Sameer Kochhar in Conversation with Jai Singh Arun, Co-Author, Blockchain for Business & Senior Program Director, IBM

2nd July 2019

Jai Arun Singh, Co-Author, Blockchain for Business

Sameer Kochhar: You have written this very interesting book Blockchain for Business. What was the idea behind it?

Jai Singh Arun: Technology solutions like IBM Watson, IBM Blockchain have been the result of our collaboration and joint working with our clients worldwide in an attempt to understand their business imperatives and processes backed by innovations. IBM Research works closely with clients across geographies in developing specific solutions and creates formal commercial products. On the other hand, IBM also works on creating such solutions, which may not be immediately required by the market. These research is patented/licensed along the way and is ready for deployment as and when required.

We started the Blockchain in 2015 and have been focusing on the development and advancement to provide commercial solutions. We also realised that there are quite a few CIOs and CISOs having misconceptions or lack of sufficient or relevant information that prohibits them from understanding how to leverage technologies for effect transformation. Therefore, we had to create 73 use cases across sectors to make the leadership teams across organisations understand the potential of Blockchain and how this technology can help on delivering organisational goals.

Sameer Kochhar: What to your mind would be the most self-evident use case in banking?

Jai Singh Arun: In a business or government, if you have multi-party transactions and are struggling with transparency and trust, Blockchain would be a fantastic tool to enable this seamlessly. Particularly for banks handling settlements and mortgage processing, Blockchain is proving to be a boon. 

Currently, everyone seems to be moving to Blockchain and now there is talk of enterprise Blockchain platforms too. Its usage in payments sector is not very apparent right now but soon it will start influencing other transactions between multiple parties. This may also throw up security challenges.

We are increasingly seeing that networks are used for loyalty programme tokens using Blockchains. And when you go from one network to another, there are challenges as different Blockchains are written differently and one is using a particular algorithm which is customised. Technologies like DLT have connect one network with another as there is nothing in between. Interoperability is one of the issues and even in payments, networks and its participants are restricted within the network. There are possibilities of expansion today. 

Sameer Kochhar: Interoperability is one issue and the second one is payments.  if you take a payments use case there is a bank, a card company and then the channels.  This is very hazy.

Jai Singh Arun: Interoperability is a big issue and the second one is payments. Question remains on who will these trusted parties be?  This is one of the bigger challenges that we have faced in recent years.  Even when we can replicate the same thing to be applicable in India, the bigger concern would be how to bring people, organisations and other parties to agree to common new framework, which they have not thought through.

Sameer Kochhar: How has Europe done that?

Jai Singh Arun: Europe has done that successfully due to defined geography, one defined currency and one law. In India, every state has a different law. State like California introduced California Consumer Privacy Act (CCPA), limited to the state only while Europe has GDPR, which is global. Now imagine if 49 other states come up with a law, how would you deal with such a situation? This is not a technology issue, technology could help if it was a business issue. The policy and governance related issues have to be dealt with before bringing in the technologies. Boundaries, cross-boundaries, regulations remain big concerns. 

Sameer Kochhar: Take, for example India, where the whole village has one tractor and that one asset.  Could the whole village gain or could there be smart contracts. Will those kind of use cases be far more innovating and exciting?

Jai Singh Arun: You are absolutely right, I could have an asset that I could share and exchange the value of the asset within my net worth. If everyone agrees to then, we can definitely do far more things than you can think. I believe that we would see the innovation occurred due to the blockchain. We can definitely do far more with innovation due to Blockchain than ever. We will always have rules, Internet laws, boundaries and regulations. IBM is engaged with the US government for Blockchain purpose. The US government has a Blockchain committee, which looks at what kind of rules that the country needs and what kind of governance need to be put in place. 

Sameer Kochhar: Would you say that each country will need its own blockchain? If that is  the direction then everyone will be inward looking.

Jai Singh Arun: This being the case, then the question arises that will each country require its own Blockchain making it inward looking? This is indeed a challenge and this is where interoperability will play a big role. Blockchains will need to talk to each other and progress pretty much the way Internet did. I see the same pattern here.

For instance, I wrote something using Ethereum and the other using other Blockchain. They do not talk to each other today but in future they will have to. That was the same phenomenon we had with Internet to start with.  Yes, governments do their own bit or as much as the private organisations do, but eventually they will have to communicate. The same goes for the banking and financial systems too. Information exchange will be the key.

Sameer Kochhar: Do you think KYC part of payments can be handled by blockchain better?

Jai Singh Arun:  I believe the Know Your Customer (KYC) part of payments can be handled better by Blockchain. For example, in Canada for a population of 66 million there are a six banks. Living in Canada, one will have to have an account in at least one of these. Imagine a situation wherein all these banks are doing their own KYC spending $100 per account. While banks still could not share information with each other. There could be a third party, which is operating this network will enable this information sharing which is encrypted and safe. Basically a customer will send a request using his handphone asking to validate his credentials. This encrypted information so shared will sent across to the requester bank. Technology can make this happen without exposing the identity of the requesters – individual or bank. 

Sameer Kochhar: What I find is that in most organisations Blockchain professionals are clubbed with the security professionals. Why is security talked in the same breath as Blockchain?

Jai Singh Arun: One of the fundamentals of Blockchain being understood is that every transaction has to be encrypted and secure. Assuring every transaction has to be secured, it has to be fundamentally encrypted end-to-end to avoid any kind of vulnerabilities. There is no mechanism like anti-virus that exists now. But with the passage of time it shall also happen. Security is an important element of Blockchain as we say that every transaction is secure, who has access and permission of the access. 

Sameer Kochhar: So, Blockchain has to be built ground up for it to be secured, not a layer that you can add. 

Jai Singh Arun: One of the fundamental principal that you all understand is no matter you take any technology garbage-in and garbage-out. Even if people say that you are having one Blockchain so you must be secure.  But if your network is not secure, even your members who are not legitimate members they are providing wrong information or basically authenticating transactions that are not supposed to be then its same thing - garbage-in garbage-out. 

There is no magic bullet! However, there are precautions that everyone is taking. IBM started with putting the Blockchain on mainframe systems because that is far more secure for banking transactions running on mainframes that have hardware security modules that encrypt all transactions. So, we keep keys in hardware security module that even administrators can not interfere with. Therefore, I say that in-building safety and security into any hardware or software solution is important and intrinsic. 

Sameer Kochhar: How will quantum computing secure Blockchain?

Jai Singh Arun: Even encryptions are vulnerable to hacking. This is where quantum computing comes in. Quantum computing can run multiple permutations and combinations of any information at a speed faster than any other technology. IBM has a technology called post-quantum cryptography, which is letters based cryptography having multiple layers making it virtually hack-proof. Customers will be able to run your blockchain network using letters-based cryptography to defend themselves.

Sameer Kochhar: Do current security solutions support letters based cryptography?

Jai Singh Arun: Currently security solutions are not using letters-based cryptography. Quantum computers are evolving, IBM has 20 qubits right now we will be moving to 50 by end of this year and then a machine there would be time we would have 100 or 200 qubits system, which can easily track our 128 bit encryption. 

It will be an interesting area to watch as to how do we get there but yes, I am sure that quantum would be advancing faster than expected. Let me tell you how quantum works: bits in general are 0 and 1. In quantum, it is quantum physics element, that a huge bit is having an entanglement in position associated with them. Quantum computers are not limited to two states; they encode information as quantum bits, or qubits, which can exist in superposition. So, positioning is like 0 and 1, but 0 and 1 could be having an angle like 45 degree, 60 degree or 90 degree that can define its position or superposition. But it can also have an entangle with the other, which is associated with that and those entanglements are superpositions of this bit defining different positions. This permutation and combination aspect can do a lot more computation compared to the traditional computers. Imagine, if we have hundred qubits, I would say the best system with 100 qubits, we could analyse the molecular structure of insulin and then understand that how insulin reacts and behaves with human body and we can effectively create a diabetes medicine. So, we are talking about a whole new computer science now.