hi and welcome to Tech Talk where we take a look at the latest in technology
news and offer our insights and analysis to see if we can figure out what's going
on I'm Ken Mingis executive editor at computer world
I'm here with computer world senior reporter Lucas Mearian it's time to check
in on blockchain and see what's been going on lately so stick around
okay so Lucas we're back thank thanks for being here um you know we've talked
a lot about blockchain over the last couple of years and it dawned on me that
if 2017 was the year that blockchain sorted to sort of emerge and you know
the hype went crazy and then 2018 seemed to be the year that it kind of really
edged into supply chains you know ask and Walmart and the Olive company and
the diamond company and and so it seems now that 2019 it's really getting more
of a foothold in the financial services in FinTech area and so you know you've
got the story about IBM's announcement this week so I thought we could start
with that and then see where else blockchain may be going this year so IBM
this week what's up what they're doing well they launched a worldwide which is
a Global Payments Network based on blockchain and stellar the Stellar's
blockchain financial network right and it's gonna be based mainly on a stable
coin which just means that's fiat currency right backed by fiat currency
basically so one cryptocurrency is equal to one dollar in this case and it'll
allow for banks to cut out middlemen banks and money transfer companies to
cut out the middleman the bank central banks and just make transfers between
two entities on an open ledger so the whole point here is to basically create
this network that's pegged to real currencies rather than just strictly
like crypto currency like Bitcoin for instance doesn't have any real currency
behind it it's valued at what everybody seems to think it's valued which is why
it can fluctuate so much supply and demand supply and demand so with
something like this with stable coin you're looking at you know a real
measure of value based on the US dollar or whatever other I guess real
currencies that institutions want to use yeah probably
makes regulators a lot less ENC they do also have ripple cripple crypto
currencies so they can do do play and both feel that way but yeah but they
they're primarily it's probably gonna be played through a stable coin which is a
lot easier to use since regulatory oversight already
covers that but there is a lot of gray area as well especially since you're
talking about cross-border yeah and this just rolled out this week let me ask you
you know and and you may need to think about this a minute but you know
JPMorgan has also made some some news in the last few months with its efforts
around blockchain is this something that this is obviously different than what JP
Morgan is doing but are they kind of related you know it feels like they are
yeah they're actually very similar the only difference is is that IBM is
creating its stable coin through a partnership with another company a
stronghold USB it's out of Nevada I think it's honored about it okay and
I'll correct myself later that's wrong will it yeah and JP Morgan created its
own stable point okay but they're both been gonna be used for payment networks
and the whole point here is basically as you say you know this is one of the
advantages of distributed ledger technology which is blockchain that you
can eliminate the middleman eliminate the you know all the the layers of I
guess border cross border everything it did basically smooths the movement of
money and funds and currency between either institutions or now with the with
the IBM effort is that is that related is that geared toward institutions or is
it more toward individuals or some combination thereof
so probably the the greatest volume of traffic over the network will be from
payment authorizers and mark makers so the Western unions of the world who are
enabling foreign workers to transfer their pay back to their home countries
so they walk into a shop and they hand the money - then electronically transfer
back to their home and that's what they'd use this network
for so they would take that money convert it into this stable coin and
then be able to transfer it over the blockchain almost well that will be
instantaneous then as soon as it's on the blockchain all the parties who are
participating in the transaction will be able to see it immediately but what's I
think it's unique about this network is it's also a messaging platform so not
only can you do these one-on-one for one financial transactions but you also
create a communications network between banks and clearance the settlement is
the idea there then that that because I know one of the things you've written
about is that this is near real-time it's not immediate but it's five to ten
seconds not five to ten SEC which is pretty darn close you've been given the
scale of what we've been talking about and you know that's been an issue with
with blockchain in the past is the idea that sure you can scale it up but then
it gets slower and slower and slower as you figure out as you're adding you know
blocks to the chain so obviously IBM has something here that
works in near-real-time I presume that the financial institutions see that as a
real plus yeah absolutely it creates it removes the fee process from the central
banks that are typically involved and a lot of the regulatory oversight I don't
call stumbling blocks but maples hurdles yeah the regulatory hurdle its friction
its regulatory friction basically exactly and it takes time and money to
you know time is money in the financial services industry so it reduces that
IBM is conservative not conservatively they're saying probably about 50% of the
cost can be removed through this okay so it's a saving for our financial
now is this is this in place now is it actually live they actually went live
with that I think the first transaction was March 8 March 8 okay and do we know
do you have the number at hand of how many institutions or entities are
involved right now I mean I've written will be more down the road yeah it's a
very low number right now it's about six that are involved I think four are
actually using the network now and most of these banks are relatively small
entities and they're not you know they're not
a us-based however I did read a story today that there are a couple of large
US banks that are considering joining the network although IBM did not
disclose who they are okay they don't want to talk about it I guess until it's
uh until it's nailed down it does seem like though more and more as we get into
this year that financial institutions have gone beyond just taking a serious
look at blockchain and now figuring out how to work it and IBM is obviously
willing to be a player in that because you know it's gonna be there's a lot of
money potential yeah I think there was regulators and and others law
enforcement were worried about crypto currencies because they can be used for
a lot of nefarious activities right whereas a stable coin because it's tied
to fiat currency is less so you're guaranteed that you're going to be paid
because as a reserve of that money to equal the amount of digital currency
there's real money behind it exactly you can't you can't sort of artificially
either inflate or deflate the value of the coin or the cryptocurrency because
it's pegged to you know a solid currency right and in these networks you're
verifying the people on the network to begin with so the Western unions and on
some other names but other companies that make these wire transfers okay good
alright so at least I know now what IBM is up to and obviously this is something
we're gonna check back on because as this gets into more financial services
I'm sure there'll be more banks in institutions joining absolutely let me
shift gears because you had mentioned before we before we started taping that
another entities getting involved with blockchain and of course it's gotta be
Facebook yeah so what the what is gave me a little sneak preview of what you've
been looking at what why would Facebook need a blockchain and for what purposes
is it money is it some sort of it's money it's again it's all about money so
Facebook would basically be challenging other payment companies like Google pay
Samsung something like venmo maybe I don't know they transfer between mobile
devices things like that yeah it's it's definitely mobile payments application
that they're looking at they would probably also use a stable coin okay
write their own stable coin or possibly through a third-party and you'd be able
to purchase things say like advertisements get on facebook
now through this stable coin through the Facebook coin the advantage here is that
you most Facebook users I think three times as many Facebook users are using a
mobile device to connect to Facebook and then they are desktop device okay and
people don't really want to have to punch in their credit card information
they don't feel as secure doing that on a mobile device you know and it's also
kind of a pain and there's no real way to do it now so if facebook comes up
with a payment method they can make dollars off of this so is this a sort of
thing where and I realized this is still very sort of speculative and you know
you know we're still trying to nail down all the stories but is the idea that you
would hand over your credit card information to Facebook they would have
it keep it theoretically securely just like all your other data but I'm serious
it's like okay but anyway um so you would hand that to them and then if you
want to do some sort of transaction through Facebook right the information
you know the the your credit card financial information would be there and
you would use the Facebook cryptocurrency whatever it is which
would be blockchain secure to make the transaction yeah they'd have to get
financial services institutions on board to actually so probably supply the money
they I mean they could do it themselves they're big enough obviously you know if
they probably wouldn't though so if I get some financial services industry to
back them on this but yeah basically you'd have a crypto wallet with a stable
coin and you could use that money or even credit through them through a bank
to make purchases on Facebook okay so blockchain coming to a face book near
you there yeah there are other things I wrote down here that we're interesting I
talked to an analyst and the other thing that this would allow people the
Facebook to do is to fight fake news and BOTS because using blockchain you can
verify the identity of users now that's right now if there's a little bit of an
arduous process to do that on blockchain but it could be simplified and therefore
you would have to verify who you are to participate I mean
now you create a profile yeah on Facebook so you just be creating a
profile with verification information who knows what that would be okay so
that's interesting so the idea here is it's not just financial that there may
be a way of actually establishing that whatever content is being shared on
Facebook is coming from legitimate people rather than bots or I mean if
people willing to sacrifice a little more time to register on Facebook for
that purpose and we know they've been having a lot of problems lately with
that sort of thing yeah fake news and BOTS yeah it could be a venture for them
okay do we do we know if the Facebook coin has a name is it is it Zuckerberg
they have Facebook has not commented on quatloos perhaps hey I mean New York
Times its mother October 2 said behind the scenes this is happening but
Facebook hasn't commented on us so we don't really know much about it other
than that okay well I definitely look forward to hearing more about that that
has given the number of pies at Facebook has its fingers in I'm not surprised
that they want to look at this because a lot of big tech companies are really
taking you know pawn chain seriously but I guess the proofs in the pudding when
it's when it's really rolled out yeah oh I wrote down also about if there's a
Barclays analyst that came out today and said the valuation of this could be as
high as 19 billion this is the Facebook part yeah the Facebook car Facebook when
we think about the number of people they've got on the network on their on
their a social network and and the you know the potential purchasing ability
there it'd be I'll be very curious to see if you as you say a financial
institution would tie in with them yeah because that's gonna you know
that's a sort of vetting you'd want to see rather than just Facebook saying hey
we've got a new cryptocurrency I would imagine they would go that direction
yeah you have to have some backing good got it any other thoughts before I let
you go no I think that's pretty much covers where we are forever we are now
yep all right as you can see there's a lot going on with blockchain and we'll
be revisiting this definitely with the Facebook part and also IBM and some of
the other tech firms that are involved so absolutely thanks for the update
Lucas for now for a distributed ledger technology that's a wrap