Blockchain co-inventor Stuart Haber says his technology can improve transparency and assurance in banks, CFO News, ETCFO
Stuart Haber, the co-inventor of blockchain, says some information with banks should be available to regulators, the public and everybody looking at the records of a bank. They should be sure that they are actually looking at the real stuff, where blockchain can help, he tells ETBFSI in an interview at Singapore Fintech Festival. Haber’s work has bridged pure research and practical cybersecurity over the course of a 30-year career spent both at large established companies such as Hewlett Packard Enterprise, HP Labs, and Bellcore, as well as at startups such as InterTrust and Surety – which in 1995 deployed the world’s first commercial blockchain he founded with his co-inventor, Scott Stornetta.
How do you start working on the blockchain?
Stuart: Well. Stornetta and I ambitiously set out to preserve the world. In 1989, when he first came to Bellcore, I’ve been there a couple of years, and he said, ‘I’ve got this great problem. How do we ensure the integrity of records?’ In 1989 the world didn’t look like it does now. When I started in 1987 many people didn’t even know what an email address was but in any case, it was quite clear that all the world records were going online and digital files are so easy to change. We were worried about the human record. And so the solution took a while to be widely adopted but there’s a reason why it’s being used. It works and we were fortunate enough to be there early, early on to ask the question, how to do this and came up with a design.
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What would be a great use of blockchain for the banking and finance sector?
The technology of records. That’s the main thing, transparency also. There’s plenty of information stored in a bank which should not be public. But there is probably some information that should be available to regulators and to the public and everybody looking at the records of a bank. For example, they should be able to be sure they’re actually looking at the real stuff.
Blockchain is mostly aggressively used for cryptocurrencies right now. Did you specifically craft it for cryptography or you thought it will be a research for the whole segments like banking and financial?
We designed it with the general to handle records of all kinds of things. We spun out a company called Surety to offer what we call Digital Time-stamping Services and Digital Integrity of Record Services. We imagined all sorts of applications. Our ambitions were pretty immodest, but the company convinced a large institution to use our ideas. They’re using the software too. Making things seamlessly operate with what they’re already doing now.
Considering the whole craze of blockchain, one of the CTOs said it is a military kind of technology. Can you go 30 years back and tell us what you thought then, specifically about blockchain and why it was necessary to write this code then?
Some cryptographic tools, not quite in widespread use but completely standard in the cryptography world, could solve problems but it required trusting the essential entity as a registrar of records. That solution, even though it worked, was unsatisfactory to us because for a single institution or entity it would depend on, it is a single point of failure. So we wanted to design a solution that did not require a single centralised entity and we were having great trouble in doing so, given my own mathematically trained background, I told Scott maybe we cannot solve it but then we ended up coming up with a solution that finally worked. In fact, a couple of different solutions worked and one of them was exactly the blockchain data structure, the other solution involved a random choice of parties to validate things and that is now in use in plenty of blockchain systems.
After 30 years how do you see the usage of blockchain?
A meaning or value like this takes it everywhere. Walk out on the street and people have heard of it because there was a lot of money made. It’s not everywhere in actual use with businesses and institutions completely relying on it but I think it is coming.
The central banks looked at blockchain with a different lens because it was used in the crypto world for their dark intentions. Do you feel a great ecosystem is being badly misused?
No, it hasn’t been misused, every tool can be put to good use and bad use. For example, we understand each other as we can speak English so we can make good plans or bad plans using English. So similarly blockchain is just another tool which can have good use or bad use.
Going ahead, do you think central banks or regulators looking at blockchain positively?
Yes, it can surely be used to enable transparency and assurance in the systems.