Ep 79: Why you should Love Blockchain, not Bitcoin Part 1

And somehow it seems like there is nobody that’s really sitting in the middle and everybody’s just kinda like, “yeah!” or like “no!” You know, it’s like, nobody’s really trying to give you a perspective. I know recently Dalio published an article that was pretty comprehensive. I think the Financial Horse also published another article about this thing. So definitely check out their articles. I’ve read a little bit of it and yeah, I felt like we were very aligned. 

So in part one of this two-part series, we’re going to focus on blockchain and I’m going to give you some base case for why I think the blockchain future is here to stay and it will continue to thrive.

Okay. So a little bit of a context, I used to work for a cloud computing company, right? So it’s an infrastructure, a service company. So I do have a little bit of insight into how data is being managed, how do things actually work in the data center and you know, why physical servers, cloud servers, those kind of stuff.

So I’m not a techie. I can not like recreate all those things, but I can actually have a decent explanation as to how they actually do it. And to me that is why I’m super positive of blockchain because my experience in a data management field gave me this basis to work with, to try to understand what is going on. And without going into the technicalities of data management, of course, it’s not like I can give you, I’m not techie.

The broad idea is traditional data, which comes in all forms, okay, from your Tik Tok videos to your tweets, to your documents, you know, they all form different kind of data, but they are all stored in giant data centers. So that is the traditional way of data management. So all of these things that you’re uploading online, you know, you’re sending your friends on tweets, you’re coding something, or you’re doing some research and you gather all these data, right. They are all stored online and they are actually not in the, like, cloud, you know, they are all stored in a physical data center, okay. And these data centers are huge, they are there like industrial buildings, they are like your schools, you know, that kind of size. 

And inside these data centers are packed with servers, right? So what are servers? Servers essentially just like super high quality computers. They have no display screen. So the physical laptops that you use, the computers that you use, actually, you know, why they are what they are is because they have a display screen. BUt everything that is processing, all the things from your hardware, you know, different kind of SD, your HD, you know, SDD, HDD , you know, all those kind of physical hardware stuff, they form the server. 

Okay. So just imagine a lot of computers that are very high quality without display screens stacked on top of each other, okay. So those are servers and they are stocked in server racks and the server racks are all laid out in a data center, a little bit like a Matrix vibe, okay. So, instead of envisioning all these data, you know, sending somewhere and going nowhere, they’re actually going through the Internet highway, the internet ecosystem, to get to all these data centers and stored there in physical vaults.

So it’s kind of like a vault, right? So everything that you do, everything that you create online, they’re all, you know, being sent to this vault, okay. And most of these data centers are actually owned by giant organizations or like big cloud companies, like Amazon Web Service, Google, Microsoft, Azure, Ali Baba, or like Facebook has their own data management system also. So they have their own data centers. 

And actually the Singapore government also has their own data centers, which is a fun fact, okay. Recently there are a lot of breaches over the past few years because they have been trying very hard to kind of put a lot of our personal data, like the citizens’ personal data, onto the public cloud structure, you know, on Google, on Amazon, you know, or just kind of give developers access to those, you know, data. 

In the past, they use intranet, right? So for, for everyone that, that, you know, go to the army before, work in the ministry before, you know that the intranet system has no access point to public. So it is built within the closed loop. So the only way to compromise or to hack the system is to literally bring a physical thumb drive or physical hardware to go in and jeopardize with, you know, direct connection into the physical computers within their ecosystem. Whereas if you go online, when you go into the public cloud, right, the internet, then, yeah, you got a lot more touch points to attack it. 

And so for everyone that wants to learn, you know, how actually does the internet work, right. There was this one video on YouTube that is amazing. So just go to YouTube and search how the internet works, okay. It’s by Learn Engineering and they talk about exactly what we are trying to talk about, right? How does the internet work, you know, how the internet cables work, the data centers, you know, your wifi systems, a lot of those things, they all discuss. So I think that is a great video, a great place to start, to try to understand the global data ecosystem, with internet as the highway of transmitting data.

Okay, I hope you’re still with me here. We are going to blockchain very soon, but the basics to understand this is the traditional data management system essentially is all stored in the big data centers. I think Singapore has about 50 to 60 of these data centers and yeah, all the data’s being stored there. And through the internet system, they get transmitted all around. 

And then where does blockchain come in? How does blockchain re-envision this data system? Which brings me to point number one of why I am so positive above the long-term future of blockchain. Number one is that blockchain is immensely more secure because of the way it is being built.

Which is why I had to spend like five minutes to talk about the traditional data management system of data centers and internet highway. So then when you re-envision, how does blockchain works, essentially it is a big web of many, many small computers, you know, putting in their computing power to manage the data within this ecosystem, which is the blockchain ecosystem. 

So then why is more secure by managing things this way, instead of a centralized data center to have a big web, you know, of different, different, computers running the blockchain? Number one of course is because there is no clear attack point, right. It’s very hard to pinpoint where exactly things are. So it’s very hard to attack it directly. 

But more importantly, in the blockchain, every one of this computer actually runs the same set of codes. So when they run this same set of codes, they are cross checking each other at any one point in time, which means to put it in simple terms, for lack of a better way to put it, I know you all waiting for this line. For lack of better way to put it, in order for the blockchain to be breached, right? That means, data to be leaked out or, you know, the codes to be changed and whatnot. You have to attack every single one of the computers at once, which is virtually impossible, which is why a lot of them say a lot of these blockchain enthusiasts say that it is impossible to compromise the blockchain. Impossible to attack it. 

So you get idea, right. Instead of having one central location where you can attack, and then  just kind of compromise the data, leak the data, change the codes, and whatnot. This technology does not allow you to do that because you have to kill everything at once. If you try to compromise one or two computers within a space, which many of them call it nodes, it will sound the alarm. And then every other node will take over its work. 

So there is no simple way to kind of attack it, unless you, you know, kind of kill everything at one time la. Of course, one big problem currently will be the computing power that it has, right? Not like traditional servers or like big data centers where you can compute all sorts of big things.

Like a lot of, your videos, you know, your big research projects, your machine learning kind of stuff, those things take up a lot of computing power. You know, there’s a lot of calculations, a lot of transmission, a lot of things going on. It’s very unlikely to replicate that currently on the blockchain, because most of the computing power does not have the capacity to do that at this moment in time. But that does not mean that it may not happen to the future, but the very base as to why I think, you know, it’s very powerful and it can really kind of change the game is exactly that it is immensely secure. You cannot breach. It’s very hard to breach it.

So if we kind of re-envision how data is being worked across the ecosystem, then there may be a way to kind of keep all our information and keep all our data even more secured and safer and, you know, kind of clean up the middle man. 

Which brings me to point number two is why I’m so positive is that blockchain has already some use case that are very, very powerful. Exactly the idea of cleaning up the middlemen. When you can have a system that is not compromisable and cannot be attacked or, you know, theoretically very impossible to be attacked, it is a lot more reliant than the traditional way of managing things, which means we can remove all the clearing houses in the world.

And what are clearing houses? You know, like when you are trying to remit money, so clearing houses essentially are your middle guys kinda, you know, regulating the whole ecosystem, like your middleman. So we are trying to remit money, you want to send money from Singapore to the US , you go through the banks, there’s a SWIFT system and then you have to go through the remittance arrangement.

When you are trying to buy stocks, you buy from your broker, your broker actually has to submit it to the clearing house, to get it cleared and then approve. Whether you are maybe just, you know, trying to claim some insurance, it goes through your insurer. Your insurer has approved it, then the money will come out.

So there’s a lot of middlemen activity in our today’s world, which is really just on the center of clearing house, trying to keep the system accountable, keep the system trustworthy and just kind of make it work. But the reality is, if blockchain is extensively used throughout a lot of these, ecosystems, which it can be because a lot of these things are very administrative and not very data heavy, they’re not very research-based or they’re not very like a lot of video based. It’s just like, okay, this data come in from the hospital, come in, prove that, you know, you have gotten to a certain scenario, blah, blah, blah. And then you can claim, immediately goes in, then the money can come out. Don’t need to go through one other the next person, the next person, or the next person to approve.

So there are many, many potential use case that can come with the blockchain technology that has already been proven to some level, right? Like the extensive use of cryptocurrency being traded across the different exchanges or being replaced as a form of like a point to point currency transfer. So that is a really some use case there. 

And I believe that just based on this, we’re not even talking about other innovation, right. Because of the use case and because of how I see things, I think, yeah, blockchain is here to stay and there’s a lot of applications that we cannot discount. 

And you can just go and think about it. The amount of work that is in the back end that is in the middle office, the back office. You know, if you work in a bank, as you know, right, there is so much work in the back office and so much disconnect with the front office that they have to set up this thing called the middle office to bridge both sides.

But more importantly, once you understand this thing, you can kind of see so many things that can be replaced, right. From your contracts to… to do notary. Man, I recently had a notary experience, it was so terrible. I had to go through my lawyer and then get it notarized. She has to bring it to the court to confirm and get it chopped, to come back, send to me, tie a ribbon, to kind of, you know, mail this whole thing to KL because we set up an office there, and all these kinds of things. 

It’s like all highly administrative and highly based on the clearing idea, it was trying to keep the system accountable and functional. And if we can kind of put all these systems on a blockchain, it can make things so much simpler. And a lot of people are really using it, right. 

There is more public blockchains these days. So public blockchains are things like your Bitcoin blockchain or your Ethereum blockchains, but actually there are a lot of companies that are taking this blockchain technology and running it on their private basis, which means they don’t need random people all around the world to kind of run those computers, to join in the blockchain.They themselves are paying to kind of host all these different computers to run their infrastructure on a blockchain. 

So that’s pretty, pretty interesting. Which brings me to point number three of why I’m very positive of the long-term blockchain future. And that is because it has reached a critical mass of talent, technology, and capital.

And this is extremely important because there’s enough people that wants this thing to work and enough people that knows how to use this. So the whole open source idea of blockchain and ether from the very beginning, it’s very, very conducive for all these innovation and all these interesting things to pop up. It’s kind of like the internet, it’s kind of like the English language, kind of like 5G so these are like very, very fundamental infrastructure technologies and everybody’s just kind of building on top of it. So wow, I can apply this onto my real estate contracts, I can apply this onto, you know, my accounting arrangements. I can apply this into, you know, whatever, right. 

So people are starting to see in different ways and applying it in different industries and technology. So yeah, this will definitely be here to stay, okay. Just to give you some context, like, previously, I think not so hot now, but previously there was a lot of talk about machine learning and actually machine learning is a very old concept.

It’s been around since the 1990s, but it only stayed amongst the academias and the quote, unquote, very smart people. Limited people knew how to do it, technology wasn’t up for it. So it didn’t apply until only the past few years. And it’s the same idea. I’m not sure if you guys watched a movie called The Hidden Figures, the three black NASA ladies, you know that were trying to challenge social stereotypes about that.

Not a focus today, but inside the movie, there’s this machine called the IBM machine and nobody knew how to use it, but this black lady went to steal the book from the library, came back and taught all her girls, and then they ended up, you know, running the whole IBM machine. And that is the reality of a lot of early technologies, where only a small bunch of people knew how to use it. So it’s very hard to make it prevalent. It’s very hard for it to be adopted everywhere. 

But because of the open source arrangement of blockchain in the early stages, where everybody can participate and you know, it’s not controlled by a certain company and that’s kind of allowed a lot of people to learn how to use it and grew that whole talent pool, that technology application, a lot of money pours into this thing, which is great, you know, and that is kind of why we have where we are today. All these interesting application that are coming up. 

So these are the three reasons as to why I’m super positive about the long term blockchain future. I’m going to sum it up. So number one is that blockchain is immensely more secure than a traditional way of managing data infrastructure and using the high speed internet connectivity. So it’s a very different way of how data is being managed. So it’s immensely more secure with the web ecosystem.

Number two is that blockchain has a lot of serious use case already, and they can already kind of replace, you can envision how we can replace a lot of clearing houses and the middle offices out there today, which, actually a big part of our economy is around these things. 

And number three is that it has reached a critical mass of technology, talent, and capital. Enough people want this thing to work. So yeah, I think it will work and it’s a miracle, it’s amazing, and the power of open source. 

But all that being said, why am I not a Bitcoin buyer? Why am I not, you know, extremely positive about Bitcoin? It’s because Bitcoin or Ethereum or whatever coin is merely a byproduct of the blockchain, of the Bitcoin blockchain or the ether blockchain, so that it incentivizes you to put your time, your energy, and your computing, and your power into this blockchain.

Because like, what we have established before is that whole idea of blockchain is there are a lot of small little computers that are putting themselves into this chain to work. To do whatever work that needs to be done. And so in order to get people to do that, the incentive is to give you a cryptocurrency.

And so if you participate in the Bitcoin blockchain, you have a random chance of getting a Bitcoin. If you participate in the Ether blockchain, you have a random chance of getting an Ether. And so that is to kind of, you know, incentivize people to participate and put their resources and computing power into this thing.

And that is the fundamental, but things have taken a long way from where it started, right. So things have changed dramatically. And we’re going to talk about all these, you know, bull cases and why I don’t subscribe to a lot of these cases next week, when we come back to talk about why I’m so positive about blockchain, but I do not own Bitcoin and I’m not so positive about Bitcoin. So I hope you learned something useful today, see ya.

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Okay, I hope you learned some interesting stuff today. I know today we never talked a lot about finance stuff, but this is the building block to next week’s episode as to why it is so important to understand these fundamentals, you know, what is a blockchain, what are some of the use cases, what is the current situation out there, and, yeah, so I think those are fundamental. But

I also want you to know that I’m not a professional in this space, okay. Not exactly a professional in any space. [Laughs] But yes, I’m not a Bitcoin pro, I’m not a, like a crypto pro a blockchain pro, but we’ve brought some friends on and we’ll hear from them on the Thursday episodes.

So hope you enjoy your time with them, kind of get their personal perspective, their professional view, and then we can have an even better discussion as we go along. So if you have any questions around Bitcoin, blockchain, or any other thing, you know, you can always come to the Telegram group and just chat with us. I hope you learned something useful. 

And then next week, we will spend a lot more time to talk about, you know, why I don’t subscribe to the Bitcoin future, despite being so positive about blockchain. Later this week, Arthur from DeFiance capital will be coming on. He’s super big on the decentralized finance space, which is a particular use case for cryptocurrency and blockchain. So that’s very interesting, we could hear from him and yeah, we’ll see you next week. See ya!