We speak to Keir Finlow-Bates, CEO of Chainfrog Oy, Finland’s first blockchain startup.
Finlow-Bates studied mathematics and information engineering at Cambridge in the early 90s and went on to receive a PhD from London South Bank University in mathematics and education.
After a tenure as a mathematics lecturer at London South Bank, he’s been a technical writer for a programming languages company, a computer security test engineer, and an operations manager. Now, he’s an entrepreneur managing Finland’s first blockchain company.
What is your blockchain origin story?
I was working for a satellite navigation company in late 2009, and a colleague came and showed me Nakamoto’s original paper. I started digging into it, looking at how the sum of the parts creates something greater than the whole, and submitted a lot of patent ideas to my subsequent employer. Unfortunately, it was such an unfamiliar concept that they only filed a few of them.
As a programmer, inventor, and patent owner yourself, what about blockchain made you sit up and go, “This is something I want to spend my days working on?”
Well, it involves cryptography and game theory, which are both highly mathematical areas, and peer-to-peer networking, which makes the whole thing decentralized.
I think the fact that you can launch a public blockchain and then just have it take on a life of its own without requiring any input from the original blockchain founder is fascinating. And because it’s a foundational technology, I think it can be applied to almost any vertical, so you don’t get stuck working in just one of the energy industries, health technology, supply chain, or finance and trading.
You’re founder and CEO of Chainfrog Oy, Finland’s first blockchain technology company. What does the Finnish landscape look like in terms of blockchain development and interest?
At the moment, I think Finland is a bit behind compared to other European countries, despite being a technology and startup hotspot. At Slush 2017 last week, we couldn’t find another genuine blockchain technology company, and only a few cryptocurrency ones.
We did have a lot of interest and long queues of people waiting to talk to us at the convention though. Finland seems to be more focused on games and IoT, which is where they’ve had the most success stories. Chainfrog is doing its best to change that, though.
What are your thoughts on blockchain’s European landscape in comparison to its Asian and North American counterparts?
Nations and even larger geographical regions may have their own general characteristics and weltanschauung, but the difference between individuals within such a region is bigger than the differences between the regions. And if a new application of blockchain turns out to be fruitful in, for example, China, I think it will spread rather quickly to Europe and North America.
How will blockchain technology aid Europe’s upcoming General Data Protection Regulation (GDPR)?
I think it’s best to turn that question around and answer: “How will GDPR aid blockchain technology?”
In order to comply with GDPR, a lot of banks and businesses are finally having to go through their databases and get their houses in order. This should provide an opportunity to examine not just “what is stored” but “how it is used” and that, in turn, will provide all sorts of interesting possibilities for integrating blockchain into existing workflows and processes. I believe GDPR may be one of the best things to happen to digitalization and blockchain.
You have said that the blockchain is the biggest thing since the database. How will blockchain technology transform standard business practice across multiple industries?
I think the key here is that many companies are both competitors and collaborators. Take online ticketing offices or travel agencies, for example, which are competing with each other to sell tickets, but need to inform each other when a seat is sold to ensure it is not double-booked. Blockchain can allow such competitors to share important data across low-trust boundaries, and still keep the data secure from outsiders.
Similarly, blockchain can add transparency across supply chains – at the moment, each supplier or merchant in the supply chain only tends to know who they are getting something from, and who they are passing it on to. If there’s a defect in the product, then it becomes a forensic investigation to go back up the supply chain and determine whose component is at fault. This will become vital in, for example, the food industry, because with a blockchain the whole supply chain is visible at one go.
Finally, blockchain is able to create unique digital assets that can be traded without requiring a middleman to keep track of ownership, so titles to land or property can be exchanged without shuffling mountains of paperwork about. That’s already a game changer in the areas of cryptocurrencies and raising investment. It’s all pretty revolutionary stuff.
You believe in integration and improvisation of existing databases when adopting blockchain technology, as opposed to database replacement. Can you expand on this?
Simply put, there are a lot of legacy databases out there providing all sorts of valuable services by allowing the data to be searched and manipulated. A recent quote I read stated that “oil is no longer the most valuable asset in the world; it’s data”.
To push the analogy further, data isn’t flowing as easily and widely as it could. We see blockchain as a major enabler for this, kind of like an oil pipe supplying many different countries. But given that the current data systems are functioning, albeit not as well as they could, there should be no immediate need to replace them. Enhancing is, in my opinion, the way to go at this early stage.
What is Chainfrog’s product Blockbinder, and what sets it apart?
Blockbinder allows a company to connect a legacy database to a blockchain, and share selected parts of the data securely onto that blockchain. They can then invite other collaborators to join the blockchain and view that data in their own databases, providing data transparency.
Instead of replacing years of process and system development work, with Blockbinder they can run a blockchain system alongside their existing system and perform a real comparison to see what cost reductions and time benefits the new system brings.
So, it allows a company to deploy a genuine blockchain pilot in hours rather than in months, at a lower cost, and hopefully evolve their systems over time. We see Blockbinder allowing our customers to take small but effective steps towards a blockchain solution with inherently less risk, rather than the usual slash-and-burn approach. It should also lead naturally to new business growth and increased revenue.
Can you talk about some of your blockchain-related patents?
Certainly. We started out looking at location reporting on a blockchain and filed a patent in that area, thinking to provide provable location services, but subsequently pivoted.
We also have a couple of public key infrastructure ideas that are patent pending, an improved consensus protocol to replace proof-of-work and reduce blockchain power consumption and, of course, one related to integrating blockchain with databases, which is what our Blockbinder product is based on.
Blockchain is such a new concept with many as-yet unexplored uses, so I’m expecting many more in the future.
Earlier this year, you worked on blockchain project Pigeon with Teosto, The Finnish Composers’ Copyright Society. How did it go?
We worked on the Pigeon pilot system to demonstrate how blockchain could improve communication, data exchange and royalty payment settlement between the different royalty collection societies, or CMOs (collective management organizations) of the world. The CMOs have to collaborate in order to ensure that royalties are transferred across national boundaries, but ultimately they have the interests of their own members at heart.
Combined with the fact that some of them are over a century old, their current communication methods can be a bit slow at times. For example, there have been cases of royalty payments taking a couple of years to reach the relevant composer or artist.
There is no clear leader that they would all select to run a data exchange system, and so blockchain is the perfect match. Teosto is a very forward-thinking CMO and is typically Finnish in its love of technological advances, so it was a pleasure to work with them, and they were very happy with what we provided. In short, it was a success.
Who is the team behind Chainfrog?
Other than myself, there’s Jon Callan in Cambridge, who is our CTO, a Cambridge graduate, and a former ARM programmer, and Kimmo Rouhiainen in Tampere, who is our business development manager. We three are the original founders of the company.
Then there’s Meiss Marten, our director of sales and marketing, who joined just over three months ago as the first employee. Given that the core value that we settled on for Chainfrog is “employees first”, I guess that makes her the most important person in the company!
Finally, we also have Salla Salmi handling administration and creative design. She produced the company logo for us and makes sure we don’t put too many clashing colors on the website.
Based out of Tampere, Finland, you benefit from the Tampere Smart City initiative. What role can city governments play in aiding blockchain development and hotspots?
We conducted a workshop on blockchain with the Council of the Tampere Region (Pirkanmaan Liitto) recently, where we were looking at several possible blockchain applications. They are especially interested in how blockchain could provide a backbone for the business and innovation ecosystem. Our product is designed to make it fast and easy for organizations to start experimenting with blockchain without needing to become experts, which makes it perfect for these kinds of project.
Tampere has a long industrial and engineering history and used to be one of the research and development centers for Nokia and Microsoft, so there is a large pool of highly qualified and capable software and hardware engineers available. Many have gone on to found new start-ups.
City governments can provide incentives for such start-ups to collaborate through funding and support services, and blockchain could potentially provide the underlying system for sharing data and distributing funding. I’m also hoping they can put blockchain companies such as ours in touch with potential clients, as we are now looking for further pilot projects.