Trade associations play a leading role in educating the business community on the opportunities of blockchain. In this podcast we had the pleasure of interviewing Patrick South, Vice President of Development at the Digital Chamber of Commerce in Washington D.C. The Chamber of Digital Commerce is the world’s leading trade association representing the digital asset and blockchain industry.
What is blockchain?
Blockchain is a combinatorial innovation. Think of it like a Lego bucket in which people are pulling existing Lego pieces and piecing them together in new innovative ways. Blockchain is leveraging existing proven technologies such as linked lists, asymmetric key parenting and hash functions in new and innovative ways.
Blockchain is a distributed ledger is a distributed ledger that records and maintains data in a manner that allows multiple stakeholders to securely share access to the same information in digital aspects.
In today’s environment we have all these disparate databases that require constant reconciliation and messaging. A lot of existing technology is simply applying digital overlays to analog processes. What blockchain offers is the true business transformation. Instead of having to reconcile siloed databases, blockchain creates a single source of truth that enables all parties to operate from of that mutualised data store.
What is the Digital Chamber of Commerce?
The Digital Chamber of Commerce is a 501(c)(6) trade association whose mission is to promote the acceptance and use of digital assets and blockchain based technologies. Through education, advocacy and working closely with policymakers, regulatory agencies and industry, their goal is to develop an environment that fosters innovation, jobs and investment.
They are made up of over 200 members:
- 60% are startups varying from blockchain platforms to cryptocurrency exchanges to ones operating in the security token space
- 40% are composed of large financial institutions, consultancies, service providers, law firms, accounting and advisory firms
The Chamber has five working groups to promote the acceptance and use of digital assets and blockchain based technologies:
- Token alliance:which is co-chaired by the former SEC commissioner Paul Atkins and former CFTC chairman James Newsome. Last year this working group wrote a white a paper on what constitutes a non-security or utility token entitled – “Introducing: Understanding Digital Tokens: Market Overviews and Proposed Guidelines for Policymakers and Practitioners”
- Smart contracts alliance: which focuses on the existing legal framework and how smart contracts can be used to enforce that. This working group has a white paper entitled: “Legislator’s Toolkit for Blockchain Technology” and “Smart Contracts: Is the Law Ready?”
- Digital asset accounting consortium: as there are no accounting standings in the digital asset space. Developing accounting and reporting standards for digital assets and blockchain-based technologies.
- Blockchain intellectual property council: Balances the protection of proprietary information with the openness necessary for innovation.
- State working group: Engages with state and local governments on the regulation and implementation of blockchain technology.
US Congress engagement with blockchain
The Digital Chamber of Commerce regularly engages with the Congressional Blockchain Caucus which is co-chaired by Congressman David Schweikert, Congressman Bill Foster, Congressman Tom Emmer and Congressman Darren Soto. It represents a good mix of Democrats and Republicans.
This caucus is composed of men and women who dedicate their time and energy to learning more about blockchain. In addition numerous congressmen and congresswomen attend blockchain events both run by the Digital Chamber of Commerce and by other leading industry players.
Smart contracts alliance
In their white paper “Smart Contracts: Is the Law Ready?”the Smart contracts alliancewas looking at the broad questions around is there existing laws in place that enables both the use of smart contracts and more importantly the enforcement of smart contracts from a legale perspective. The conclusion of that white paper was that between the ESIGN Actand the uniform electronic transactions act, UETA, they believe that the current legal framework enables the use and the enforcement of smart contracts. In other words, smart contracts can be created, executed and enforced in the same manner as existing contracts are today.
Today’s contracts are rather probabilistic in the sense that you aren’t always guaranteed the results of the outcome. With smart contracts you have deterministic digital agreements that guarantee that code is going to execute the deterministic outcome. The smart contracts alliance focus was on bridging the gap between what they think the technology enables and what they believe the current legal framework enables in the United States.
National Action Plan for Blockchain
The National Action Plan for Blockchain is part of the Chamber’s ongoing mission to promote the acceptance and use of digital assets and blockchain technologies. The Chamber is encouraging U.S. leaders to recognize and incentivize the development of blockchain solutions.
The Chamber is calling on the US government to publicly support the development of blockchain technology in the United States and for the Chamber to provide the US government with a set of guiding principles on how best to support blockchain technology.
At the moment in the US there is a fair amount of regulatory uncertainty which has led firms to go to other jurisdictions such as in Asia, UK, Malta and Gibraltar that are providing friendlier treatment and guidance.
The Chamber would love to encourage a top-down narrative for blockchain in which the government publicly recognises the innovation and investment that this technology can bring.
Key regulatory challenges with blockchain
There are a number of conversations that happen within the chamber around regulation:
- Financial institutions look at the broader question around the application of the custody rule in the blockchain and crypto space
- Tax treatment
- Accounting treatment of digital assets
- Digital securities and their tokenisation. Possible implications this may have regarding dis-intermediating transfer agents
The new stack – convergence of blockchain, AI, IoT, big data and other new technologies
Patrick reminds us that TCP/IP was the underlaying protocol that enabled the internet. Blockchain is seen as the underlaying technology that enables Web 3.0. It is this underlaying layer of trust on which new applications will be built upon.
Patrick brings the analogy with how the Nokia phone helped to democratize commercial phones in making them accessible to everyone. It was a game changer at that time until the iPhone arrived and offered a whole range of new applications not accessible to Nokia phones. Blockchain is similar in that sense to the change the iPhone brought.
Data is the new oil and blockchain offers everyone the opportunity to control, own and capatalise their data in a manner they couldn’t before. With blockchain we will see the creation of data market places in which individuals will have more control over their own data and be able to selectively disclose information to the relevant parties and monetize it too. This can involve the use of zero knowledge proof. The simplest way of explaining what it is, is through an example. In the US you have to be over 21 to drink at a bar. To prove that you are over 21 you share your identification card that carries a lot of information in addition to your age. It carries you full address, weight, height and other personal information you may not wish to share with a bouncer at a bar. Zero knowledge proof is to be able to prove that you are over 21 without sharing your ID with an attestation against the ID from a valid entity such as a state or federal one.
What’s next for the Chamber?
In the short term the Chamber is going to continue pushing forward their national action plan for blockchain. Patrick would love to see the Chamber take a more global perspective in working with jurisdictions globally to help foster an environment for innovation and investment in blockchain technology.
Thank you Patrick for telling us about the Digital Chamber of Commerce and the exciting work you do. If you liked this episode, please do review it on iTunes. If you have any comments or suggestions on how we could improve, please don’t hesitate to add a comment below. If you’d like to ask Patrick a question, feel free to add a comment below and we’ll get him over to our site to answer your questions.