I just spent the last 1 week in Seoul with my wife and son. It was a good trip exploring the city on our own since our last visit 7 years ago on a package tour. The temperature was similar to home and autumn is a pleasant time here, compared to our last trip in Dec 2012 where it was below zero degrees Celsius.
It was a last-minute decision in late July to come to Seoul. There was a Skillsfuture overseas program to study about Blockchain in Seoul which I wanted to attend. It is heavily subsidized and I received an email that positions were still opened https://www.sirsdigitalcommerce.com/blockchain.html. My wife decided that it was a good opportunity for her to tag along a shopping trip for her and older son agreed to tag along. So that was how we ended coming here.
We came 2 days earlier on a Sat before my 3 days course started on Tues. We did a fantastic pub crawl tour that night itself in Hongdae with 50 other people visiting 6 bars and dance clubs with 6 drinks included for just KRW 25K! Clubbing with parents for my son is probably a whole new experience for all of us 🙂 We did the customary city tours and Korean traditional dinner and even attended an enjoyable baseball game with K-Pop cheerleaders on Tues evening.
My 3 full day of training started on Tues morning. Pleasantly surprised to see an ex-colleague there with his friends. I had told him about it a few months ago and he had decided to take it up. The class was 37 strong and unsurprisingly, it was mainly made up of people above 40 years old because of the government Skillsfuture subsidy.
Given that Blockchain is a highly technical topic, a number of participants had some difficulty trying to grasp the fundamentals. There should have been some prior reading materials before the course, to arm students with the basics of Blockchain first. While the trainers and presenters tried to explain certain concepts, the focus was mainly to sell their ideas and startup tokens.
Blockchain really came to the forefront in 2008 after the GFC and banking crisis. A group of cryptographer enthusiasts started formulating the principals way back in the early 1990s but the urgency became high in 2008 as many realized that useless fiat money was real as central banks printed like no tomorrow to save the global economy. This was when the first product of Blockchain was born – Bitcoin. With a limit to its total supply and full transparency using a tracking public ledger, it became a new currency of choice which no one can manipulate.
Miners are the gatekeepers of Bitcoin to protect the integrity of the coin. With numerous real-time ledgers, it was impossible for any one person to manipulate the recorded ledger unless they managed to capture 51% of the network. The inventors ingeniously added a reward system for the miners by releasing Bitcoins to the miners for them to maintain this public realtime ledger. The role of miners is to secure the network and to process every Bitcoin transaction. Miners achieve this by solving a computational problem which allows them to chain together blocks of transactions (henceBitcoin’s famous “blockchain”). They started with 25 coins which halved to 12.5 and then lower again as we near the 21 million maximum limit of Bitcoins allowed.
Latest conspiracy theories suggest that the creators of Bitcoin, the secretive Satoshi Nakamoto, was actually 2 persons (one in a wheelchair and the other with a terminal illness) who had since died. They supposedly had a wallet of a million coins which would have made them very rich with the price of Bitcoin at USD 10,000 each now.
Slowly but surely, the world got to know Bitcoin better over the last 11 years as more people begin to realize the power of Blockchain and its possible effects on our existing inefficient processes. It peaked in Jan 2018 as the price shot up to USD 20K!!
The industry that will be most affected with be the financial sector as it is the intermediary for a lot of transactions that Blockchain can make redundant. The trust issue is resolved in Blockchain as the chains cannot be broken and hence it cannot be corrupted.
During the 3 days of training, some of the gaps I had for this topic was made clearer to me. There was also this interesting alternative cold wallet storage process that was presented by one of the new startups. As far as I know, I thought that a cold wallet has to be a physical process. What if the private key is split up into a few parts and each individual part is stored in a separate cloud system (eg. AWS, Google, FB) with 2-factor authentication? This process will then be virtually unhackable. What a brilliant idea as opposed to physical storage onto a device that is unplugged from the internet!
While Blockchain is a good tool, the general consensus in the panel discussion was that it may be overkill for some ideas. Perhaps 5 to 10% of the projects can apply it now. IoT, Big Data, 5G and AI/machine learning can assist in making the low hanging fruits easier to pluck in Smart City mega projects.
We also learned about smart contracts and their applicability to multiple uses. Korea is trying to centralize all its medical records. An individual’s medical record should belong to oneself, not the hospital or clinic we visit so that any doctor can review and provide an accurate diagnose of a patient wherever he goes. I believe S’pore is also trying to do the same, but client privacy issues have to be resolved first.
This medical Blockchain database can literally create new innovative uses too. Pharmaceutical and Insurance companies can then price their products competitively to customize to the individual rather than the masses as they are doing now. Insurance now uses only age to differentiate pricing. What if I am more healthy and exercise much more than my good friend who is of the same age? Shouldn’t I get a lower insurance premium? Pharmaceuticals can also directly target medicine that is of use to each person effectively.
With China and Facebook trying to launch their cryptocurrency soon, we are looking at interesting times. With a public ledger, the system will need to incentivize miners to maintain the ledger. A private ledger may not have to do that, but it will suffer from transparency and possible hacking issues.
eGaming and K-Pop are 2 areas where Blockchain can be big. For years, online gaming already has their own tokens to purchase virtual goods to play the games, so they are very familiar with e-currencies. A K-Pop startup presented how they can streamline the efficiency of musical collaborations within the music community using Blockchain to enhance trust between the collaborators.
One of the pillars of Industry 4.0 is Blockchain. Fintech is ABCD – AI, Blockchain, Cloud and Data. With mobile phones, we are all connected on a real-time basis, all the time. The possibilities are unlimited.
One thing I did not like about this course – that most of the startup featured are talking about issuing their own unique tokens via ICO even though ICOs are currently banned in South Korea. I believe that 99% of ICOs are scams. Most ICO investors adopt a pump and dump scheme as an “investment” strategy. Issuers claim that they have a cap on the number of coins issued, yet they usually only released 1 to 5% of the amount initially. The funds/fiat money they receive for their coins – there is no guarantee that it will be used for the purposes which they had described originally as there is zero accountability. They could even use it to buy the coin back, giving it artificial demand and support!! The proposed ecosystem they aim to develop to enable the tokens to be used for transactions – it does take a while to create in real life.
The investors of the tokens? They have no legal claim to anything, unlike equity investors. When shit hits the fan, the tokens have zero value. Most ICO has only one selling point – that their token will continue to rise in price. Fat hope if everyone is selling as a strategy to get out after 2 weeks of issuance, right?
Overall, even though I bitch about the training and ICO above, it is inevitable that Blockchain will have a significant impact on our lives in the future. With AI and Big Data being efficiently analyzed via the Cloud, all of what we know today will have a quantum leap into the new unknown very soon.
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