Madiha Khan Student Writer, Windsor Law LTEC Lab Dual J.D., 2019
On November 30, 2018 University of Windsor’s EPICentre hosted the second annual New Kids on The Blockchain Symposium. The Symposium introduced guests to the concept of blockchain technology, with speakers presenting on its various applications, current developments, as well as the legal perspective of this technological innovation.
Nassib Kazoun, a University of Windsor graduate and the current Senior Manager of Blockchain at Scotiabank’s Digital Factory, introduced the concept of blockchain technology and its implementation into consumers’ daily lives. A blockchain, Mr. Kazoun explained, is literally just a chain of blocks. Each “block” contains specific digital information; for example, the date, time, and amount of a banking transaction. Not only does the “block” store the transactional information, it also stores information about who participates in the transaction and what actions they take, using a unique digital signature. Every time a new transaction is made, a new block is added (creating a chain!), and a unique code called a “hash” distinguishes one block from the next. Mr. Kazoun further explained that there are 4 main concepts that inform the core discussions about blockchains: distributed ledger technology, decentralized consensus, smart contracts, and cryptographic security concerns.
A blockchain is a type of distributed ledger technology (DLT). DLTs work by using several different computers, which each record and store transactions in their digital ledgers. This is in contrast to the traditional ledger system, in which data is often stored in one centralized ledger. As Mr. Kazoun explained, blockchains are not new technologies themselves, but applications of already existing technologies, such as DLTs and decentralized consensus. Digital distributed ledgers operate under a decentralized consensus system in which the computers (nodes) that store and transact data, lack a central controller. In theory, this allows for an equal distribution of power and of governance over the network, as opposed to allocating power of supervision and control to a specific network/system/person.
Smart contracts, which use blockchains to set pre-defined rules that parties agree to, utilize a decentralized consensus system. When a party satisfies the conditions of these rules, a transaction or agreement is automatically enforced or is self-executed using the smart contract code. This is in stark contrast to the traditional contract model, in which several supervisory and monitoring steps must be adhered to in order to execute a contract. However, as Mr. Kazoun emphasized, innovation of this breadth does not come without security concerns. As more and more businesses and industries adopt blockchain technology, there is greater concern about cryptographic security and the protection of data from adversarial, third party access. For this reason, Mr. Kazoun stressed the importance of developing relevant legal and regulatory frameworks that address the unique nature of blockchain technology.
Amy ter Haar, a Board Member of Blockchain Canada and President of Integra Canada, was the next speaker. In her presentation, Ms. ter Haar distinguished public and private blockchains and their respective uses. Both private and public blockchains, Ms. ter Haar explained, utilize decentralized peer-to-peer networks and immutability of the ledger. The key difference between the two types is who is allowed to participate in the network. A public blockchain is openly accessible for anybody to participate, such as bitcoin. Because of the vast amount of participants in a public blockchain, a large amount of computational power is required to maintain the distributed ledger and to achieve decentralized consensus. A public blockchain like bitcoin also carries significant cryptographic security concerns, because its open nature allows for little to no privacy for participants. Private blockchains tackle the problematic aspects of public blockchains, and for this reason, Ms. ter Haar stated that many industries will likely make use of them in the future. In a private blockchain, the participant must receive an invitation to join the network. This allows for an entity to limit access to certain users, and one or more entities can control the extent to which users are allowed to participate in the network. Because of this restricted function, Ms. ter Haar explained that private blockchains could potentially be used by financial institutions, industrial businesses, and even the healthcare system in the near future.
The next speaker, Kunal Bhasin, Manager of Risk Consulting at KPMG Canada, spoke about the powerful potential uses of blockchains, and shared three cases in which he helped clients apply blockchain technology to advance their businesses. The first case involved an airline that utilized blockchain technology to allow customers to track and record their airline points in real-time. Customers were able to use their airline points to purchase coffee, gas, and groceries since their loyalty points were synced across multiple, interconnected platforms, and the airline experienced a 40% cost reduction. The next case Mr. Bhasin discussed involved a pharmaceutical company. The company applied private blockchain technology in order to comply with the US Drug Supply Chain Security Act. Using blockchains, the company was able to accurately trace a product’s journey all the way from the manufacturer to the consumer, and was able to record the product’s quality at every stage of development and transportation. The last example Mr. Bhasin presented was about a travel insurance company. Using blockchain technology, the insurance company was able to record airline delay insurance in real-time, which allowed them to process payments in 3 hours and to significantly decrease instances of fraud. Using these three cases as examples, Mr. Bhasin demonstrated how industries and businesses can utilize blockchain technology to their benefit, especially to address issues in supply chain management.
Next, guests had the opportunity to take part in a panel discussion moderated by Dr. Brent Furneaux, Assistant Professor at University of Windsor’s Odette School of Business.The panel consisted of Nassib Kazoun, Amy ter Haar, Kunal Bhasin, and Dr. Muharem Kianieff (Associate Professor at Windsor Law).The first question the panel addressed was how the conversation surrounding blockchains has changed over the last few years. The panel unanimously agreed that while the last few years had seen speculative investment surrounding blockchain technology (such as bitcoins), the focus would shift to enforcement and regulation in 2019 due to the current lack of rules in the cryptocurrency market. The panel then discussed potential regulatory issues that would need to be addressed before blockchain technology became the global standard. These issues included taxation and compliance with existing regulations, such as the SEC and anti-money laundering laws. The panel also emphasized the importance of developing consumer protection laws specifically designed for blockchain technology.
Overall, the symposium provided a succinct and engaging introduction to blockchain technology. The various speakers at the event provided their own expertise and opinions about the use of this powerful technology, and the panel discussion allowed for a thought-provoking debate about the future of legal regulations and laws concerning blockchains. Attendees and participants left the symposium truly feeling like one of the New Kids on The Blockchain!