8 minute read
With over a decade of experience as a lecturer and researcher at The Australian National University (ANU), Columbia University and the University of New South Wales, Dr Priya Dev has primarily focused on mathematics for finance.
Six years ago, when she learned that two strangers could remotely transfer assets of value without any intermediaries, Priya dived into the realm of cryptocurrency.
In a candid interview, Priya discusses her passion to probe blockchain technology, how it can create a better global financial system, and why it is a pillar of trust.
What sparked your interest in blockchain and digital assets?
After experiencing issues with payment intermediaries such as PayPal equivalent Skrill, in 2013, I experimented with Bitcoin. At that time, I was working with a financial technology start-up, and an increasing number of people in the software space were seeking payment through this new digital currency.
When we started using Bitcoin for business, transaction times and costs were not only significantly lower than going through a bank, they did not vary with the location of the recipient.
From there on, I began to learn more about the world of Bitcoin and blockchains. I was coming to realise that we are watching a socio-economic experiment of the grandest proportions play out.
The technology enables change but it is fallible...blockchain is still in the chasm of experimentation
Why do you say this technology is a grand socio-economic experiment?
Bitcoin’s blockchain is more than just a software innovation. It is the first decentralised governance system operated by a network of computers – built to give the internet its own currency.
Bitcoin itself is challenging societal constructs of what money is, probing key monetary foundations such as; how it is created; who should create it; and how it should best serve society.
Blockchain technology is broadly helping society experiment, and explore, alternative business models called decentralised business models.
While technology enables change it is fallible. It is attempting to create decentralised governance that makes it difficult for participants to collude, but we are seeing power concentrate around some participants of this network and so blockchain technology is still in the chasm of experimentation.
Given all the technicalities underpinning this technology, how would you best describe blockchain’s core innovation and why is it so important?
Until now, societies have always relied on trusted intermediaries such as a church or a bank to provide a consistent service. In the case of the banks, they are institutions trusted to maintain records of assets or debt, but each bank maintains its own set of records.
Bitcoin’s core innovation allows millions of parties to share, manage and agree on a single set of records. It does this via a consensus algorithm. This is of tremendous value because it could lead to a move away from centrally governed record keeping towards systems that allow many stakeholders to store and share information. This shared governance model could form the backbone of a next generation financial system. Some experts even believe such a model could have prevented the Global Financial Crisis (GFC).
A blockchain can be described as a network of computers that performs record-keeping tasks, where cryptocurrency is this network’s money. Moreover, a blockchain and its cryptocurrency are used to incentivise the network to maintain an honest record and can thus be regarded as a pillar of trust for future societies.
Blockchain models could form the backbone of a next generation financial system. Some experts even believe such a model could have prevented the GFC
Why do you regard this technology as a pillar of trust?
Trust is a belief in an individual or entity to do what is promised, agreed or implied. Since the GFC, society at large has experienced an erosion of trust in governments, regulators and corporations such as banks and large technology companies.
More recently, Australia’s Royal Commission into banking services has brought to light how banks do not always act in the best interests of their customers. Similarly, robodebt is an example where centralised record keeping and governance has failed. Facebook’s data breaches are another. Trust requires more than someone’s word, it needs to be verifiable.
Blockchain infrastructure can be used to share this verifiable information with a wider market. For example, businesses can use a blockchain to record and share timestamps of events that customers, stakeholders and algorithms can use for taking verifiable action in real time. This level of transparency not only builds trust but also allows trade to occur on the basis of verifiable information. Building markets and financial products that execute on the basis of such information has the benefit of reducing barriers to trade while rewarding authenticity.
How do you think that university graduates and researchers can assist in the development of blockchain?
They can do this in two ways. Firstly, they can look beyond cryptocurrencies as currencies that compete with government issued tender. This will allow them to explore the potential of the decentralised business models and decentralised governance frameworks that blockhain is enabling. For example, we are generating more data at increasing rates through our growing reliance on computers. This is leading to new challenges, which require us to create new methods for managing and governing data ownership. Looking beyond cryptocurrencies allows us to view data as a digital asset that can be governed under this new governance mechanism.
Secondly, they can use the information shared through public blockchains to form and test hypotheses. This type of experimentation will ultimately help blockchain cross the chasm from experimentation to large-scale adoption - and if it does not, then at least we will understand why. Regardless of whether we think that blockchain has a future, we are living through this experiment - and thanks to decentralised governance, blockchain information is freely available to us.