An interview with Alex de Bruyn on Blockchain & property: “Mechanisms to trust data”
Part 3 of 5
PNXT: Blockchain’s reputation took a massive hit at the beginning of 2018, when crypto prices plummeted and the “bubble” popped. Then we found out that a lot of the Initial Coin Offerings (ICOs), which were supposed to be the future of fundraising, turned out to be scams that cheated people out of billions… it’s like the Wild West out there. So why would one want to get involved in this technology while it’s still in its infancy and could have some serious, unforeseen shortcomings?
It’s a question that keeps coming up, repeatedly. It’s because it is at the top of everyone’s mind. If you see an asset go from R360,000 to R50,000 in the space of a year, you start questioning its viability. However, if you start extracting the potential of the technology from the short term price, you will see something totally different. What we focus on is that we were not trying to sell Bitcoin; we’re making sure that we can apply the technology that underpins Bitcoin, to solve certain problems.
Blockchain is not going to solve everything, which was the promise that we saw in 2017 from every ICO, and it doesn’t make sense in all instances. However, where it does make sense, we will see a radical improvement and disruption to the current way of doing things.
A centralised database is definitely more efficient than a distributed one, however that inserts different risks. A blockchain makes sense when you’ve got three fundamental problems: Trust, Reconciliation and Immutability. I you have a challenge around those three pillars, you may have a need for a blockchain.
A need for immutability is saying that, if there’s an ISO standard or regulation, it’s an occupational health and safety matter. And I have to prove, at a future date, that something did or did not happen, or the risk of something going wrong might be big. Immutability becomes important. One of the things we’re doing now is capturing Occupational Health and Safety records onto a blockchain that cannot be changed. What that does is, if something happens on site, there is an immutable record of what did or did not happen. And the management team managing at sites is either at fault or not. Hopefully, they’ve implemented their processes correctly, so they will be safeguarded from the repercussions of the current systems, which are either paper based, centralized, or alike, should it become questionable.
If you look across many ecosystems, trust is a big problem. In the construction space, again, a worker will overstate his claim of work completed, because he knows is going to get push back from the quantity surveyor. The main contractor might have an agreement with his sub-contractors to only pay when he is paid, which means the sub-contractors have to trust him on sticking to that payment term. For the main contractor it remains better to hold onto the cashflow and only pay his sub-contractors when he believes is needed, leaving little trust.
All the data doesn’t need to be captured to a blockchain, but the relevant data that helps the project be more trusted and remain healthy, becomes vital if it is distributed. So, status of work completed and payment statuses (not necessarily amounts) become important for the health of the project.
And then there’s reconciliation. If you go to any large corporates or to their suppliers, and you asked them, “where’s your biggest problem?”, they likely say it’s cash flow management and reconciliation of purchase orders against invoices and receipts to actually get paid on time. If they could link that mechanism between their supply chain, upstream and downstream, it will:
- take the administrative burden off the smaller SMEs and the corporate to just make sure that the relevant paperwork and documentation are captured and updated across their systems in real time;
- ensure adherence to payment terms; and
- improve the health of the entire value chain.
There a blockchain would make more sense.
Now, not once, has Bitcoin been mentioned in any way. Bitcoin is trying to solve a very big problem, which is a global currency problem, and it will solve that on its own, but there are areas that these technologies can add things and benefit it, which is not linked to the price of Bitcoin. And, and that’s what we try to focus on. We use Bitcoin as a mechanism to fund accounts on a retail exchange, but we don’t necessarily go into corporate and enterprise to sell them the belief that Bitcoin will be the next thing. Bitcoin will do that on its own.