Blockchain Explained: Ken Seiff and Peter Smith

OXFORDSHIRE, United Kingdom — Deliver a seven-minute crash course on the blockchain: what it is and what can it do. This was the challenge accepted by venture capitalist and “recovering retailer” Ken Seiff, speaking at VOICES, BoF’s annual gathering for big thinkers, in partnership with QIC Global Real Estate.

It’s easy to describe a mobile phone or a bicycle but explaining something as conceptual as the internet is hard, began Seiff, who is currently the managing partner at Blockchange Ventures. Describing the blockchain is further complicated by the reality that the technology is still in its infancy and nobody really knows how it will develop. “We can’t fathom the power of the blockchain the same way that we couldn’t fathom power of the internet,” he said, likening the present state of the blockchain to where the internet was in the mid-1990s.

Put simply, the internet allows for any two entities (a person, a company, an institution) to exchange data (text, image, voice, video, a list of your friends, credit card numbers, GPS coordinates), said Seiff, giving Uber and Facebook as examples of services that run on this concept.

The blockchain also allows entities to exchange value with each other. It’s an open, distributed ledger that can record transactions between two parties efficiently, verifiably and permanently. And yet when it comes to the blockchain we don’t yet know what we’re going to be exchanging, said Seiff. It could be anything from digital currency to medical records to something we have yet to imagine.

He used the metaphor of fire to underscore his point. Fire was first controlled by humans about one million years ago, he said. At the time, our ancestors likely understood that fire could create warmth and light, because they understood the sun. But they could not have imagined that fire would be used to weld steel to build skyscrapers and the railway systems that would accelerate the colonisation of entire continents.

It will change the power structure between the people who create and the people who buy.

With blockchain, we have essentially just discovered fire. There are potential applications in everything from supply chain to payments. But we can’t yet predict what the equivalents of Uber or Airbnb will be.

“Essentially it’s a way of distributing a source of truth,” explained Peter Smith co-founder and chief executive of Blockchain, the world’s largest software provider for digital currency and distributed ledger technology, picking up where Seiff left off.

He used the example of traditional banks as a counterpoint that operated as a centralised source of truth. Blockchain, on the other hand, is like a “distributed HSBC,” Smith said, adding that there were differences in the ways that investors and engineers tended to see the technology and that the world had yet to settle on a unified theory for blockchain, but that digitising value — once hard — would become trivial.

Two of the most famous protocols that sit on the blockchain are the digital currencies Bitcoin and Ethereum, said Smith. As for applications for fashion? Of course, it’s easy to imagine fashion retailers accepting virtual currencies as a form of payment, especially “if you are interested in affluent millennials,” suggested Smith.

He also imagined how blockchain could enable fan-based financing of fashion labels. “It will change the power structure between the people who create and the people who buy and the people in the middle who finance,” he said. “It will change how things are financed. Things like fashion could be financed directly rather than indirectly.”

But that’s only one of the myriad unknown applications of blockchain soon to come. For the time being, it’s important to start conducting experiments, added Smith. Playing with fire? Surely not.

To learn more about VOICES, BoF’s annual gathering for big thinkers, visit our VOICES website, where you can find all the details on our invitation-only global gathering, in partnership with QIC Global Real Estate.