That IBM would have engaged Von Neumann was not surprising. He was at the height of his fame and recognized as one of the greatest minds in all history. He had already made lasting contributions to the foundations of mathematics, quantum mechanics, nuclear physics, game theory, computer science, and had invented the “Von-Neumann architecture” the blueprint for a stored program computer. Although Von Neumann rejected any claims to being the father of modern computing, (that accolade goes to Alan Turing) participants at the time agree that he was at the very least its midwife, bringing the modern computer to life.

Von Neumann and Hurd arrived safely at Big Blue’s Headquarters and Backus gave his presentation. His idea, which he had named “FORTRAN”, short for Formula Translating System left Von Neumann distinctly underwhelmed. After listening to the presentation he raised his famous question “Why would anyone want to program in anything other than machine code?”

With 60 years hindsight this question may seem short sighted. Backus went on to receive the Turing Award in 1977, and FORTRAN became an essential programming language powering the scientific community. Since the start of the computing age the inventions that have significantly advanced the human race have all evolved to applications far beyond what the original inventors imagined. The Internet itself, or more precisely the protocols for inter-networking, Public Key Cryptography, the World Wide Web, and the PageRank search algorithm all represented major advances for the human race, but very rarely did the inventors see the implications of their work at the time.

Which brings us to blockchain, the latest technology to receive attention and massive investment from Silicon Valley. While Marc Andreessen, the doyen of Silicon Valley’s Venture Capitalists, has described the blockchain as the most important invention since the Internet itself, we are only just beginning to consider the real applications that will take blockchain beyond its bitcoin roots. Ultimately it may can redefine the meanings of trust and truth and make it impossible for humans and machines to lie about the past.

Early Adopters

The blockchain is, in essence, a distributed public ledger. Akin to real-world ledgers, information can only be added, never removed. There are also specific rules agreed upon by the participants about how the ledger is updated. The rules can be simple (e.g. no rules at all, in which case the ledger is acting like a public notary, to rules that involve complex financial derivatives). The key challenge is ensuring that participants can come to a consensus on how the ledger is updated.

Today, there are a number of great minds working on blockchain applications. Vitalik Buterin and his team at Ethereum have generalized the rules to make the blockchain “Turing Complete” by building a scripting language so that anything that can be calculated using a computer can be calculated using the blockchain, paving the way for smart contracts -- systems which automatically move digital assets according to pre-specified rules.

More recently, a new venture called Blockstream raised $21 million in seed funding from leading investors to create “sidechains.” Sidechains extend blockchain protocol to allow new blockchains to be pegged into an already existing blockchain, taking advantage of the resilience guaranteed by the current blockchain while trying out experimental features in the newer sidechain.

Blythe Masters, recently on the cover of Bloomberg Markets has been a hero in finance for a while now and she shows no signs of stopping. Her investment firm, Digital Asset Holdings, recently acquired company Hyperledger, founded by Dan O'Prey. The company creates private ledgers which are not based on any one cryptocurrency, making it flexible to integrate with existing systems. This makes it possible to be more private (as opposed to the public Bitcoin ledger), keeps bank information secure and allows control over who has access to the ledger in the first place.

The possibilities begin to seem limitless, and we will soon see entire industries transformed by the public ledger. Here are a few industries that are top of mind for us at Guardtime:


The biggest problem with security today can be summarized by Geer’s law, which states that “any security technology whose efficacy cannot be empirically determined is equivalent to blind luck.” In other words, if there is no way to verify that your security measures are working, then you are reduced to hoping that they are. But hope is not a strategy, as witnessed by a long list of victims including, Sony, Target and Home Depot. There is no verification mechanism for anti-virus, sandboxing, intrusion detection, etc.

Now imagine a blockchain-enabled network. Every transport, storage and compute of data both into and in the network is entered into the blockchain, providing a means to verify what happened in the event of a breach. This protection-plus-detection approach turns the security paradigm on its head, and will address the concerns of any smart Enterprise CIO.


The pitch to regulatory bodies such as the SEC, FDA, FAA, FCC, etc. asks, “would it be valuable if the entities that you regulate could no longer lie to you?” You don’t need to be a startup entrepreneur to figure out the answer to this question. By requiring all activity within regulated entities to be registered on the blockchain, they would have the means to independently verify the activities of the organizations they are tasked to regulate. Think of healthcare – if every modification, access and deletion of healthcare records could be verified after the fact, without disclosing the records itself, it would transform the healthcare industry and help eliminate fraud. Or, consider the European Union’s ongoing antitrust case against Google - and what might change if the EU’s commission suddenly had the ability to audit.

Internet of Things

The Internet of Things is about to connect our world, and leave us incredibly vulnerable considering just how much can go wrong, or be corrupted. Companies betting on this future are beginning to explore proof of concept systems for next generation of IoT, based on IBM's ADEPT (Autonomous Decentralized Peer-to-Peer Telemetry) concept, Bitcoin cryptocurrency, Ethereum and the peer-to-peer comms protocol Rehash. It sounds ambitious, but the concept is quite simple. From the time a sensor completes final assembly, it can be registered by the manufacturer into a universal blockchain representing the beginning of its life. The integrity of the software the sensor runs can be continuously verified throughout its life. Also verifiable is the integrity of the process of how data is collected and, ultimately, used.

Mutually Assured Detection

Transplanting the hierarchical governance systems of the physical world to the digital has proven to be doomed endeavor as trust simply cannot scale across time or number of participants. Verification is the only answer, hence the potential of the blockchain to provide an audit trail for all digital activity.

John Von Neumann would have understood this. He was the game theorist behind the strategy of Mutually Assured Destruction. As any game theorist will tell you, if you know you will eventually be caught, it will change your behavior. If Google brought the end to ignorance, then the blockchain will bring the end to lies, as Mutually Assured Detection will at least ensure that everything that happens can be verified after the fact. And that achievement, too, should be considered a significant advance for the human race.