Scalable Verifiable Blockchain Through PlatON with Ada Xiao

NTE 54 | Verifiable Blockchain

 

We want to use blockchain in collaborations and we want it to perform fast throughout a centralized system. At the same time, there is the issue of privacy. Will be there a time that we can have both? Ada Xiao, the Chief Strategy Officer of PlatON, talks about the use of privacy-preserving computation that enables secure data exchange and collaborative computing for enterprise users. Today, she helps us in understanding the mathematics behind verifiable blockchain so we can put trust in the system that’s going to shape the future. She also discusses where China is currently at in this technology.

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Scalable Verifiable Blockchain Through PlatON with Ada Xiao

I’m bringing to you Ada Xiao. She is the Chief Strategy Officer of PlatON, a next-generation computing architecture that aims to facilitate secure, seamless and open data sharing for the public good. They use Privacy-Preserving Computation. PlatON breaks down data silos and enables secure data exchange and collaborative computing for enterprise users. They have some great projects they’re working on. Ada focuses on developing, communicating and sustaining their strategic initiatives as the Chief Strategy Officer. She’s one of the first employees and the former head of business development at Blockchain Laboratory. She has deep blockchain experience and she also led all Asia Pacific-related blockchain investments and partnership at Fenbushi Capital 

Ada is a seasoned player in the global capital markets and asset management space as well, working with investment banks and financial institutions in Hong Kong, including Goldman Sachs and UBS Global Asset Management. She has her MBA from Columbia Business School and a Bachelor of Arts from Trinity College, University of Cambridge. She is quite knowledgeable and this is going to be a little techie episode. That’s okay because sometimes we need to understand a little bit more about the science and the mathematics underlying what’s going on in blockchain for us to get a sense and trust in that trustless future that we’re all looking for. With that, I bring you, Ada Xiao. 

 

Welcome, Ada Xiao. I’m so glad to speak to you.  

Thank you, Tracy.  

It’s so wonderful to be connected through blockchain innovation and things that are going around the world, to be connected to people all over the world. 

That’s the ideology of blockchain. 

Your company, PlatON, has some next-generation computing architecture. I want to do some definition to begin with because there were some things that I was like, “I’ve got to look this stuff up. I’ve got to understand what I’m talking about.” Our whole goal in what we are looking for is to take data. As you know, it’s the new currency and especially we have here in the US, The Great Hack that has come out on Netflix. The term, data as currency, is coming into the forefront of everybody’s mind. We’re looking at that and we’re saying, “Is there any place that can become private? Is there a promise of privacy somewhere out there?” That’s what blockchain has been touted as being, but we’re finding a lot of problems with that. One of them is scalability. Can you talk about that? What have been some of the scalable issues with blockchain that has created a privacy conundrum? 

NTE 54 | Verifiable Blockchain
Verifiable Blockchain: Make sure that your data is very well encrypted before it’s transferred or utilized.

 

We think of data as more than just currency. It’s like new energy. It’s the new order that’s powering technology advancement, economic growth and productivity growth, etc. That’s why we think that if the data can flow and it can be used for collaborations, it can definitely be very good for industries and humanity and so on and so forth. It can be used for the greater good. People and organizations are very reluctant to share data because of the privacy issues. We see a lot of news coming out about Google and Facebook, and the apps that we use daily in our lives are using the data that we generated for their own commercial and private interest. That’s something quite concerning. 

With blockchain, it solves the trust issue with this unique consensus mechanism. It’s enabling people who don’t know each other to be able to collaborate with each other and removing the trust factor that we have on some random thirdparty. We don’t trust some centralized systems, but in blockchain, we can work with everyone around the world. However, with that comes to the problems as you stated. The most imminent problems with the current blockchain technology are privacy issues and scalability issues. Even though in blockchain systems, we believe that we can be anonymous. However, some information that’s recorded and transferred on blockchain can still be seen by others. That’s one of the issues that when we talk to our enterprise customers, they worry about that. They don’t want their transaction data to be recorded on blockchain because it’s easily deduced back to them. Also with the current consensus mechanism, it requires every node to repetitively run the same calculation in order to reach a consensus outcome. That hinders the scalability.  

You’re talking about the difference between what you are based on, which is verifiable computation versus consensus algorithms. Would you define those for us? That would be helpful.  

By consensus mechanism, we’re using what is called Probability Proof of Stake, PPOS. It consists of three stages. The first one would be similar to other projects. One-hundred potential validators will be elected through voting. The second stage, among those 100 validators, 25 will be elected by a Random Factor, the RF. Those 25 validators will then take turns to be the block producer and produce the outcome and reach the consensus mechanism. That happens a round after another. By verifiable computation, what it stands for is like I have mentioned before with the old technology. Every node has to run the same calculation in order to verify the outcome and reach a consensus. However, with verifiable computation, it means that only one block produced needs to run the entire calculation and then a shockproof will be generated. The other nodes can verify that shockproof mathematically to know that the outcome is true and is not false for anything without running the entire calculations all over again. That saves a lot of time and energy and makes it more scalable.  

You’re dealing with verifiability and scalability in the same process. 

That’s to the most imminent problems that we’re trying to solve. We’re solving those by different means. For the scalability, we’re trying to solve that with verifiable computations that I was talking about. For privacy-preserving measures, we’re adopting a number of cryptographic means. For example, zero-knowledge proof and multi-party computations. It’s mathematically provable so people can trust math without having to trust any third parties or human factors to make sure that your data is very well encrypted before it’s transferred or utilized. 

There’s a lot of complexity to what you’re doing here. Tell us some more about what PlatON is attempting to do in the enterprise solutions. 

Data is more than just a currency. It's like the new energy or the new oil. Click To Tweet

We have been talking and working with quite a lot of enterprise clients both within China and overseas. One of the reasons why we decided that our policy is an issue that we’re going to target on is because when we talk to those enterprise customers, they have gigantic amount of data. They are worried about the collaboration with other counterparties because of exactly the privacy issue. For example, the banks and financial institutions have numerous amount of information on transactions and their clients, etc. They are also the most regulated area in the industry. There are a lot of rules about what kind of information you can’t share and you can’t review. For example, in a case where a bank wants to do a credit investigation, it only has a very partial data of the particular person that it will want to obtain extra information from the other banks. In this case, it’s hard to get them to collaborate. That’s why we’ve decided that we want to do MPC and all those cryptographic technologies to make sure that, “Don’t worry about the privacy part. We can ensure that your information is very well encrypted so that you can be safe to share it on blockchain.” That’s the bigger issue facing mass adoption of blockchain in the commercial area now. 

We have so much competition for which priority needs to take over. Do we want privacy or do we want speed, access and collaboration? They’re all competing for each other’s attention and we can’t have all of them. It’s a design problem. We do see here the hacks that have been happening and the manipulation of algorithms for nefarious purposes. We are seeing what’s going on and it’s making everybody nervous about their data and what is happening with our data. Yet we don’t want to slow down the progress of how we get access to our money, whether it’s through our banks and how much information is utilized to give us great products, solutions and services. We want all of that to happen within our healthcare systems, our financial systems, our government systems for that matter, but we also want to protect our privacy. We’re at this conundrum of how do we do both? How do we get a win-win between the sharing and the safety? 

There are still debates about whether we should use a centralized system or a decentralized system. As we all know, if it’s centralized, then it will be faster because it’s controlled. If we choose a decentralized platform, it will slow down the process a little bit, at least with the technology that we’re using right now. It depends on different use cases. Even for us when we are dealing with enterprise clients, they have a lot of demands and what they want to reach. Sometimes when we build a system for them, it will be a combination of centralized and decentralized solutions in one. As the technology evolves, one day we will see that blockchain will be able to meet all the demands and be very scalable and protects all the privacy. 

Sometimes we need to make a choice between the two. Whether you want to reach a collaboration on one or more parties or you want to have fast with high throughput centralized system. However, the reason why we’re choosing blockchain combined with the privacy-preserving technologies because we believe that especially with the sharing platform among individuals or with our third-party, they are concerned about privacy because they don’t know who they are collaborating with a lot of the times. The entire privacy-preserving technology that we’re using can be conducted off-chain and the outcome itself will be recorded on-chain so that the authenticity can be ensured and verified. 

You’re talking about some of these ideas of going private and public blockchains and shifting back and forth seamlessly between them. 

NTE 54 | Verifiable Blockchain
Verifiable Blockchain: The technology evolves. One day, blockchain will be able to meet all the demands, be very scalable, and protect all privacy.

 

It’s not shifting back and forth, however, the cryptography algorithms that we’re using and the whole encryption process can happen off-chain. If it happens on-chain, then it would take up a lot of calculation powers and they will slow down the process even more so that all the encryption will take place off-chain. Blockchain decentralized system itself will serve as the pipes and tubes that connect all the nodes and all the counter-parties so that once they decided, “We are going to collaborate and we’re going to share data so that we can do a calculation that’s beneficial for all of us.” After the calculation is done, the outcome will be recorded on-chain so that it can be verified, shared and used by everyone. The divided process from the first one would be off-chain encryption, then the second one would be the result of sharing on-chain and recorded on-chain. 

Beyond silos, but walled gardens might be another term that people use. We see that as your layperson. Most people see that idea of protection as obvious security. They’re nervous about blockchain because they can’t see the security and it is in the distribution that is supposed to achieve that higher level of security. How do you explain to your average person about what you’re working on is going to become more tamper-proof, more private and the ability to be hack-proof at the end of the day? 

In order to explain that, I have to divide the process into two parts. The first one is called storage securities. We have already very mature technologies to serve that part, where the data is stored at some centralized or decentralized storage facilities. We have to make sure that the data center and the storage is unhackable to ensure that the data is never going to get leaked. What we are targeting right now is somewhere the market is empty. They don’t have any measures to solve that part yet. We’re targeting another process where the data leaves the storage and where it’s shared and utilized by transactions and other kinds of parties. What we’re trying to do is using math and signs. For example, cryptography algorithms. There are papers out there, people have been researching about cryptography for a very long time. The concept of MPC was proposed back in the 1980s. Everything can be mathematically proven and if anyone is interested they can look up the paper. 

You have them on your website. You have both a white paper and a blue paper. For those of you who don’t know what a blue paper is. It’s like blueprints. It’s like a tech spec. You have technical specs as well as the dissertation, the white papers side of the research on that. I’ll be sure to share that to you because MPC, as you referred to it, Multi-Party Computation and verifiable computation, all of that is something that we need to start wrapping our heads around as we’re developing bigger companies, bigger systems and more collaborations. We need to start understanding where do we need to be structured as business entities 

You have to think about it from a perspective of Facebook’s founders, Google’s founders and all of these. They’re building businesses and they’re not thinking about these bigger picture items. These strategic problems that are going to occur. It doesn’t let them off the hook for not thinking about it, but it wasn’t in their building a business description. They weren’t thinking about these bigger data problems that we’re going to have. They never expected to get to the scale that they did as quickly as they did. That’s part of the problem. We’re all building companies that could end up like that. 

Many years ago, when the dot-com and everything happened, we’re definitely benefiting from the internet and its growth. We didn’t know that we’ll come to this day where one of the most valuable assets on any company’s balance sheet and decentralized companies didn’t realize that they can use data to profit so much. Once that happens and then with the scandals, especially for the past few years, the government, whether it’s in the US or European or even Chinese government, are becoming more and more aware of the data breach and the utilization of the data by the internet on centralized giants. I think that it will stay the trend in the future where the public or the regulators will become more and more aware of how important data is and how we should protect our personal data. I simply believe that would be the trend. Even Facebook and those CEOs and owners will be more and more aware of this and they will take actions on this. 

Technology has to mature to be utilized at a much larger scale. Click To Tweet

They need to take actions. Let’s talk a little bit about some real-world usability that you’re working on. You’re working on some blockchain projects in China, specifically in Hangzhou, which is one of my favorite cities by the way. I absolutely love to visit. I’m looking forward to the Innova City Project that you’re working on. You are building a smart city there. What is your part in that and what’s happening there? 

It’s Mercedes initiated and invested by Wanxiang, who is one of the biggest auto parts manufacturers in China. We also have factories in the US and we have acquired Fisker, which is the competitor to Tesla and lithium battery factories as well in the United States. It’s aiming to produce in ecological EV, Electric Vehicles, in the future. It was announced, this Innova Smart City Project, back in 2015. We were chosen to be the backbone of it. This is the infrastructure that they use for the Smart City. The reason why they’re trying to use this blockchain class privacy-preserving infrastructure for the Smart City is so that they can better monitor, use and securely store all the data information generated by whether the factory, the Electric Vehicle or its residents that will be staying at the Smart City. 

Some of the things that I’ve heard about are AI-driven light cycles and things like that. Traffic lights would be going on a pattern of it while technically recording your personal data as you’re driving through the city and everything. The benefit of collaborating and drawing all that information to make the AI that runs the light system smarter, that’s important. 

Not just the light systems, especially with the auto-driving these days. In order to make sure that all the driving is safe almost everywhere, you need data samples from the driving behaviors in that particular area. That’s how we trained AIs. We train the algorithms with data. We feed them with data of their past behaviors. With the data that we can potentially be collecting from the drivers and cars, we can better train the auto driver systems so that we can make our driving in that city safer. That applies to everywhere else in the world. One very important part is that we don’t want to collect the data and then make people feel uncomfortable that their personal data is collected. That’s why we need this privacy-preserving technology to make sure that we can use the data for good, but not at the cost of anyone’s personal privacy. 

There are going to be some great things going on in that and it’s supposed to be live in 2025, but things are coming along as you’re going forward. Where can people get more information about what’s going on there? 

They have a website with everything that’s going on, but it’s probably more in Chinese. However, the CIO, the Chief Innovation Officer of thaparticular project is from IBM and he also flies back and forth from the US and China. We’re working together to make sure that the announcements or the update news and everything can be shared across. That is so people can learn more about what’s going on in China and how we are devoting and making sure that innovations and technology progress is happening within the country. 

NTE 54 | Verifiable Blockchain
Verifiable Blockchain: We can train algorithms with data, but we don’t want to collect data and make people feel uncomfortable that their personal data is collected.

 

Ada, I think that’s one of the issues that we here in the US have. When I started covering the blockchain industry for Inc. Magazine and came into that, I was so surprised at how far along China is in adopting blockchain and building it into their systems and considering it for big projects like this and looking at that. It seems counterintuitive to us because it seems that China wants to control the data and have a centralized view of data and people and other things. It’s because of the way that the country is run as opposed to the independence and privacy-seeking that we seem to be about here in the US. It seemed counterintuitive. Why do you think that is? Why is it so critically important to China and to other countries that are adopting it at a much faster pace? To be honest with you, we are behind here in the US. 

Sometimes there might be some misunderstanding and misinterpretation of what the Chinese government was trying to do for us. As a blockchain technology company, we feel like we are encouraged by the authorities. As for the privacy part, I know there are news about a lot of the apps that we use in China who are misusing and misutilizing the user’s data. They were scrutinized by the government and punished by the government for not protecting personal privacy, etc. I feel like the government and the authority is trying to do a lot of things. They’re coming up with legislation, with different regulations and different measures to make sure that the personal data is protected and is not being abused for commercial interest. That’s what we see in the country. What we are doing with privacy-preserving is something that the government and the authority are quite interested in. 

I felt like we are being supported. I don’t think the Chinese government has a different view from the US or the European Union concerning data privacy. At least that’s how we feel in China. I don’t think that the US or other countries are behind or anything. It’s just that privacy-preserving is a big topic and it’s something at the top of any regulator’s priority list. However, the technology itself is new and it requires a lot of whether it’s registrations or making sure that the technology is more mature to be utilized at a much larger scale and everything. It might take some time, but I believe that it will definitely be a main focus in the future. 

I think that we have a very maverick approach to technology and innovation, which means that we have cowboys out there. They’re all like, “Let’s explore the new frontier, let’s go for it.” They jump in maybe too fast without full consideration and view of how it’s going to change the order of the country, the order of our banking systems, the order of how people’s lives run. In the end, it’s breached our privacy in a very egregious and awful way. That makes people go, “Let’s put some big giant restraints on everything and let’s be anti-innovation,” which isn’t the answer either. I think we’re very reactionary here in the US. That’s part of the problem. We’re reacting badly and that’s probably slowing us down.  

I appreciate you coming on and sharing what you’re doing and I look forward to you keeping us updated on how things are going. Please make sure to send us messages on social media, @NewTrustEconomy and make sure our audience hears about that and the progress you’re making and the new projects you’re working on. We’ll make sure that they can also reach you anywhere right on our website at NewTrustEconomy.com and on social media, so they can reach out to you if they have interesting projects or enterprise things that they’d like to explore with you.  

Thank you very much for having me.  

Thank you so much for reading the New Trust Economy. We will be back with a new episode and new innovation to feature, new companies, new explorations. We’re always looking for what’s going on in blockchain, in innovation and cryptocurrencies. Thanks again. This is Tracy Hazzard on the New Trust Economy. 

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About Ada Xiao

NTE 54 | Verifiable BlockchainAda is the Chief Strategy Officer of PlatON where she focuses on developing, communicating, and sustaining PlatON’s strategic initiatives. One of the first employees and the former Head of Business Development at Wanxiang Blockchain Laboratory, Ada also led all Asia Pacific-related blockchain investments and partnerships at Fenbushi Capital. Ada is a seasoned player in the global capital markets and asset management space, having previously worked for prominent investment banks and financial institutions in Hong Kong, including Goldman Sachs and UBS Global Asset Management. Ada obtained her MBA from Columbia Business School, and her Bachelor of Arts from Trinity College, University of Cambridge.

PlatON is a next-generation computing architecture that aims to facilitate secure, seamless, and open data sharing for the public good. Through Privacy-Preserving Computation (PPC), PlatON breaks down data silos and enables secure data exchange and collaborative computing for enterprise users. With its open-source data marketplace, PlatON supports and incentivizes individuals and businesses looking to both monetize and utilize data resources. PlatON addresses limitations in scalability and security by way of Verifiable Computation and privacy-preserving encryption capabilities, currently enabling real-world usability across a variety of global industries, including advertising, healthcare data management, IoT and decentralized AI, financial services, as well as key management systems.

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