June 2018, London
Blockchain bonanza part II
In the second part of a Q&A with the founder of ‘public permissionless’ blockchain Winding Tree, we find out more about the currency, governance of the platform, privacy, scalability and more
In conversation last week with Joerg Esser, a theoretical physicist, former Thomas Cook director and now independent consultant, his experience of talking to people about blockchain in recent weeks has been one of ‘blur’. In other words, nobody fully understands the implications of this new and emerging technology on the travel industry. Indeed, for many even the core distinction – between that of a public and private blockchain – is unclear.
Esser will be sharing some nuggets around blockchain use cases in Amsterdam later this week, which EyeforTravel.com will cover. In the meantime, however, here is the second part of a two-part Q&A with Maksim Izmaylov, the founder of Winding Tree.
EFT: Earlier this month you were planning to launch your LIF token, which is said to be the travel industry’s answer to ‘bitcoin’. That’s now been delayed until February next year. Why the delay?
MI: There have been a lot of dubious token projects recently and so FINMA, the Swiss Market Supervisory Authority, is right to be investigating these. The team agreed that it is best to wait for formal approval from the regulator before issuing our LIF tokens, as we want to be perceived as a serious project. (More about this on Winding Tree’s blog.)
EFT: You’ve said you want to level the travel industry playing field but you’ve also said that you aren’t playing at being Robin Hood, and that like bitcoin’s founder Satashi Nakamoto, you want to make some money…
MI: Yes, the founding team is being rewarded with a certain number of tokens, which hopefully will cost a lot in the future. That’s a very healthy motivation. But we believe that if we get it right, ultimately it's about the decentralisation of power - power that today is concentrated within just a few big corporations will be distributed among millions of people.
Ultimately it's about the decentralisation of power - power that today is concentrated within just a few big corporations will be distributed among millions of people
EFT: Will LIF be integral to all operations?
MI: Yes, any operation that requires an interaction with the chain requires LIF (as a fee).
EFT: Can you explain how LIF works, and what the implications will be if its value soars dramatically, as has been the case with Bitcoin?
MI: Well, first of all, the token price going up means that the platform is successful and we'll do everything to make it happen. As entrepreneurs say - it's a great problem to have. There are potential problems that it may cause, like high transaction fees on the platform.
As for usage of the token, there are several. First of all, the token will be used for value transfer; in other words, for payments on the platform. All parties will be also paying so-called ‘gas fees’ - that is fees that will be taken by miners that support the platform, for hosting those transactions on their computers. Another very important part of the token is participation in platform governance.
EFT: And why is this needed?
MI: As I’ve mentioned before, the smart contracts that we will be deploying are - by definition - immutable. No single company or individual can change them. But we have to change them, because no software system is static; business rules change, regulations change etc. So how do we do that? Well, we propose that the whole community votes on these changes. If it's good for the whole community, great, if not, let's not make the change. That's what we call platform governance.
EFT: When it comes to new adopting new technologies, security and privacy are a concern for many people. Should they be?
Regarding the privacy/scalability, we should not have any concerns thanks to state channels. The simple explanation of a state channel is this: a certain number of transactions are sent directly between two parties, let's say Lufthansa and Concur, and the authenticity of these transactions is confirmed by a complicated algorithm. Basically, if Concur tries to be an impostor in these transactions, they will lose money, and vice-versa. The final result of all these transactions is then posted onto a public blockchain along with the hash of all the data that those transactions contained. The result?
a) Transactions are fast and cheap
b) No one sees the data inside those transactions.
EFT: We have previously talked about the distinction between private and public blockchains. How are public ledgers incentivised?
MI: This is a great question! So, let's say there are 1,000 nodes (computers) in the blockchain network. All those nodes give the network their computational power (proof-of-work) and storage (to actually store the ledger). What incentive do the owners of those nodes have to connect their machines to the network? Here is where the ingenuity of the original bitcoin design lies. All the parties involved are incentivised to participate. These nodes (we call them miners) are being rewarded when they ‘mine’ the next ‘block’ of transactions and append it to the longest ‘chain’ of blocks. I hope I didn't lose you there.
EFT: A bit, yes, but continue...
MI: What happens is that all those 10,000 nodes compete with each other for solving a complex computation and when one of those nodes finds the right solution, they automatically get a reward from the network (we say: they mined 12.5 bitcoins; that's how new bitcoins are born, up until 21 million bitcoins, that's where this reward will stop), plus the miner receives all the transactions (we just say: tx) fees from all the tx that they are including in the next block. Today, for example, the Bitcoin network reward is 12.5 BTC from the network + tx fees.
Our goal would be to drive adoption of the platform and we’ll try and make it as easy as possible for startups to build consumer-facing products on top of it.
EFT: Do you see adoption of Winding Tree going the way of the Internet? In other words, tried by early adopters and then gradually entering the mainstream? Or do you see startups leading the way in developing products that use this technology to pass on value to the consumer first?
MI: I think with bitcoin and other applications of blockchain technology, it's already happened: there are early adopters (that have already benefited hugely!). In the case of Winding Tree our goal would be to drive adoption of the platform and we’ll try and make it as easy as possible for startups to build consumer-facing products on top of it.
EFT: Will travel suppliers auction off inventory to third parties? Will they do this in blocks or with real time dynamic pricing?
MI: Yes to all of the above.
EFT: When will consumers be able to book inventory on Winding Tree?
MI: We’ll try and make it happen as early as 2018.
Want to hear more from Maksim Ismaylov? Join us in London for EyeforTravel Europe 2018