Craig Wright Bitcoin Masterclass (London) – May: Day 1 Session 1
Dr Craig S. Wright, Chief Scientist at nChain, held another edition of his Masterclass series at an exclusive venue in London in May. The Masterclass course forms part of a monthly series aimed at helping attendees understand the fundamentals of Bitcoin and the technology behind it.
The Bitcoin Masterclass series will give you a comprehensive overview of Bitcoin’s history, theory and design. Wright discussed the future of Bitcoin and the unbounded scalability of nChain’s blockchain solutions, with potential use cases across several industries.
In this part of the series, Wright discusses various aspects of modernising and improving business processes, particularly focusing on electronic data interchange (EDI) and its relevance in the context of supply chains and commerce. The goal is not only to solve these processes using a blockchain but to improve the processes reasonably and make them more efficient.
The use of EDI, backwards compatibility and stable protocols
During the workshop, Wright discussed Electronic Data Interchange (EDI) and its relevance. He explains that EDI can be a part of a contract, essentially serving as a means to document terms, agreements, disputes, and more, signed electronically. He mentions the history of smart contracts, tracing them back to the 1970s, and their significant role in global commerce, despite lacking updates for 25 years.
He also highlights the inefficiencies in the system, such as using faxed IP protocols, which are practised for example in the US Army to ensure backwards compatibility. He also discusses the use of CRC (Cyclic Redundancy Check) codes and digital signatures in EDI for security purposes.
The main focus of the workshop is to find ways to simplify various types of contracts that currently rely on paper-based or outdated electronic systems. Wright asked participants to suggest examples of such contracts, and there is a brief mention of customs declarations and shipping documents still using paper signatures, with Amazon being relatively more advanced in logistics.
Smart contracts and digitising bills of lading
Wright goes on to discuss the practical applications and significance of bills of lading in trade and commerce. He mentions that people not only use bills of lading in finance but also to buy and sell goods before they arrive at their destination. These bills of lading can be sold to raise funds or finance other activities. Wright mentions how people speculate on the conditions of goods during transit, for example, the colour change of oranges.
Wright then delves into the importance of settling contracts in real goods, especially in commodities exchanges, highlighting that ownership of actual goods is crucial. He emphasises the value of bills of lading as evidence that the goods will be delivered and mentions the fluctuation of oil prices during transit, making these documents even more valuable.
The conversation then shifts to the possibility of incorporating digital methods for attestations, discussing the use of digital certificates and hardware-based solutions for capturing evidence. Wright suggests using specific hardware and capturing evidence with it, which can then be recorded on a blockchain to create a verifiable record.
Challenges in modernising commerce
In this part of the workshop, Wright discusses the importance of integrating technology into existing business processes rather than changing how the world works. He emphasises the need to make technology align with the way people already conduct their activities, especially in the context of electronic data interchange (EDI).
Wright acknowledges that a significant amount of commerce, estimated at 5 to 6 trillion dollars annually, relies on outdated and insecure channels because organisations like the US Army have not updated their systems. He explains that it’s unrealistic to expect large institutions to completely overhaul their processes and retrain their staff for new technology. Instead, he suggests making the existing technology more efficient and demonstrably secure.
The discussion then shifts to data capture and formatting. Wright asks participants about their experiences with barcode scanning and highlights the fact that businesses don’t need to manually enter all the product information because manufacturers provide comprehensive data, including product size, origin, and other details. He uses examples like book ISBNs and product packaging to illustrate this point.
The participants discuss elements of EDI, such as purchase orders and invoices, and how these messages are part of the electronic data interchange process. The workshop encourages thinking about how technology can streamline and enhance existing business processes, especially when it comes to data exchange and management.
Leveraging the BSV blockchain to create more efficiency in commerce
In this section of the workshop, Wright discusses how to implement blockchain technology in the context of electronic data interchange (EDI) and business integration. The discussion covers various technical aspects and potential use cases for integrating blockchain into existing business processes and highlights the potential for streamlining data exchange and improving efficiency in various industries.
Key points from this section include:
- Integration of BSV with Existing Systems: The participants discuss how blockchain technology can be integrated into existing systems. They mention that the message and contract logic can be embedded in BSV transactions. This allows for a spectrum of integration possibilities, depending on the specific requirements.
- Integration with Salesforce: Wright asks about the integration of the BSV blockchain with Salesforce, and the participants confirm that it’s feasible. They discuss the use of adapters and the conversion of Salesforce schema into BSV transactions.
- APIs and Connector Apps: The discussion touches upon the role of APIs and connector apps in facilitating data exchange between different software systems, such as Salesforce and Oracle. APIs play a crucial role in making data interchange smoother and more efficient.
- Standard Data Formats (XBRL): The participants talk about using standard data formats like XBRL (eXtensible Business Reporting Language) for data exchange. XBRL is mentioned as a format that can simplify data interchange and reporting.
- Data Validation: Wright emphasises the importance of data validation and ensuring that information is correct and accurate. He mentions that fields can be hashed, signed, and validated, ensuring that the data remains tamper-proof.
- Deterministic Signatures: Wright discusses the concept of deterministic signatures and how they can be applied to ensure that multiple parties can validate the same transaction or data interchange.
- Automated Business Processes: The participants explore how blockchain technology can automate various business processes, including tax reporting and purchase orders. They discuss how APIs and databases can play a role in automating data validation and acceptance.
- Just-in-Time (JIT) Inventory: The concept of JIT inventory is briefly explained, emphasising its role in efficient supply chain management. JIT ensures that products are delivered exactly when needed, reducing the need for warehouses and dead stock.
Unpredictability, pricing strategies, and integration challenges in modern supply chains
The last third of the workshop focuses on the complexities and challenges of modern supply chain management, pricing strategies, and the importance of adapting to changing market dynamics.
Wright emphasises the unpredictability of events and their impact on supply chains and markets. He discusses the challenges of supply chain management, geopolitical risks, and the effects of events like COVID-19 and Brexit. The importance of visibility in supply chains and intelligent data warehousing is highlighted.
He goes on to discuss pricing and purchasing decisions within supply chains and markets. Topics include competitive pricing, complementary goods, loss leaders, storage costs, market dynamics, second-hand goods, and the complexity of supply chain decision-making.
Before closing the session, Wright focuses on the integration of goods and services within supply chains. He emphasises the need for technical infrastructure, mentions major applications like ERP systems, and explores the challenges of integrating proprietary systems. The potential for blockchain technology and the creation of more open markets is discussed, along with the importance of simplifying solutions and enabling disintermediation.
