The mysterious and trendy concept du jour otherwise known as blockchain was front and center during an extended breakout session Tuesday at the Global Privacy Summit. Skadden Partner Stuart Levi and Filament CEO Allison Clift-Jennings expounded on this paradigm-shifting concept to a packed room during the session, "How Blockchain Will Transform Privacy and Identity."
Levi, who took the first portion of the session to lay out some of the basics of the blockchain concept to the uninitiated, likened blockchain's potential effects to that of the internet. "It's a new paradigm," he said. "Think about trying to explain Uber, Lyft, Amazon, and Facebook to someone before the internet was invented." That's the effect, he said, blockchain will have on future markets. Potential innovation will be limitless.
Clift-Jennings, whose startup Filament facilitates internet-of-things communications built on blockchain, pointed out some of the limits to current public, proof-of-work blockchains — like bitcoin, for example — comparing them to what dial-up was to the internet more than 20 years ago. Proof-of-work is a mathematical concept that helps verify the computational work to secure a given block has been successfully completed. Massive amounts of computing power are needed to run what is essentially a guess-and-check program that deals with exponential-level numbers. The amount of energy needed to run these programs is unsustainable.
"I think we'll look back at some of these proof-of-work systems and see how primitive they were," she said.
Alternative blockchain systems are also in the wild right now, Clift-Jennings noted. Zero-knowledge proofs, for example, allows a party to reveal only certain portions of a value(x) for a trusted transaction.
Looking forward, Clift-Jennings outlined a number of future and alternative iterations of blockchain, as well. Next-generation consensus algorithms and machine anonymity are some exciting areas to watch. She pointed out machines can also work on a blockchain ledger, and, in an IoT ecosystem, will need privacy and anonymity, too, just like people, because the machines will often be doing work on behalf of people.
But this is really only the beginning for blockchain, it appears.
Levi and Clift-Jennings also took a stab at potential government regulation of blockchain, specifically contemporary cryptocurrency. The U.S. Securities and Exchange Commission and the Federal Trade Commission have each recently expressed concerns about bad actors on cryptocurrency. Clift-Jennings said she thinks U.S. regulators will move cautiously out of concern that cryptocurrency companies will leave U.S. soil and move to more friendly confines, like Switzerland's "Crypto Valley," Hong Kong or elsewhere.