David Roon (Blockchain Expert): From planning to real application
David Roon (Blockchain Expert), software developer extraordinaire, shares his insights on blockchain in the financial and insurance sectors as well as potential future applications within those fields.
Can you briefly introduce yourself?
I’m a developer based in Zurich. Before I began working on blockchain, I was looking for rendering systems which allowed a distribution of data with verification of origin features. I looked into structures including Bittorrent and Ethereum. After testing the implementation of such distribution systems on a virtual machine, the process led me to become a part of the fascinating blockchain community.
« Blockchain would provide enormous cost savings and have a tremendous impact on risk management strategies. »
In short, what is a blockchain?
The term blockchain stems from the fact that data and transaction are ordered in blocks which are intertwined in a chain system. We consider any distributed system which manages a networked consensus whereby all stakeholders agree upon the network’s state and configuration to be a blockchain. What’s most important is that this happens in a
trust-less way as the design of the system forces people to follow specific rules. This is achieved by creating cryptographic proofs which certify that all steps and procedures have been respected. Such proofs should be easy to validate and nearly impossible to falsify.
What are the implications of blockchain for the financial and insurance sectors?
Fundamentally, the added value of blockchain lies in its capacity to create a consensus around data. For example, a group of banks - a consortium - can create a network in which none of the players is obliged to trust the other(s) as the technology guarantees that none of them can act maliciously. In addition to this, the network - by its very nature - ensures significant transparency. The insurance consortium which has been created - see B3I - works on that basis. B3I created tools which build trust among players. This is going to have a huge effect in terms of compliance, because the process could be coded. Blockchain would provide enormous cost savings and have a tremendous impact on risk management strategies.
What are the key developments to keep in mind?
I think identity verification will soon play a very important role. Companies will be able to identify individuals at lower costs using blockchain. Currently, processes like KYC - know your customer - entail substantial administrative costs. We could see a very safe, decentralised data source without a host/owner which would ensure trust due to its incorruptible nature. Once identification initiatives are successfully tested and implemented, developers could then turn to smart contracts and other expensive, risky processes. The objective is to increase the fluidity of
financial systems by moving away from impractical and costly compliance systems and legislation and reallocating resources where they are most needed, instead. 2017 will be the year of the prototype. Of course, everybody wanted to understand the concept of and the risks surrounding blockchain but the workshop phase is now behind us. In 2017, consortiums will launch their first beta projects and the blockchain community hopes that 2018 and 2019 will see tangible applications.