Q&A with Blockchain Driven’s Peter Borovych: Companies Don’t Need to Build Blockchain Now, But Need to Think About Future
by Josh Anderson
NEW YORK, NY — Peter Borovykh has made his name in the traditional financial background and later became fascinated with digital applications of blockchain in finance. He is a quant who has created his own groundbreaking algorithmic trading strategy based on quantifying the market sentiment and leveraging the emotion of market participants. He set out to illuminate that part of the finance industry. He is the author of the book “Blockchain Applications in Finance” and a contributor to CapRE’s Data Center Summits. Below, we spoke with him about his latest projects, perspective, and predictions for blockchain technology in the data center space.
CapRE: Thanks for chatting with us today. Please, share with our readers a bit about what you and BlockchainDriven do.
Borovykh: I’m a blockchain consultant at BlockchainDriven.com. For the most part what I do is connect the bridge between the ideation and the actual development of blockchain architecture for private and public organizations. Our HQ is located in New York City, and at this point I am traveling worldwide 3 weeks out of the month. It’s been like this over the last 9 months, as interest in blockchain architecture and integration has spiked and continues to accelerate.
CapRE: And what regions do you work with?
Borovykh: The regions we are covering right now are the former Russian Federation, Latin America, and the U.S. Recently we were getting lots of looks from the Middle East, especially with regard to smart cities and big data solutions.
CapRE: So how does this all relate to data centers?
Borovykh: When it comes to data centers and blockchain, they’re connected due to the fact that organizations, whether public or private, want to take ownership of their data more aggressively. They didn’t always have this opportunity but they do now. We’re not just talking to small companies either – we’re talking to leaders, politicians, high-end executives, CEOs – because of this integration, because of that desire to own the data and be fully responsible in front of the client, the connection and migration toward blockchain is expected in the next 5-10 years. At this point, it isn’t going to happen immediately, but it will in the near future.
CapRE: Tell us more about why that is.
Borovykh: So you have blockchain, which is basically a protocol across a network. You can have that protocol, which is a piece of software, but if no one is joining it then it won’t work. The reason that our most popular coins are the way they are is because of the network of entities that validate transactions. When it comes down to these applications, they have these DAPS (decentralized apps) that take the processing power of the network to do certain things.
CapRE: And what about the decision-making process for adoption?
Borovykh: We have certain applications that are trying to create competition to AWS, Microsoft, etc. to create a decentralized computing cloud that takes advantage of this computational power. At this point in time, any legitimate data center has a trade-off when making these decisions. Do you pay a little bit more, and have absolute control of your data? Most people would say yes. But at this point it’s too expensive. As computing power goes up though and as networks become more efficient, we’ll see more use-cases – more actionable companies outsourcing part of their cloud computing tasks to blockchain. Because they want to protect it.
CapRE: How have things changed in the last year or two?
Borovykh: The last couple of years have changed dramatically and we have to thank cryptocurrencies for that. A lot of cases of blockchain technology would be more fruitful with an element of tokenization. Cryptocurrencies by themselves are useless, to be honest. And Blockchain is useful. But together, they create “magic.” They change business models. So because of that potential, more and more companies are considering implementing blockchain.
Last year you wouldn’t have seen this many decision-makers in the room – you’d see startups with no budget. A few asset managers considering crypto as an alternative asset for their portfolios. But starting in September, it changed drastically. Decisions-makers in the room will sit there and talk about what it is and how it will impact their business model. Next year we think there will be even more. The reason is because they see cryptocurrencies in the news, and a lot of that news supports the hype, but there’s also a lot of research online that’s profound and insightful.
CapRE: What are some of the challenges that might impact this widespread adoption of blockchain technology?
Borovykh: The oldest challenges are always in technology, but that will for the most part disappear through trial and error as more and more blockchain tech is integrated. However, one of the biggest challenges right now is about creating blockchain architecture that will work for different tasks – Task A, Task B, Task C. No solutions work like that for now. There are no perfect solutions. They’re customized. It’s always about trade-offs. It’s either the scalability of the processing power vs the trustworthiness of the network. How much do you trust them with the data, that all of your transactions are legitimate? There are no perfect solutions – yet. But the more solutions that we have, the more they will become realistic and scalable across the platforms.
CapRE: Fascinating. What else?
Borovykh: Another challenge is the incorrect outlook of how it should be done. You have a consortia of banks that want to do blockchain. That’s perfect. But they want to do horizontal structure, where every single participant is a competitor. Well how can competitors agree on something, or anything? They are splitting revenues and clients and sharing data with each other, which is insane. In many ways horizontal structures are a success – you’re bringing these people together to achieve something. But at the end of the day, they’re competitors.
CapRE: So what’s the alternative?
Borovykh: What will work and has already worked with some of our clients in Latin America and the U.S. is a vertical structure, where, say you have a transporter and manufacturer and a distributor – these guys can work together and not be competition. They can make things more efficient, inexpensive, and it can be more transparent and trustworthy. They already do business with each other and are likely to trust each other more than a 3rd party data center they don’t know or their competition.
CapRE: That sounds promising.
Borovykh: These vertical blockchain networks will be the first to see a major breakthrough in this A-Z technology, which can be a scalable solution for many business models. That’s what we’ve been doing pretty successfully, and we are seeing a lot of interest to implement those specific architectures. I would advise any company that is thinking of exploring blockchain to start thinking about it now, as the change of tech pace and blockchain adoption is accelerating. Right now the reward for the first movers far outweigh the risk.
The biggest resistance to adoption we see is a lack of understanding and education of what’s possible. As a company, you don’t need to build blockchain now, but you need to start thinking about the future.
CapRE: That’s great stuff. Thanks for chatting today.