Tag: Blockchain

Putting Blackpool FC on the blockchain

Blackpool Football Club, its fans and community have been treated horrendously over the last few years. The owners, the Oyston family, have run the club into the ground, abusing and taking legal action against fans in the process, while both the football authorities and Blackpool’s town councillors sat by and watched.

Last year there was light at the end of the tunnel when Justice Marcus Smith ruled that the Oystons had “illegitimately stripped” the club “in a manner which involved “fundamental breaches” of their duties as directors”. The ruling came after a legal case bought by Valeri Belokon, a major investor at the club. To compensate Belokon the Oystons need to raise money so have put the club up for sale.

Seven patient months later a company called vSport are reported to have bid for Blackpool FC and are quoted saying that they expect to complete the purchase by the end of the month.

vSport say that they are the “world’s first non-profit, open-source and blockchain empowered platform which is completely dedicated to the Sports Industry”.

Sounds impressively futuristic but what on earth does that mean? And should fans and journalists be welcoming the news, or undertaking a bit more scrutiny?

What on earth is blockchain?

Blockchain is a new technology that is generating a lot of interest. Many people believe that it will change the world.

I was part of a team that looked at blockchain two years ago. Our first assessment was that it was useful, but not for everything. We then wrote a longer report, which looked at the promises and risks. Our simplest definition was:

Blockchains provide a way to store information so that many people can see it, keep a copy of it, and add to it. Once added, it is very difficult to remove information. This can reinforce trust in a blockchain’s content.

This type of data storage can support lots of new business and organisational models. Bitcoin is the most famous new model associated with blockchain, indeed blockchain was invented as part of the development of Bitcoin.

Bitcoin was originally intended as a way for people to send payments to each other without an intermediary, unfortunately Bitcoin is currently most famous for being notoriously hard to spend and use, generating a few (Bitcoin) billionaires, losing some people a lot of money, and using as much energy as Ireland or Denmark. Bitcoin doesn’t seem a great thing.

from “Blockchain for 2018 and Beyond: A (growing) list of blockchain use cases

There are many many other proposed uses of blockchain. I won’t list them all. They seem to exist in every sector.

I still haven’t seen one working at scale. And I do spend time looking, Because while I still think there may be some good in blockchain (making it really hard to change data, and making it easier for more people to see when it is changed, must be useful for something! perhaps our project on national archives will help find it?) there is also a lot of hype.

It is good to see that the hype is gradually being seen by more people. We need to get past it to see where, or if, blockchain can be used for positive purposes. Where there is hype there is danger. Not just of lost money — some people will always lose some money while experimenting with new technology — but of more unintended harmful impacts, such as Bitcoin’s impact on the environment, or a direct and immediate impact on individuals.

As societies we need to experiment with new technology to see where it could be useful, but we need be wary of harmful impacts and who could be affected. In the age of a global internet and world wide web, harm can happen at great scale and speed.

What on earth is vSport?

vSport say that they are “world’s first non-profit, open-source and blockchain empowered platform which is completely dedicated to the Sports Industry”. It was founded by Bai Qiang and, Dutch ex-footballer, Wesley Sneijder. vSport is based in China.

The two previously founded a company called Sport8. The English-language version of Sport8’s website has not been updated since 2015 although the Chinese-language version seems to have been more recently updated.


There are reports that Sport8 signed a deal with Borussia Dortmund in 2016, although the Borussia Dortmund website has no mention of it. Bai Qiang previously produced a 3D music video in 2012 and worked as a Vice-President at large speech recognition firm iFlytek.

Play vSports roulette! Could this be offering the chance to win rare Brett Ormerod memorabilia soon?

vSport, like many other companies, has raised some initial funds from investors, put out some blogposts and a whitepaper and is trying to show its potential so that it can bring in more funds. When I signed up on the website I got the chance to play a boring roulette game, I don’t think that game will bring in many funds or players in Blackpool.

The whitepaper has lots of big words and claims but little technical information or detail on how the capabilities will be built and adopted across the many claimed scenarios. I couldn’t find any source code to review, either to check if the roulette game was fair or to help form an opinion on whether the larger technical claims were credible.

A list of applications from the vSport website

The list of applications on the website and in the whitepaper is long and varied. In the time it would take to build a business across the sports sector then most of these ideas would be out of date. If I was advising them then, as for most other blockchain companies, I would recommend that a little more focus and a lot less hype would make them more likely to have long-term success.

from the vSport whitepaper

Some of the applications are a little strange and will have harmful impacts. For example, a section on data sharing talks about personal data like people’s names, sports activities and achievements being put into the blockchain. It says that this could be used in marketing and in making decisions about teenagers at school. Don’t put personal data in a blockchain. Sometimes people need protecting and data about them needs changing or removing. The very same factors that make it hard to change data in a blockchain, also make it hard to protect the people that the data is about.

Most of the applications don’t require a blockchain, they could be built with existing and less experimental technologies, and most of them are about creating financial value for vSport, football clubs, and celebrities but, one of the promises of blockchain is that it can widen the number of people involved in decision making.

from the vSport whitepaper

If vSport follow that model (and the whitepaper hints at this) then football fans could influence its direction and get it to build applications that they want. Perhaps Blackpool fans could vote to finally build a training ground?

Unfortunately the limited information about the foundation shows a simple organisation chart with no detail of who is in which box, how decisions are made, and how they can be appealed.

vSport looks like the very early stage of a classic top-down business. Lots of promises, few products and in need of customers to both develop the products and prove that it can deliver what it promises. I worry that it wants to buy Blackpool football club either for marketing or to test its new technology on the club and fans.

vSport needs more scrutiny

Blackpool fans have had a terrible time. Many, like me, haven’t been to see their football club in years. Any escape route from the Oystons might seem a good one but vSport doesn’t seem the right next destination.

Being either a marketing vehicle for vSport or a testing ground for its technology doesn’t seem like something Blackpool FC, its fans, or its community need. Fans, journalists and local councillors (who’ve hopefully learnt a lesson from their failure to get to grips with the Oystons) need to ask more and better questions of any potential new investor. Any investor that fails to talk with fans before bidding should immediately raise alarm bells.

Many fans were happy to start a new fan-owned club if the Oystons failed to leave. We can ask more questions of vSport, or wait and see if Belokon can use his court case to get ownership from the Oystons, but we should also continue to be prepared to start a new club rather than accepting the first rescue ship that comes along.

Will blockchains or Beyoncé change the world?

A version of this post, with minor changes, was originally published back in January 2016 at Marketing Magazine.

My thinking on blockchains has evolved but it is clear that many of the current ideas flying around are still nonsense whilst others show a lack of awareness of the damage that could be caused by loss of privacy or an undebated transfer of power by control over the blockchain and the data it holds.

As James Smith of the Open Data Institute said in this lecture in March 2016 we risk good ideas and good uses of blockchains and other forms of distributed ledger dying in the hype cycle. We also risk wasting a lot of money on marketing ideas.

It would help us all if we were more wary of hype and helped blockchains, and other technologies, progress through the hype cycle.

Blockchain was only invented in 2008, starting off as technology to underpin the cryptocurrency bitcoin, but it’s rapidly becoming famous.

The original piece at Marketing Magazine. It’s a long story why it ended up there.

It provides a way to store information so that many people can see it, many people can keep a copy of it, and many people can add to it. It is very difficult to remove information, and this can create trust in the stored information. In the bitcoin system, for which blockchains were originally designed, anyone can access and add information to the blockchain, though other systems are more restricted

There are some voices expressing a desire, or need, for a little caution but there are many others calling for full steam ahead. Recently blockchains appeared on the front cover of global magazine The Economist with a tagline of “the trust machine” and a statement that blockchain technology ‘could transform the economy’.

Is the fame justified or are we falling for the hype machine? And what does this have to do with Beyoncé and feminism?

Fame and the hype cycle

Gartner Research have a nice visualisation called the hype cycle. It is not scientific but it neatly shows some of the stages that technologies typically go through. There is a peak of inflated expectations before we work out how to actually use something and it becomes widely adopted and productive.

Gartner hype cycle image from Wikimedia by Jeremykemp, CC-SA-3.0

The hype cycle is neat but it is not great at showing time or failure.

Time: Sometimes it can take decades for a good idea to become widely used. We’ve been hearing about internet television since the 1990s and yet it’s only recently that Netflix have managed to use the internet to launch what might be the first global television network.

Failure: The hype cycle does not show the technologies that fail and disappear. Perhaps they are replaced after years of use (so long floppy disk) or perhaps they struggle to get adopted in the first place (farewell Betamax). People might spend billions on new technology but much of it was a waste of money. This is not necessarily because the technology was a bad invention: it might simply be another solution to a problem that was already solved.

There is a third problem with the hype cycle. It can be tricky to tell if a technology is on its way to the plateau of productivity or whether it’s still on the first slope. That’s the one that leads to the peak of inflated expectations.

The blockchain institute

One way to differentiate the peak of inflated expectations from the slope of enlightenment is when people start to weed out daft ideas for a particular technology and instead focus on more useful ones. This might be tricky. It is possible to see almost any problem and think that blockchain technology will help. Working out which problems the technology can usefully help to solve requires careful thought.

If you look on twitter you will find that someone set up a Blockchain Institute. Perhaps this official-sounding institution will come up with some good ideas for the practical applications of blockchains? A quick look through its twitter mentions shows people thanking it for sharing conferences and blogs, criticising it for not crediting images, including it in conversations, connecting it with friends, and asking it questions.

After this article was first published it was even ranked #59 in an, automatically generated of course, blockchain who’s who.

The blockchain institute was ranked 59 in a blockchain who’s who

But the real problem is that humans trust the code. I went to an event where someone told me the Institute had a slightly quirky take on blockchains but had interesting things to say. They asked me if I knew who was writing the tweets.

But the Blockchain Institute is a computer program. Not only that, it’s a program that tweets nonsense.

https://twitter.com/blkchninstitute/status/691931060712689664

I did not write it or set it up but I can see what the program is doing. It replaces the word blockchain with Beyoncé and bitcoin with feminism.

If it sees a tweet that says “blockchain is a star because of bitcoin” it changes it to “Beyoncé is a star because of feminism”. There is no new content. The computer program does word substitution. Nothing more complex. Yet people are struggling to spot that it’s simply copying other people’s thoughts, words and ideas and — for some reason known only to its creator — adding in a bit of extra Beyoncé and feminism.

This is not a good sign. People are trusting opinions that come out of a machine without spotting that it’s a machine, thinking about the motives of the programmer or that the opinions don’t actually make any sense.

This, and the many ridiculous ideas for using the technology, are reasonable signals that blockchains are heading towards the peak of inflated expectations. People still don’t understand blockchain technology, what it might be useful for and whether it adds anything to the existing suite of technologies and organisational models for storing and sharing data. Disillusionment will surely follow.

Beyoncé and feminism are changing the world

It remains to be seen whether over time we will see blockchain technology become productive and deliver real value or whether blockchains will fail. Blockchains seem to be moving through the hype cycle faster than many other technologies but some things never escape the hype cycle and never become productive. We need to be more wary of hype. We need more research, trials and successful implementations to find out whether in this case it is justified.

In the meantime I do recommend keeping an eye on the Blockchain Institute. Whilst the technology world continues to struggle with gender balance and social media is being used to abuse and troll so many women it is useful to have regular reminders of the revolutionary impact that feminism has had on society and that Beyoncé and feminism are changing the world.

Bitcoin, money laundering, and the challenge that law faces in keeping up with technology

I’m interested in the new organisational structures that blockchains, or other forms of distributed ledger, might enable, the problems they might solve and whether solving those problems can help make the world better. Bitcoin is enabled by one type of blockchain. As Jeni Tennison of the Open Data Institute explained:

Blockchains provide a way to store information so that many people can see it, keep a copy of it, and add to it. Once added, it is very difficult to remove information, which can reinforce trust in a blockchain’s content.

Bitcoins are a form of digital currency and blockchains were originally designed as a system to manage them. Within the Bitcoin system anyone can access and add information (such as what Bitcoins are used for, where they were spent and when) to the blockchain.

Someone (*) told me a theory about bitcoin the other week. I don’t know if the theory is right, or even close to right, but it reminded me of something I’ve come across before. A familiar, although slightly different, pattern. This kind of pattern matching is common in humans. It can help us grasp new concepts quickly. Sometimes it can also lead us astray. Given the pace of legal frameworks that can be a bad thing.

Money laundering

Money laundering is how a criminal makes it hard to discover that their money was gained illegally. There are many ways to do it. After money is laundered it appears to come from a legal source. It is ‘clean’. The criminal can enjoy the profits produced by their illegal activity with a reduced risk of punishment. Money laundering techniques evolve over time.

Let’s take an example:

Alice sells illegal drugs for cash. Alice has no other reason to have large amounts of cash hanging around. If the police find Alice with her cash then she will be in trouble.

Alice walks into a betting shop and puts the cash into a slot machine. Put a pound in. Press the button. Put a pound in. Press the button. It gets repetitive. But every so often there’s a big win. Alice ends up with £300 in cash in her pocket along with a receipt saying that she won it by putting in a single pound.

Slot machines have a built-in advantage for whoever runs them so Alice ends up with less money than she started with but it was worth it. If anyone asks then Alice now has a good reason to have the £300. She’s got clean money and is less likely to go to jail. Lucky Alice.

I know Alice’s story is true. It has become easier in the UK since the liberalisation of slot machines in 2001.

Here’s a more complex money laundering example. One made possible by newer technology and business models:

Roberto has a regular income in his country. He makes his money illegally: perhaps from drugs, perhaps from robbing people, who knows. Every week he gets some money coming in.

Roberto heard of M2M (machine-to-machine) and IoT (internet of things). M2M is when machines communicate with each other. IoT is when that happens across the internet. Communications cost money. At a basic level it is the machines and the cost of the network that connects the machines together but money might also be paid to intermediary organisations that pass on a message or that translate between the languages spoken by different machines.

Roberto spots an opportunity. He sets up some machines in both his home country and another country. He uses his illegal money to pay for the energy consumed by the machines and of wages of people to look after them. Roberto also sets up an intermediary organisation. His machines talk through the intermediary and pay a fee. The intermediary organisation helps turn the dirty money into clean money.

If Roberto sets up the intermediary in a third country he could produce the clean money in a different currency and legal jurisdiction. He could even pass the transactions through multiple intermediaries making it very hard for anyone to trace it back to him. Lucky Roberto.

I think Roberto’s story is true. Once upon a time I thought I saw some of the breadcrumbs left behind by his machines as they went from one intermediary to another.

A theory about bitcoin

And now for the bitcoin theory. It is not the usual story about money laundering by exchanging cash for bitcoins. It is a little more complex.

The blocks in the bitcoin blockchain store information. The information might say things like “Jerry transferred money to Jane”, “Brenda paid Mary” or any other message you like. Anyone can pass information to the bitcoin network for storage. Machines called ‘miners’ compete to create the next block by doing work to solve a complex computer problem. The miners are rewarded a number of newly created bitcoins for doing this work. This is called a proof of work system. It reduces the chance of two miners storing the same or conflicting information at the same time and helps the whole system to function.

Let’s imagine the tale of Francesca:

Francesca has money that she has received illegally and wants to launder. She has spoken to Roberto about his machines. Francesca has also heard about bitcoin but doesn’t trust anyone to change her money into bitcoins. She decides to combine the ideas.

Francesca builds a bitcoin mining farm. She hires people to run it. She buys specialised hardware to maximise her return. She pays the electricity bill. She stores information for people. (Even people like me who store silly messages about their football club on the bitcoin blockchain.) She receives bitcoins in return.

The bitcoins are controlled by whoever holds the key. Francesca can buy things with the bitcoins or other people that she trusts with the key can. Lucky Francesca.

Now I don’t know if the theory is true. I suspect it will not be a great money laundering scheme. After all bitcoin is more transparent than it is private. Perhaps Francesca’s aim is a more focussed one of transferring money from one country to another. To transfer it away from the control of a particular government to somewhere safer.

New technologies create new patterns of behaviour that are hard to predict

These patterns and the changes from Alice to Roberto to Francesca — one money laundering to avoid the local police, the next to avoid all authorities, the final one to, perhaps, avoid a single government — shows how hard it can be to predict how new technologies will be used.

Our governments want to stop money laundering whether it takes place through bitcoin, other cryptocurrencies or new technologies that follow. To do this governments will have to understand how both the bitcoin blockchain, and the many other types of distributed ledger, might be used for money laundering. They may think that we need to follow a pattern from old technologies and demand that we know people’s identity. If they do this then, as Joichi Icho points out, we risk more bad laws that could create adverse effects elsewhere. New technologies, and hence our societies, operate on a global scale with open standards that can be used and influenced by anyone. One country’s defence against money laundering or international terrorists might help another country’s moves to stop internal political opponents.

If we are to make the world a better place using new technologies then perhaps one of the biggest challenges we need to think about is the legal and political one. Our technologies and societies are becoming more global open, agile and dynamic. How do we create legal and political frameworks that aren’t rigid and take years to come into force but are instead adaptive and iterative enough to keep up with the changes in technology and society?

(*) I’m happy to add their name if they wish.

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