While in Davos, Business Insider's Sara Silverstein interviewed Adam Ludwin, co-founder and CEO of Chain, for a special edition of Crypto Insider. The following is a transcript of the interview.
Silverstein: And this is the biggest question that I have coming out of the these conversations at Davos — everybody is telling me that blockchain can solve all these different problems. I understand why blockchain makes sense for not being able to sell the same asset twice. That makes sense to me. What else — why is blockchain used as a solution for so many things, and why is that any better than a centralized database?
Ludwin: So I think the primary reason around the hype for blockchain is it's just a part of the hype cycle we're in. It's, sort of, captured the zeitgeist of digital transformation and a lot of folks are looking at it as a panacea for a lot of different things. When it's not. It's a tool like many other tools in your modern software suite. And it should be applied where relevant. And in the case of financial institution a relevant place to apply it would be where it's important for a particular product or service to have either more trust from third parties or to engage third parties in building a network without a traditional intermediary. That's really where it's most relevant. So I'm also equally, sort of, surprised maybe dismayed by the type of — let's call them — airport advertisements that I see proclaiming blockchain to be the cure-all for every corporate ail. it's not.
Silverstein: And when you sell — when you're talking about of a software for an institution, because when we look at bitcoin and all these currencies, every person that's involved in the network has a copy of the database right? So they can all verify that. But when you're talking about selling it to an institution, who are you getting that integrity from where is that security coming from?
Ludwin: Right, so let's start with bitcoin. So as you rightly pointed out in the case of bitcoin, the model is peer-to-peer network — no predetermined intermediary. There are, in fact, intermediaries in bitcoin known as miners, but they're not predetermined. They have to compete and you never know which one's going to actually process those transactions. And that all serves a purpose, which is to create an alternative payment rail that's censorship resistant, meaning no one can stop anyone from transacting on that network. And whether that is useful really depends on your context.  For some people in some places, having the ability to transact with someone else without censorship is important — whether those are you know people that are facing strict capital controls, or in a country of hyperinflation. Because in a particular place if you donate to a non-profit, you go to jail for political reasons. There's a lot of legitimate — I would call them — civil society reasons why bitcoin is a powerful mechanism. Very different context if your talking about an organization like Visa or Nasdaq, where we don't need miners, because we already know in advance who's going to process those transactions; who's going to order and ensure that no double spending is happening.
At the same time, the value that they see and gain from the technology is being able to cryptographically prove to third parties that they're not manipulating data; no one in their company has manipulated any data — intentionally or accidentally; no hackers have changed any state. So it's simply about increasing the robustness of that institution. It's a security and transparency innovation when we use it there. So very different uses — both in my mind legitimate, but both serving different goals depending on how it's deployed.