Here is the full transcript of Chief Digital Officer of IQVIA Holdings, Richie Etwaru’s TEDx Talk titled Blockchain: Massively Simplified at TEDxMorristown conference.
Listen to the MP3 Audio: Blockchain Massively Simplified by Richie Etwaru at TEDxMorristown
Richie Etwaru – Chief Digital Officer, IQVIA Holdings
Let me take you to the ground floor of the Internet.
This is what the Internet looked like exactly 40 years ago. In 1977, the Internet was just a couple of computers, a dozen of dots if I may, loosely connected by some lines that can barely carry a couple of bits and bytes between them, not that much.
Today you’re watching this video on YouTube, using the Internet, in the most sacred part of your house without a wire connected to the device, that you’re watching this video on, on the seat that most people should watch TED talks on, in your toilet.
Now in order for us to go from where we are, which are these couple dots, to where we are today, a lot had to happen. People like Bill Gates and Tim Berners-Lee had to dream about what could the world be like? How could we change the world?
And here we are, 40 years after. Now the thing about great inventions and great paradigms like the Internet is you actually don’t know what it is the day was made. You kind of have hindsight forty years after and you look at and you go, “Oh I see, what that did! It did the following thing:
And the question or the discussion we’re going to have today is if there was a paradigm sitting in front of us today, what can we do today to figure out what that paradigm is going to do 40 years from now so that we could take advantage of it, so that we can be a part of what Bill Gates and others did to the Internet.
In order to do that, in order to get ahead you have to ask what I like to call the big question. And the big question about any paradigm is: what is the one thing, what is the one gap that that paradigm fills for everyone?
Now I said hindsight is easy. Hindsight is 2020 but foresight, that’s where it gets difficult. Let’s take a look at hindsight.
If we think about some of the large inventions in our life, the printing press, for example, in the 1400s. The printing press filled an interesting gap. It filled what I like to call the knowledge gap. At the time knowledge only came to the anointed — someone special would get a clay with the name of kings on it and that’s how knowledge came from the gods.
The printing press was invented and completely closed the knowledge gap. If we take a look at something like the engine, — that invention; what gap did it fill? Well, it filled a power gap. At the time we wanted to manufacture and all we had was manpower, slavery, colonialism. The engine helped get rid of all of that.
And then our favorite invention: the internet. Starting 40 years ago, you looked at it, you’d go I’m not sure what it does. Today I like to think of it as filling the distance gap. The world is a lot smaller than it was 40 years ago. Today you can transact with just about anyone, from just about any distance away.
We’re here to talk today about the next gap that exists. There’s a gap that is building in our society and there’s an invention as you would imagine that fills that gap. That invention is called blockchain.
Now this is an oversimplified version of a blockchain conversation. For all those blockchain experts, the sixteen of us that exist in the world, save all the details for the comments. We’re going to have an oversimplified conversation. We’re at the ground floor of blockchain. And what I want to talk about is what is the gap that it fills so that we can look forward and see what the world could look like and take advantage of it.
Blockchain changes something that is very fundamental to us. It’s at the core of who we are and each of us do it hundreds of times a day. What blockchain is going to change is, it’s going to change the way we trust. Not just how we trust each other but more specifically, how we trust in business.
Now you might go, “Wow! Trust in business? I trust all the businesses I operated with today.” Of course, I do. I trust my government. I trust my news. I trust everyone. I’m being funny here guys.
Trust is actually very, very core to business. Trust in business started very early on, from cavemen all the way through the mercantile economy to the Industrial Age and today in the Information Age. We have come to a conclusion as a species that I have to trust you in order to transact with you.
Yes, ladies and gentlemen, trust is the fundamental currency of commerce. Think about if we just stopped trusting all companies or governments. Commerce would come to a bit of a halt.
Now trust itself is very delicate. It’s poignant; it’s close to us; easily breakable. And yet somehow we’re able to trust each other and transact a hundred trillion dollars a year between the 7 billion of us on this planet. This little delicate thing called trust somehow or the other we’re able to do it this many times per year.
The fact is we manufacture that trust in order to transact. Somehow or the other, we manufacture trust. When I exchange my hard-earned dollars with you for a good or a service, I have to trust you and we manufacture that trust.
Let’s talk a little bit about the manufacturing of that trust. I’m going to use my Slim Shady voice. Anybody here knows Eminem. You know, will the real Slim Shady please stand up? Let the oversimplification begin.
Let’s talk about how we manufacture trust today. In order to talk about trust so that you can really get a sense as to what I mean by blockchain is going to change the way we trust. Let’s imagine that we’re about to buy a house.
Now we have invented this thing in society called the ledger. No, not heat ledger, the ledger like bookkeeping, entries, debits, and credits. And the ledger is the fundamental way that we go about storing information about transactions today.
For this house, for example, if we needed to get a record of who owns this house and what happens to it, we would store that information in a ledger that looks like this. First, the house is built, then it’s constructed and there are some changes that go with it. It had some violations here and there but eventually would be able to get a record of this house before we buy it.
Anyone here ever bought a house or sold a house? How long does it take to get this information? You have to go to a title company. 30% of the titles in the United States have errors in them.
The problem with the ledgers that we use today which we depend on the trust, many things, not just houses, is that someone as easily as they can write a record on the ledger, they can delete a record from the ledger.
Can you imagine buying a house and you go to the homeowner and they go: Yes, of course, here’s the title. I’ve kept all the records of the title. Please have it.” Would you trust him? No, because the information can be tampered with.
The ledgers that we use today to transact with, whether it’s a house, a car, a rights to some piece of art, someone who owns a piece of intellectual property or a patent are tamperable. You can tamper with them.
And what makes it worst is not only are they tamperable, you can remove a record, you could also add a record or edit record. As you can see here that chimney violation that happens to this house, somehow magically is now a new chimney. I bet you’d be paying a price you don’t want to pay for that house.
So we have this capability called the ledger. We use it, it’s tamperable and we could trust a little bit but we’re sort of in this state of commerce where we have to trust but verify. Anybody knows who said trust but verify? All right. Good. We’ll add it to the comment section as well.
Okay. The truth is today as a civilization when we start companies or we start transactions, we start with an automatic assumption that the counterparty cannot be trusted. When we start companies or we start transactions today, we start with the automatic assumption that the counterparty cannot be trusted. It almost feels normal to us; kind of feels like oh yeah, I mean, why would we not do that? Does it have to be that way? It’s just something that we’ve become accustomed to.
And the way we’ve gone about it is we establish these things called intermediaries – fancy word for middlemen and middle women. Intermediaries. These are entities that are responsible for keeping a centralized copy of the ledgers in all of commerce and they facilitate the brokering of the relationship between those who are looking to trust and those who are looking to be trusted.
Examples of intermediaries are things like banks. Department of Motor Vehicle, it’s a great intermediary for identity. Mortgage, title companies, credit reporting agencies — these are all intermediaries. This is just a small example of the intermediaries that we deal with today. And the reason why we deal with them is because we simply can’t trust the ledgers that we have.
Now the intermediaries don’t actually get us all the way there. If you think about operating in zero trust which commerce would come to a stalling halt and abundant trust, the intermediaries kind of get us to a point where we can manufacture some and the rest of it comes from the gut. The fact is commerce and the state that it is in today, we sort of exist in this trust gap.
Now I should remind you that the oversimplification is still happening. Let’s talk a little bit about blockchain to get a sense as to what blockchain is, and what it does.
As you would imagine, blockchain has a ledger as well. Now the blockchain ledger is an epic upgrade on the ledger that we have today. There’s a couple of things that are very very interesting about it.
The first thing that’s interesting about the blockchain ledger is every record that’s written on a blockchain ledger has a unique key that goes with it. Now you don’t need to get into the details of cryptography or hash keys et cetera. Just trust me when I tell you that there’s a really really awesome unhackable key that’s in every record on a blockchain ledger.
The other thing that happens to blockchain is that every record is written and stamped by the trusted party that wrote that record. Uh-huh, you can see how this is a little bit different from the crappy ledger we use today; isn’t it?
Here’s the major invention. When the next record is written — when the next record is written, everything from the first record, including the key and the contents of the second record is put into that formula and out comes a key for the second record. You can see there’s some dependency now.
When the third record is written, the third record — same thing happens. All of the contents of record number one, including the key and the contents of record number two, including the key goes into the formula and out comes a key for the third record. You can see how the dependency from one record to another is different from what we do today.
Now again we’re in the oversimplification zone. There’s going to be a lot of comments about cryptography and hash keys – yes, all that is important. But this is the fundamental difference. And this happens on and on and on and on. Essentially technology making sure that every single record we can see who wrote the record, we can add a key to that record and we can build dependencies between wrong records or another. Essentially chaining all of the records together. Aha, now you see where the word chain comes from in blockchain.
And here’s what happens. If someone that doesn’t like that failed chimney inspection decides to remove that, very quickly with an algorithm you can apply it and look at the information and recognize that it was tampered with. That is the difference between how we exist today as commerce and how we will exist tomorrow in the future. Essentially we’re in a world where we can start to take advantage of a ledger that is immutable. Meaning, yes you can mess with it but it’s really easy to tell the ones that were tampered with as opposed to the ones that are not tampered with.
Now blockchains usually exist in what is called communities. What you find is that participants that operate in an industry will all operate on the same chain so that each participant in that industry has a copy of the information, so they can write to the ledger with each other. Now this helps to sharing, this helps the transaction throughput et cetera, you could call this the real estate chain if I may. We’re still talking about that house that we’re buying.
Obviously there’s going to be healthcare chain. There is going to be financial services chains. There will be all industry chains and eventually we’ll see a chain of chains.
Now if someone happens to interfere with one of those ledgers, let’s say, something happens, a consensus algorithm runs, looks at all the rest of ledgers, and says: hey, you’re the one that’s out. And it gets replaced by a copy of those that still has the good information.
New blocks of transactions appear. They get written on top of the collection of ledger. New blocks of transactions appear. They get written on top of it and eventually we get into a situation where what you’re looking at is what is called a distributed immutable ledger.
I want to pause and make sure we take inventory. We talked about inventions, large paradigms, trust — a trust gap, how we bridge that trust gap today with ledgers that we can tamper with and now we’re looking at a completely different ledger, one that is immutable shared across organizations that operate on a specific chain and now distributed.
If you look on the left side of this chart, you see a state of commerce that uses ledgers that are tamperable, requiring intermediaries that own a centralized copy of it that broker the relationship between those who are looking for trust and those who are looking to be trusted. And as a result, we live in this trust gap.
On the right hand side of this is a different view of commerce. A view of commerce where information can be trusted and available in real-time.
Now I want you to think about this house that we were buying. Can you imagine if the information about the ownership rights of this house was written on a blockchain, how much time would that take out of the process to get the title information right? How much friction would it take out and how much fraud would it take out, much less the cost? This is the power of blockchain.
Now we saw that in the large paradigms that we looked at, we saw things like the printing press, destroy those organizations that were only anointed with knowledge. We saw the combustion engine destroy things like colonialism and slavery. We saw the internet come in and destroy brick and mortar companies.
What we’re looking at today is a new invention called blockchain that changes the way we trust. And I believe trust companies are going to destroy at a minimum these intermediaries. We will simply trust in a different way. The human experience is going to change us fundamentally as it changed from the printing press, from the combustion engine and from the creation of the Internet.
I’ll use my Slim Shady voice again. This is the official end of the simplification.
So where do we go from here? The reason why blockchain is so interesting to me and why is it that I continue to study it and participate in it, is that that trust gap that we talked about is actually increasing. We are transacting with more things in more ways than we ever have.
If you look at this concept of sort of zero trust and abundant trust, you can see that that need to trust is actually stretching out to the right. Today you not only transact with human beings, you transact with machines. You transact with smart devices. And all of these things we need to start to figure out how to trust them properly.
Now blockchain changes two other things that I am particularly interested in. One is in the area of identity. And when I think about identity, I’m not just thinking about McLovin from Superbad. I’m not just thinking about this 24 year old organ donor from Hawaii. I’m talking about the 12 million cases in the United States where there’s identity fraud. That is the first area where the trust gap is expanding.
The other area that I’m talking about is all the new devices that are coming online that we also have to trust, not just human beings. I think the last prediction that I saw was that by 2020 we will have 7 times more smart devices than we have human beings in the world. That’s about 50 billion smart devices in 2020 that we will transact with, that we will have to trust. And this is what I mean by the trust gap is expanding.
The other area where the trust gap is expanding is in reputation. When I talk about reputation, I’m not just talking about that phantom Yelp reviewer that you see that writes a restaurant, about how there was five shrimp in the meal as opposed to six that was supposed to be there. I’m not just talking about those people. I’m talking about the quarter million rides a day that’s happening between Uber and Lyft.
I’m talking about the hundred thousand transactions on Etsy. I’m talking about the hundred fifty thousand rooms that are rented per night on Airbnb. These are all reputational opportunities that we continue to manufacture trust with our gut, putting ourselves at risk. This is what I mean by the trust gap is expanding.
To the extent that when I think about blockchain, I don’t only think about blockchain replacing intermediaries. I think about blockchain creating trust companies that will replace just about every company in the world. If there’s one thing that you remember from this talk, just remember that I love tangerines.
Now I love tangerines but I happen to have an allergic reaction to the chemicals that are put in non-organic tangerines. So every time I go buy tangerines from the store or my wife buys them for me, we have to look for this little logo that says: “Organic. USDA certified.” I don’t know whether that tangerine company just got the logo off the internet by using Google search and printed it on the package or not. I have no idea whether the tangerines are organic or not. I just have to trust that they are.
There’s about 50 agencies in the United States that are certified to give you the permission to put the stamp on the package that you have organic tangerines.
Now I want you to just imagine the day when a tangerine company comes out and puts a QR code on the package and I can scan that with my phone and it opens up an app on my phone that shows me all of the transactions that happen in that tangerine farm, including all the chemicals that were applied to it and it’s running on a blockchain so that I know that I can trust it. Aha, which tangerine would you buy?
I can see it already, 20 years from now I’ll be remembered as the guy that said aha, which tangerine will you buy? Obviously a tangerine company running on blockchain would cannibalize any other tangerine company that’s just claiming to be organic. That is the power of the distributed ledger. That is the power of having information that you know that someone did not tamper with, that you can actually trust without having to have an intermediary.
The way I look at blockchain is that every company in the world today, not just the intermediaries, are at risk of having competition from a blockchain version of themselves.
Ladies and gentlemen, we are at the ground floor of a new paradigm in humanity that will change the human experience called blockchain. The thing that is going to change is trust.
It has been my absolute pleasure. Thank you very much.