[00:00] [music]

Kevin Garber: [00:09] Good morning. Good evening. Hello. My name is Kevin Garber. I am the CEO and founder of ManageFlitter. It is Friday, the 21st of October, 2016. Kate, we are nearly at the end of 2016.

Kate Frappell: [00:25] Pretty scary. [laughs]

Kevin: [00:26] Pretty scary. You'll notice -- you're still pretty young -- but as you get older, time just speeds up. It's a really crazy sensation. Anyway, you're listening to Episode number 65 of "It's a Monkey Podcast." Thank you for joining us. We have a terrific show lined up for you.

[00:46] Later on in the show, we will play an interview with Tim Lea who is the author of a book on the blockchain called "Down the Rabbit Hole." I spoke to Tim about everything blockchain. Tim is also the CEO and co-founder of Veredictum and a blockchain evangelist.

[01:03] We had a really interesting chat about the blockchain. If you've always been curious about the blockchain and what it actually is, we tried to really distill it down. I wanted to bring it back to first principles and pair it down so that...it's one of these concepts that people, I think, are afraid to admit that they don't know much about.

[01:23] I know that I still struggle to get my head around certain concepts around the blockchain and bitcoin. That's coming up later on in the show. As usual, we're going to chat about some news this week. But before we get into that, I just want to mention some of the shout-outs.

[01:44] I got an email from Willem van Zyl in South Africa. He emailed us and said, "Great to see that the podcast is back up and running," and that he enjoys listening to it. He has a website of pronotbusy.com, which I think is for Productivenotbusy.com. So, pronotbusy.com, check it out. Willem, thanks very much. We appreciate the note.

[02:08] I also got an audio note from the CEO of an app called Goalify, Michael Winterheller. He sent through a note saying that he enjoys the podcast, and telling us a little bit about his app, so we're just going to play that quickly.

Michael Winterheller: [02:26] Hi, Monkey Podcast team. I enjoy listening to your show, so I thought I would drop you a note about our product as your listeners may be interested. I'm Michael, founder of the popular productivity app, Goalify.

[02:37] I created Goalify because I noticed how often people fail in reaching their goals simply because they do not follow up with their goals in a consistent and successful effort. My colleagues and I believe that success is not one giant leap, but rather the continuous realization of many small, consistently taken steps.

[02:58] This is where Goalify fits in so perfectly. Goalify is an easy and fun to use mobile app, helping you to work on your goals and habits on a consistent basis. Goalify makes sure that you will reach what you have envisioned, all while integrating into your daily life flow in the most efficient and convenient way. I personally use our app every day to boost my productivity.

[03:20] Thanks again for a great podcast, and best wishes from Austria. You can follow us on Twitter, Facebook, or by visiting goalifyapp.com.

Kevin: [03:32] That was Michael Winterheller who's the CEO of Goalify. If you want to send through a shout-out on audio, we'd love to play it for you. Or drop us an email, podcast@itsamonkey.com.

[03:43] We'd love to hear from you. We're excited that this podcast is back up and running every two weeks. We'll try to keep to schedule. We may miss a few here or there, but try keep an eye out on your podcast lists every two weeks or so.

[03:58] Back in the studio with me is the one, the only, Kate Frappell, double P, double L. Kate, thank you for joining me.

Kate: [04:08] Thanks for having me again.

Kevin: [04:10] What does it feel like to be on you podcast number two?

Kate: [04:12] Still pretty nerve wrecking, but not quite as bad as the first time.

Kevin: [04:17] Did you get a flood of Twitter followers?

Kate: [04:21] No. [laughs]

Kevin: [04:21] If you're listening, follow Kate on Twitter @katefrappell. Kate is a design leader at ManageFlitter. She's involved with our brand new spanking product, Manage Social and everything around that. Kate, what's been happening in the news this week?

Kate: [04:41] Facebook have recently done a conference and had a virtual reality session with the Oculus.

Kevin: [04:49] This is the Oculus product that Facebook bought a few years ago, which is their virtual reality product.

Kate: [04:54] Exactly. At the moment, it's very much targeted as a game. But as you can see in the video, they can actually bring in avatars. It's a new experience of hanging out with your friends in the digital realm.

Kevin: [05:08] I had a look. I watched this video in its entirety. We'll link to it on the show notes. I really encourage you, dear listener, to watch it. Really fantastic. It's really come a long way. Mark Zuckerberg pops into this virtual world with a couple of his colleagues. They change the environments from the Facebook offices to under the ocean, to Mars.

[05:30] They even then patch in a call from Mark's wife, Priscilla Chan, into the virtual reality world and they chat to her. She can see them in there. The opportunities are endless. The mind just boggles in terms of how this can be implied.

[05:49] Just forget about social events, games, or the novelty factor, but in terms of training and learning. Wow.

Kate: [05:55] Creating a new space. I quite liked as well, they took a selfie. They can bring in objects. I don't really know how it works, but they materialize objects in that realm and then they can take selfies of their avatars.

Kevin: [06:12] They can create these objects in the realm, in the virtual reality realm as well. It's really right on our doorstep, virtual reality. I think in terms of training, it's going to be absolutely huge. You can imagine, if you're a paramedic, a doctor, a teacher, or anything like that, the simulation type effects will be fantastic.

[06:37] Of course, with travel and just gaming. It's really a wave that's about to crush down on us.

Kate: [06:46] Very cool. Recently, I went to a travel expo. I was at the Contiki stand. They had these, I think they were Samsung, but similar idea goggles. They put headphones on you as well, and took you to these destinations that Contiki travel to.

[07:03] One of the ones that I went to was Machu Picchu. No joke. I'm sitting on this stool and you look down. It's all 360. It was as if I was sitting on some cliff top.

Kevin: [07:16] It's really fantastic. You look up there and you see the sky.

Kate: [07:19] Exactly.

Kevin: [07:20] Did you get motion sick?

Kate: [07:22] Not so much motion sickness, but this feeling of not being on the stool, if that makes sense. I actually felt like I was going to fall off the cliff if I leaned over any further.

Kevin: [07:33] It just shows you the brain. The brain is this wonderfully powerful, but in a way, linear input. You can trick it relatively easily. You trick it and it takes you there.

Kate: [07:47] I wonder as well, down the track, the ramifications of that. Psychologically, where do you draw the line between reality and virtual reality?

Kevin: [07:57] I think it is going to become really, really blurred. A lot of other things are going to become really blurred. We're not going to tell who amongst us are robots and not, as well. It's also going to become really, really blurred until someone stops working in the middle of the day and they need to be plugged in.

[08:15] There's going to be the singularity they talk about where people and machines become one, and everything becomes blurred.

Kate: [08:23] It's also just altering our sense of fear. If you're in a game and it's so life-like that you can shoot and fall over and stuff, but you don't get hurt. If you can't tell the difference between the game and the real life, then your inhibitions had just shrunk dramatically. You end up hurting yourself in the real world.

Kevin: [08:46] Very interesting. I think there would be a great movie in something like that. When can you tell you're in the real world? When can you tell you're in the virtual world? Does it make a difference?

[08:57] There's a famous book I might have mentioned before in the podcast before, called "Neuromancer," which is where the word cyberspace was actually coined. This book came out in 1984, so even pre Internet. It's a great social statement on what society is going to be like at that stage. A very famous book, Neuromancer by William Gibson.

Kate: [09:19] I have to check it out.

Kevin: [09:19] Check it out. He was quite on the money in terms of...He paints a world where that's very emotionless, where it's very flat, because people can create any experience that they want. Their adrenaline wears out because they've had all these experiences.

[09:43] Anyway, it's an interesting book. Have a read. It's quite an easy read. A little bit of a science-fiction-y well, very much a science-fiction style book, but interesting.

Kate: [09:55] That sounds pretty good.

Kevin: [09:57] It certainly gets you thinking about some of the worlds that we can create.

[10:03] What else is happening? Snapchat announced that they're going to get into the sunglass game with Snapchat Spectacles?

Kate: [10:12] Spectacles, they're called. Yeah. They're trying to get in to the Google Glass, but without going the whole distance. At the moment it's marketed more as a toy, a plastic, glossy, colorful toy that interacts with your Snapchat and records 10-second videos directly from your perspective.

Kevin: [10:35] When you push a button on the...?

Kate: [10:36] On the glasses.

Kevin: [10:38] A big, big difference between Google Glass and Snapchat's Spectacles is Google Glasses were about $1,500, or something.

Kate: [10:46] These are about $130.

Kevin: [10:47] They're a huge, huge difference. It's a really smart move. Snapchat seem to have gotten this gimmick effect, novelty wave with their different lenses and filters. Now to create yet another novelty around this, I think is pretty clever.

Kate: [11:10] They know it, as well. They know that a huge part of their target market are teenagers, and anything glossy, fun, plastic, short, and quick is going to appeal to them.

Kevin: [11:23] Snapchat announced, they didn't announce, but there's implications that they're going list next year for a $25 billion listing, which is going to be a big deal, as well.

Kate: [11:34] They did just change their name to Snap Inc.

Kevin: [11:38] I believe so. It's in preparation. Do you see ads on Snapchat?

Kate: [11:46] I've recently started seeing them. One of the new updates sells me, if you're watching Snapchat Stories, everyone's story just blends in together. As soon as one finished, another one starts. Often I'll find an ad somewhere in the middle of all that.

Kevin: [12:03] I've tried to start using Snapchat a bit more. I have a few friends on there that put some of those stories together regularly. I'm trying to get a sense of it, but it doesn't draw me in as much as Twitter.

Kate: [12:17] You can get quite clever with it. My brother's in the US at the moment, and he's been going through different museums in New York. I've had to laugh at some of his snaps. He's taken certain statues and captioned it with something witty.

[12:33] You can add in little filters or stickers over the top that change the context of the photo. In that sense you could get a lot of popularity, because it's amusing.

Kevin: [12:42] It's more entertaining, in a way. Interesting, there's only so much head space to go around for social media network. I don't know anyone that really focuses on all of them. You've got to...

Kate: [12:55] Pick your battles. [laughs]

Kevin: [12:57] pick your medium, pardon the pun, and go for that. Speaking of medium, if you missed our podcast two weeks ago, Jon Westenberg, fantastic writer, great thinker, we interviewed him on the podcast in the most previous edition. Have a listen to that.

[13:14] You're listening to Kevin Garber and Kate Frappell. We work at ManageFlitter. We put together a podcast every couple of weeks. You can follow the podcast account @MonkeyPodcast, or on Facebook at MonkeyPodcast. You can also email us podcast@itsamonkey.com. Rate us on iTunes. That really helps us a lot.

[13:34] There were some comments that were flying around on the site last show about Allo. We spoke about the Google messaging app, and there were a few comments about the privacy around that. If you go to ItsaMonkey.com you can comment about these stories. We love to engage with you about comments.

[13:51] We're going to take a short break now. When we come back we're going to have the interview that I did with Tim Lea, everything blockchain, so stay with us.

[14:02] [commercial break]

Kevin: [14:02] You're back with Kevin Garber on "It's a Monkey" podcast. We talk about everything relating to the tech economy, the tech industry, and something that I'm particularly fascinated about -- it's a little bit of an enigmatic type of technology, but been around for a little while -- bitcoin and blockchain.

[14:42] It's been getting momentum over the last couple years. Industry heavyweights, such as Mark Andreessen, have been saying, "Watch this technology. Watch this space. Keep an eye on blockchain. It's going to revolutionize the world as much as the Internet has."

[14:59] I've been wanting to interview an expert on the blockchain. I found someone right in the backdoor of Sydney, right on our doorstep, which is great. In our "studio" I'd like to welcome Tim Lea, who is the CEO and founder of Veredictum, and blockchain evangelist, and in fact is publishing an entire book on the blockchain called "Down the Rabbit Hole" which is going to be released on November the 17th.

[15:24] Tim, thanks so much for joining us in our studio in Sydney.

Tim Lea: [15:28] Thanks, Kevin. I'm really pleased to be here. Thanks for the invitation.

Kevin: [15:30] Let's go right back, because blockchain's one of the technologies where people are scared to admit they don't understand what it is. They nervously mumble around it or chat around it. A lot of people don't understand at all how it came about, or what it's supposed to achieve, and why there is buzz around it.

[15:53] Let's keep it simple and let's go to first principles. Explain to me as if I was a six-year-old, what is blockchain. Let's go for it.

Tim: [16:02] As a six-year-old it becomes very interesting. To give you a little bit of background, I went to the blockchain workshops in Sydney back in December last year. I definitively tried to get from people there, "Describe the blockchain in five words," and I couldn't get it. It was distributed ledger technology. It was crypto 2.0banking 2.0It was a whole variety of geeky stuff.

Kevin: [16:26] Distributed system of trust is one that I've heard is close.

Tim: [16:30] There's a load. The one that's favored in the financial services is distributed ledger technology, but it means nothing. If you remember back to the Internet -- I'm old enough and ugly enough to remember the Internet when it first came around. Al Gore first said it was the information superhighway, everybody got it. You knew what it was about.

[16:50] When it comes to blockchain, describing it in five words is almost impossible. That's the challenge for it in terms of people understanding it. With the six-year-old interpretation, this is something that, when I've done various presentations on the blockchain, I try and use this as an example.

[17:09] The best thing to say is across the desk from me here is Kev's really nice phone. I'm going to steal that phone because I really want it. If I actually did steal Kevin's phone and we had to establish the truth, we'd go to a court of law.

[17:25] The judge would say, "Tim, you stole Kevin's phone. Here's the sentence." I'd dispute it, and away we go. There'd be an argy-bargy about the establishment of the truth.

[17:35] If we look at a situation where, for example, we imagine that there are 5,000 independent photographers that take a picture of me stealing Kevin's phone. Because Kevin does such a great thing with It's a Monkey podcast, obviously the paparazzi are chasing him all over the place.

[17:50] Imagine those 5,000 independent photographers are taking the photograph of me stealing Kevin's phone. It then becomes almost incontrovertible proof that I stole Kevin's phone.

[18:04] If I wanted to change the facts, I'd have to persuade 2,501 of those photographers to alter the image and have Tony Abbott as the picture, Photoshopped, stealing the phone. Then we could say, "Maybe Tony Abbott stole the phone." The reality is that's a very, very hard thing to do, to persuade 2,500 people to change the images.

[18:29] Let's now imagine that those 2,500 images have to be changed in 10 minutes, because at the end of that 10 minutes all those photographs that have been taken of me taking Kevin's phone are going to be locked in a bank vault, which is permanently sealed with a lock on it that's got more combinations than there are grains of sand on the planet.

[18:56] Let's imagine it's going to be permanently locked, and then imagine that we've got a camera looking in and we can see all of those 5,000 photographs that confirm that I stole Kevin's phone. That's pretty incontrovertible and transparent proof that I stole your phone.

[19:13] That is how the blockchain works. Instead of thinking of the photographers and the image of me staling your phone, think of independent computers all around the world. Instead of thinking of the photographic image, you think of data that is available.

[19:34] The idea is that data is stored on all of those 5,000 independent computers. The idea is there's no one central point of attack. The information is permanently available on each of those 5,000 individual computers.

[19:52] If you think of the idea of the photographers, it gives you a very top-level idea of how the blockchain works, in terms of it is, essentially, a peer-to-peer database that is immutable. In other words, you'll hear the word immutable talked about a lot in the blockchain space. Immutable means it cannot be altered.

Kevin: [20:14] Of course, we have a world filled with middlemen, middle-people, clearinghouses, because this problem is such a big problem. Courts unto themselves, you've given that example,they're essentially a clearinghouse of justice.

Tim: [20:31] Absolutely.

Kevin: [20:35] Am I correct in saying is that why the blockchain is anticipated that the impact is going to be so high, because all aspects of society where there is a clearinghouse, per se, the blockchain can remove the friction around that?

Tim: [20:49] Essentially you're right. The best way of describing it is that it can take away trust. That's one of the key things which it does. It enables, technically, the disintermediation of trust. You can strip out trust.

[21:05] For example, if we use a very simple example, I'm from the UK, and I sold a property to fund this business that we're involved with right now.

[21:15] The issue that we have is when I transfer money from the UK via the banking system, for example, the banks, bless their cotton socks, charge me 50 bucks for the privilege. It takes three days to get here, and they give me an exchange rate that's between 2.5 and 4 percent below market rate.

[21:33] If one looked at bitcoin, for example, or another cryptocurrency, you can transfer internationally so that the funds are cleared with bitcoin in an hour, and it costs you between two and five cents.

[21:47] The power of that, obviously, from a financial point of view is very, very good. What it's actually doing is it's stripping out all the intermediary banks that need to be in the chain so that we can transfer money from, say, HSBC in London, to what is known as a counterparty bank internationally, here in Australia, and then those funds are then transferred locally.

[22:15] It's all these middle layers that are in the middle. By enabling the technology to go from one party to another, and getting funds cleared internationally in less than an hour, is incredibly powerful.

[22:30] We're seeing use cases coming through in the financial services sector, where there was a transaction that went from Canada to France and was cleared in less than 20 minutes. The NAB here, locally, in Australia transferred $10 and it cleared within an hour internationally.

[22:48] It's dramatic changes that are going on. The banks recognize they're being disrupted and are embracing the technology, because they recognize if they don't they're going to be out of business.

Kevin: [22:59] I want to get back to the banks in a moment, but before that I want to talk about bitcoin's relationship to the blockchain. Am I correct in saying that the bitcoin is a particular use case of the blockchain?

Tim: [23:15] Absolutely.

Kevin: [23:17] There's been a lot of confusion, where blockchain is a platform, whereas bitcoin is a cryptocurrency.

Tim: [23:23] Yes, the blockchain is the technology that underpins bitcoin. That's the best way of saying it. If you compare it to the Internet back in 1995 -- I got involved in the Internet back in February 1995 -- at that stage email was the first use case, and there was this thing called TCP/IP. It was the technology underneath.

[23:49] With the bitcoin and blockchain, bitcoin is the first use case and blockchain is the underlying technology. It's that sort of parallel.

Kevin: [23:58] Could you parallel it as blockchain being TCP/IP and bitcoin being email, World Wide Web, FTP, or something like that?

Tim: [24:08] Bitcoin would have been email, because that was the first real use case, when you had the likes of Hotmail first set up in 1995, and those types of things. Email was the first technology that disintermediated the post office. The post office has suffered ever since, for example, worldwide. It's very similar in terms of the underlying technology and the first use case.

Kevin: [24:37] Are the banks reluctantly getting involved? Are they excitingly getting involved? Where do they stand with all of this?

Tim: [24:43] The way I see it is the banks know that if they do nothing they are going to be disrupted. They're going to be de-banked in a lot of areas of their business.

[24:58] What they are doing there, a number of banks have set up innovation divisions that are looking at getting proof of concepts, getting new ideas out there. The biggest challenge is that you've got the innovation divisions of the banks, and then you've got those that are actually working the banks that are going to have to work with all this technology.

[25:21] I finished up part-chairing the last afternoon of a blockchain summit down in Melbourne. I interviewed the innovation division of Rabobank. It was great that they were very gracious in telling us what they were doing.

[25:38] For example, a loan syndication type of structure that they had looked at, which is where at the big ticket there might be $200 million worth of loans that they're putting out, and they'll split that out to a number of banks. Don't worry too much about the technical detail.

[25:52] What they identified were there were 48 processes involved in this loan syndication, and via the blockchain they could reduce that down to 12. There's a great deal of passion and enthusiasm at the innovation end.

[26:09] I asked the question, of which I knew what the answer would be. I asked the question, "OK, you've got these proof of concepts ready to go. How long is it before these are going to be out in the real world?" We just saw the body language of the three people that were there. There was that sense of resigned frustration on their faces, and they came back and said, "Three years."

Kevin: [26:37] It's pretty soon.

Tim: [26:38] It is soon, but bearing in mind one actually has...

Kevin: [26:42] In bank years it's very soon.

Tim: [26:44] Absolutely, but this is one of the biggest challenges, because the innovation teams are really fired up and enthusiastic, but those that have to deal with the technology, they owe a duty to all their customers that they have to maintain trust come what may, because that is the DNA of every single banking institution.

[27:06] If they lose any trust to their customers, they are out of business. You've then got audit commissions, compliance commissions. You've got a whole variety of people that are going to be coming along in the middle.

[27:16] With compliance being such a major issue that's front and center in all bankers' minds, especially with the Deutsche Bank debacle that's been happening very recently, with the threat of a $14 billion fine, they're looking at compliance in every angle of their business.

[27:34] As a result, the enthusiasm of innovation is not met with the same enthusiasm throughout those that have got to deal with it. That's why, within the blockchain space, provenance is the issue that's going to come in way ahead of the banks, in my opinion.

Kevin: [27:51] The CEO of CommBank in Australia, which is the biggest retail bank in Australia, it's Ian Narev. Earlier this year he was on record saying if they don't innovate they're going to disappear. They're very much aware of it, right up the food chain.

Tim: [28:09] It's already happening. If you think specifically of the international payment space, like I was talking about transferring money, there's a great use case based out of Silicon Valley with a company called GoAbra. It's goabra.com. Abra's the name of the business, goabra.com if you want to check out the website.

[28:28] What these guys do, and there's a very clever bit at the end, so bear with me, because there's some interesting stuff with this. This looks at the cultural narrative of a lot of expats, specifically in the States, which is where they looked at, that might be Indonesian, Filipino, Bangladeshi, whatever it might be.

Kevin: [28:48] Remittances are a huge for...

[28:50] [crosstalk]

Tim: [28:50] Absolutely, remittances are massive. The cultural narrative is that a lot of expats send money back to family and extended family. The cost, typically, there's a World Bank report that came out that highlighted, on average, about 7.8 percent, but it can be 10 to 15 percent. If you send $100, you're going to get charged $10, $15.

[29:10] With these GoAbra guys, it's very, very cool what they do. You get the money from your traditional bank account in the States, for example. It then gets transferred via the bitcoin network. It gets converted and transferred across to the Philippines, Indonesia, that type of area.

[29:30] This is where the clever bit comes up. At the other end they have bank tellers that are the trusted parties in the villages and towns that act as the dispensers of local currency.

[29:44] The idea is that instead of having to go via Western Union, which might go via the banking system and all these intermediaries in the middle, you've got these guys that enable cash to go from your mobile phone in the US, over to the Philippines. In theory, you could have the money there within an hour.

Kevin: [30:01] How do you get around criminal elements, though?

Tim: [30:02] Criminal elements are very, very important. The regulators, at this moment in time, are all over the place when it comes to bitcoin in general terms, but the one thing that is non-negotiable is when you go into bitcoin and you come out of bitcoin, all those parties that have that exchange have to report the transactions.

[30:29] By de facto standard, the counterterrorism regulators are monitoring where cash comes into and comes out of bitcoin. Bitcoin can be considered to be not quite anonymous. It's more pseudo-anonymous. What it means is any transactions going from hard currency into bitcoin you can monitor who's actually transacting.

[30:57] They do the KYC -- know your customer -- and AML, which is the Anti-money Laundering protocols. At each end those are monitored. It doesn't remove the problem of criminality, but it certainly makes it harder.

Kevin: [31:13] The big wave of Internet of Things I would imagine would dovetail neatly with the blockchain, the double-spending problem, and ensuring that things don't get spent twice in ownership. Give us some use cases of how the Internet of Things can seamlessly fit in.

Tim: [31:39] If one links in an element in the blockchain -- I don't want to get too heavily into the technicalities of it -- there is a things called smart contracts, which are essentially like a vending machine, is the best way of saying it, that automate transactions.

[31:55] For the first time with smart contracts you can program money. The reason why I say that when we link it into the Internet of Things is, for example, if one looks at the situation where you're importing product, let's say, from China. It could be the States. It could be Australia.

[32:10] As soon as the boat hits Australian waters or American waters, there can be a GPS coordinator linked into an Internet of Things device on the container that could actually automatically say, "Yes, the boat is actually at this particular location." Then that instigates a small contract to release funds automatically to the Chinese supplier, for example.

[32:34] Those types of things are being worked on right now, in terms of ideas. Certainly, there is a thing called a smart lease that DocuSign and Visa launched in October, as a proof of concept, with the idea that if you buy a nice sports car, for example, and you make the payments on a regular basis, that's all hunky-dory.

[32:58] The idea is that if you lose your job, and you fall behind with your payments, it can be the situation that the car itself has Internet of Things devices based within it. That it will be notified by a smart contract that you've not paid the cost of your lease. That will then trigger a smart contract to disable your key.

[33:24] The car can be located, in principle at least, via GPS to be identified as being in your driveway. The key will be disabled. Then, at the other stage, there'll a repo agent that will have a key. That they can automatically come and pick the car up.

Kevin: [33:43] It would be like those smart trolleys that you take too far away from the supermarkets. [laughs]

Tim: [33:50] It's those types of things that are slowly beginning to be seen.

Kevin: [33:54] What I find interesting is, on a philosophical level, our entire society is based on trust. If you break it down, there is so much inherent, implicit, and unspoken trust. There are all these institutions that have evolved to deal with the rough edges.

[34:14] I sold a business earlier this year, and the issue of settlement was a very complex real issue that I could see, "At what point do you hand over the keys to the business? At what point do they send the money?" The stakes are pretty high, and it does require a lot of trust. It's a problem that hasn't been neatly solved at all yet.

Tim: [34:38] We're still going to need to see trust, unfortunately. In the book I talk about the idea of the smart contracts with the vending machines, and that type of thing.

[34:51] I've got a whole segment on why smart contracts aren't actually smart. It's the idea that smart contracts could disrupt lawyers, but they won't disrupt smart lawyers, because in the event that there's a dispute, for example, you're going to need to have intermediaries get involved.

[35:08] For example, the often used case is the vending machine. I'll go back to that, just to give a bit of narrative to where smart contracts come in. If you buy a product out of a vending machine, you put your money in, you get your product out, and there's nobody involved in the middle. That's what a smart contract essentially is.

[35:26] Then, if you look at the issue, what happens if the product's out of date? What happens if the machine chews up your money? What happens if...? You have all these particular scenarios. What we will see is there will still be a need for lawyers to be around, but their role will change.

Kevin: [35:48] Goddamn you, I was hoping.

Tim: [35:49] I know. I'd love to be able to say that lawyers wouldn't be around, or auditors, or accountants, but the reality is we're human beings. There's even a term that the tech community has, where it's called dry code and wet code. Dry code is the code that machines can read and wet code is the code that human beings read.

[36:13] For example, in this nirvana of computers making all the decisions for us, where code is law, when it comes to consumer-based material, if you go to a court of law and the judge says, "OK, what's the documentation for this?" "Oh, it's a smart contract. Here's the machine code." The judge is going to say, "Well, how can you expect anybody in the street to actually understand what the hell's going on?"

[36:36] There will always be a need for this wet code, as it's called, in terms of, "Here's the human interpretation." Lawyers will be disrupted, but not the smart ones.

Kevin: [36:48] If someone's interested in the blockchain, what are some good online resources, Meetups? It seems like it's not the most easily accessible technology/community to get involved with, for whatever reason.

Tim: [37:03] Worldwide the blockchain community's getting bigger. Certainly Meetup has got a number of blockchain-based groups, and also they have what is known as bitcoin groups. Also, Etherum groups, which is the next big cryptocurrency coin.

[37:22] Certainly, if you go to those events, a number will be more user-friendly than others. YouTube is a great combination. I've got a couple of introductory videos that talk about blockchain from, fundamentally, a non-technical perspective.

[37:42] That was the whole reason behind writing the book, is to get it out there in terms of, "Here's something that's easy to digest." Down the Rabbit Hole is all about making it easy to access.

Kevin: [37:51] I can't wait to read a copy. [laughs] I've been waiting for a book like that for a while.

Tim: [37:56] This is the issue. Again, I go back to December last year when I asked people at a blockchain networking event, and these were the smartest guys in the room. I met more PhDs in those events than I have ever met in my entire life.

[38:12] I also met the highest level of social awkwardness I've met in my entire life, and the inability to communicate, in my entire life. I'm not being disparaging. There are some fantastic brains there, but in terms of communicating the ideas in a succinct way, it was a real challenge.

[38:29] I said, "You know what, even though it's going to take me a hell of a long time to do this, I'm actually going to get a book out there that summarizes this in an easy to read format." That's why I've written Down the Rabbit Hole.

[38:42] Down the Rabbit Hole, by the way, comes from "Alice in Wonderland," because when she followed the White Rabbit, she went deep, deep down, and she discovered this wonderland of unbelievable surrealism.

[38:54] That's no different to the blockchain. Once you get down there, there's so much that's happening. It's an incredible opportunity for anybody that's got any hint of entrepreneurialism in their blood.

Kevin: [39:04] Are there any listed companies in the US, and bearing in mind, we're not giving any financial advice? Are there any interesting listed companies in the US that are building interesting businesses around blockchain technology that if someone likes dabbling in the stock market they can have a look at?

Tim: [39:20] [laughs] What you said, in terms of investment advice, absolutely is not the name of the game. There are lots of companies that are geared towards being publicly listed. The ones to look out for in the press, let's look at those, because I really don't want to talk about investment advice, quite rightly, as you said.

[39:46] Digital Asset Holdings are one to very much look out for. Based out of New York, they are looking at driving the number of days it takes to get an equity transacted from one person to another. They're trying to get that down from two days to the instantaneous time frame.

[40:04] For example, here in Australia the ASX -- the Australian Stock Exchange -- they took a $15 million stake for I believe it was about five percent equity.

Kevin: [40:18] Nice valuation.

Tim: [40:19] Very nice valuation. It's the idea that they want to change the Australian Stock Exchange from waiting two days to get your money, from when you sell an equity, to making it instantaneous.

[40:34] That gets rid of so many back office teams and institutions in the background. It frees up so much additional cash within the whole stock exchanges worldwide. That's mind-blowing, is the potential of that particular site. Definitely Digital Asset Holdings are worth watching.

[41:00] Ripple, also, are really worth watching. Forgive me the exact number. I think it was $55 million they've just secured, a Series B round funding. They're working closely with a consortia of banks. They've developed their own blockchain style of payments protocol.

[41:24] These guys are very much worth having a look at. The blockchain, worldwide, is not that big right now. It's got a lot of froth and it's got a lot of bubble. There's no major, major listed companies that I'm aware of, certainly right now, that have actively got involved.

[41:43] If you look at the big names that are getting behind this, IBM only 10 days ago announced that they were putting $200 million into IoT and blockchain, and looking towards sourcing 1,000 blockchain people out in their Berlin offices.

[41:58] If you look in China, for example, Wanxiang -- I'm sure I've got that pronunciation wrong -- the largest car part manufacturer in China, they've just announced a $30 billion fund over seven years for smart cities.

Kevin: [42:13] China operates at a little bit of a different baseline level... [laughs]

[42:16] [crosstalk]

Tim: [42:16] I was over at Shanghai about a month ago and what's going on there is unbelievable, the amount of money that is there. We were hearing rumors that the Chinese government is prepared to commit $500 billion to converting China from a manufacturing economy to an information economy.

Kevin: [42:38] It's a smart move.

Tim: [42:39] They don't lose many battles. They're very, very shrewd.

Kevin: [42:43] It's a smart move.

Tim: [42:45] The opportunities are immense in this space.

Kevin: [42:49] I can sense your enthusiasm, Tim.

[42:51] [laughter]

Tim: [42:51] I am a bit of an evangelist. I apologize for that. I saw the Internet in 1995, got involved, and set up an Internet café, bar, and restaurant, and a web design house, which we sold in 2001. Where I see the blockchain is where I see the Internet way, way back in '95, except this is going to be even bigger.

Kevin: [43:09] I was a Twitter evangelist in 2010, and unfortunately that share price is letting me down. No, it's an interesting industry. As I mentioned, a lot of real heavyweights, people like Marc Andreessen, said this is where the future is going to be.

[43:28] We look forward to your book on November the 17th, Down the Rabbit Hole. We've been speaking to Tim Lea, the CEO and founder of Veredictum -- we'll put all the details in the show notes -- also a blockchain evangelist.

[43:41] Tim, we really appreciate your time. It shed a lot of light. We would like to follow up with developments in the blockchain, maybe in six months to a year.

Tim: [43:51] I'm very happy to do so.

Kevin: [43:53] We'll see where everything's at.

Tim: [43:53] It's moving so, so quickly. It's almost impossible to stay in touch with everything, it's moving so quickly, but I'd be very happy to. Thanks for the invite.

Kevin: [44:03] Appreciate the time. Thanks for joining us.

[44:17] [commercial break]

Kevin: [44:43] Kate, I think your knowledge of the blockchain has at least doubled or tripled in the last few days.

[44:50] [laughter]

Kate: [44:50] Yes, the last 24 hours I've gone from nothing to elementary.

Kevin: [44:55] I said to Kate, "Look, we're going to have a bit of a post-interview analysis about blockchain, so do a little bit of reading. It's not the most well-defined, simplistic topic in the world, let's put it that way.

Kate: [45:10] No, and there's not a great amount of resources to learn, either. There's a few good videos, but a lot of the articles, as well, they're quite complicated to understand.

Kevin: [45:20] Tim's video was really fantastic, that he put up there, and that explains it really nicely. I also tweeted out yesterday, when I was doing research for the article, one medium posts explaining blockchain for beginners.

[45:32] What I find interesting is our whole society, the whole Western society, and human society, and even animal societies, in general -- not animal societies, but the animal world -- there's a level of trust. You go out onto the street, you expect people to behave a certain way. You expect cars to behave a certain way.

[45:54] Our world is so much about trust. What's interesting, on a philosophical level, about the blockchain is that here is a platform that is all about trust. For society, where trust is such a big part of what holds it together, we finally have a technology that can work with us on the trust level.

[46:19] It's interesting that up until now trust is essentially either from law, which still requires trust. If there's a revolution, the law means nothing. It's interesting that trust has devolved right down, now, to a technology. It will really be interesting to see how this all plays out.

Kate: [46:44] I'd be interested to see where the role of the central body changes. In this case the banks, for example. Where they're going to go in the end.

Kevin: [46:55] If you even look at, and it's not entirely the same thing, but in the old days, universities were the gatekeepers of all knowledge. If you wanted to learn, you had to go to a university. They were the ones that had the libraries. They were the ones that had the teachers. You really had no choice.

[47:13] Today it's distributed. That's why I like one of the definitions of the blockchain, "It's a distributed system of trust," because that key word, distribution, means no one's the gatekeeper of it anymore, which is very, very powerful.

[47:29] One of the many aspects of the Internet that is so powerful is that things are distributed. The Internet can't even go down, because it is distributed. Parts of it can go down.

[47:40] The fact that trust is now distributed, maybe even courts of law won't be the only adjudicators, and banks won't be the only gatekeepers of trust. I do think it can be as fundamentally important to the change of our future as some people are making it out to be.

[48:02] Kate. At some point, though, I feel that there will need to be a governing body. If we take the example of bitcoin, not necessarily taking fees, but in solving disputes between stolen goods, for example.

Kevin: [48:17] Yes, cryptocurrency doesn't magically solve all the issues. There's huge issues there with the criminals being able to obfuscate, and things like that. The blockchain as that platform of trust and a more efficient clearinghouse certainly seems interesting.

[48:40] I'm also still getting my head around it, though, because, as you know, once you start scratching the technology it starts getting really complicated quite quickly.

Kate: [48:48] He got the name of his book right. [laughs] It's very much a rabbit hole.

Kevin: [48:54] Down the Rabbit Hole. I'd be interested to go to some of the Meetups in Sydney. If you're listening and you have any great resources, even a product, I'm interested to see this blockchain in action. That's what I really want to see.

Kate: [49:07] Who's using it?

Kevin: [49:07] Who's using it, how they're using it. What real life problems are you solving? I'd be very, very interested to see that. I will check out some of the companies that he mentioned.

[49:22] That's Episode 65 done. We'll be back in two weeks or so with another podcast. Please feel free to send your shout-outs to podcast@itsamonkey.com. You're welcome to tell us a little bit about your company, your product, your startup, or anything you'd like to mention.

[49:39] We love to hear from our listeners. We have well in the thousands of listeners of this podcast, which is fantastic. I really enjoy doing this podcast. I think Kate will get to that level of enjoyment soon.

Kate: [49:52] It's growing on me.

[49:53] [laughter]

Kevin: [49:56] Thank you for listening, and we will talk to you in a couple of weeks. This has been Kevin Garber, together with co-host Kate Frappell. Thank you very much.

[50:04] [music]