, I think, a sense of control and sovereignty and agency over their digital data.

• Some of major players of crypto market tend to say that the next wave of mass adoption of blockchain will be seen in developing countries — rather than in developed. Do you agree?

Absolutely. In some part it might be thanks to cryptocurrency, in some part it might be due to those countries adopting the same technology even for a non-currency application. In Philippines the banking industry is building a user-centric KYC system. Users can share when they apply for a loan from one bank their history of transactions from other banks. It kind of puts them in a centre, rather than behind the scenes of the credit history bureaucratic thing. This will increase the financial inclusion, will bring down the cost of borrowing in Philippines. But this is just one example. The government of Sierra-Leone is working with a non-profit called Kiva, a digital identity system for all 30 million citizens of Sierra-Leone, and it is using a technology that does not have a central vendor. And the only way that they could deploy this stuff at a reasonable price without creating a big dependency on a vendor is through blockchain technology. So I agree with a lot of advocacy around this. It’s not a magic pixie dust though. It’s just as important as developing a great open-source software, sharing it widely.

• Which brings us to the question of regulation. What do you think should happen in the regulatory field in the next 2–3 years in order for us to see relatively mass adoption?

Regulators matter quite a bit to reinvention of certain kinds of digital financial assets, such as equities, security tokens. I think we will see a lot of equities markets move to using distributed ledgers. Regulators didn’t just materialise out of the thin air for the sake of bureaucracy. In many cases there were famous examples of people taking abuse of other people’s confidences, and selling them things that were not perhaps really what was claimed. I think the industry needs to work with regulators, as I’ve seen them do. To educate them, but also to realise that there are reasonable rules and bottom lines, and probably regulations in each sectors, whether it’s equities, or mortgages, or currencies, or any other type of financial instrument.

• A lot of fuss about a Dotcom boom traditionally surrounds crypto. Do you think this comparison is actually fair?

I think we go through waves with every technology cycle, of irrational exuberance, this kind of excitement. And certainly there are a lot of new millionaires and billionaires minted from people who are really adopters of bitcoin and participated in the Ethereum ICO. One of my favourite examples from just recently is a gentleman who bought 170 million dollars with real estate in Nevada, and it’s the blockchain company, the LLC creating a crypto utopia out there. That kind of investment allows us to do a very high risk things, which could turn out to be amazing and cool, but there could be a lot of failures there. And it’s important not to blame an entire system for failures, when there are also successes. Every technology movement needs these kind of boom and bust cycles to incentivise high risk investments to get really amazing things to come out. I don’t think it’s a bad thing, but investors should be very wary in claims. Smart investing makes sense anyway. When you invest in a startup you want to build a relationship with the founder, you don’t want to throw money at them and just walk away. And if you are a startup founder you want to build relationships with your investors. An ICO model took that away, it said there should be almost no relationship there. This space is maturing, and the good news is that a lot of that early wealth has helped to find a lot of technology development, and that will pay off in the next 10 years.

• Your words about the death of Proof-of-Work, that were all over the internet several months ago. Can you explain why would you wish PoW consensus to be dead?

Satoshi Nakamoto, whoever she is… or he, but I want to presume it’s a she, she deserves a lot of credit for coming up with a brilliant way to implement a sense of fairness across the network. And it is one CPU, one vote. On the premise that we have approximately proportionate access to a CPU power base on our wealth. And it’s a one way to fight a sybil attack, pretending to be a thousand people on the Internet, when you’re actually only one person. But that has a validity in anonymous context, and most commerces are not conducted in anonymous context. It’s conducted in the world where even if you and I don’t know each other directly, we’re both a part of the same country we live in, or country we’re doing business in. Or we’re a part of the industry, and we have reputation that we want to build. In that kind of setting it’s over engineered, you don’t need complexity, and especially the CPU power. Many people set up the Bitcoin revolution, and partly they’re setting up the Ethereum revolution, because it has a sense of being an industry that doesn’t care about the environment, or about its environmental impact. That is something the industry really needs to address, and the fastest way to address that is to move beyond proof-of-work to other consensus mechanisms as soon as they can. I think they will look back at it as something like mercury mining. In the mid 19th century they used mercury to separate gold from raw or, and it was like the alchemy. If you’re a technologist, that is the coolest way to get to gold. But now we live with that terrible toxic legacy in the Sierra mountains from the use of mercury, and we now recognise how horrible that was, and it wasn’t worth all the gold that we pulled out. I think we might need to look at the PoW the same way.

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