Sam Brown: Hello everyone, I am Sam Brown. I am an associate in Wragge Lawrence Graham & Co's Tech team. I'm here today with Adam Cleary. Adam is the founder of Bullion Bitcoin Limited which operates Bullion Bitcoin.com - a Bitcoin to gold bullion exchange platform.
Adam, many are convinced that Bitcoin's real value is not in providing a world with a currency free from government intervention, but in a blockchain technology which underpins it; a technology which has the potential to vastly disrupt the way we exchange goods and services around the world. One application, which I know is close to your heart is digitally labelling Bitcoins as coloured coins allowing real world assets to be stored on the blockchain. Can you explain how Bitcoins are coloured and what potential applications this allows?
Adam Cleary: Yes certainly. I mean Bitcoins are coloured by effectively creating a digital asset that then uses the Bitcoin protocol to transmit, send and store these assets so Bitcoin, or rather the blockchain is used as the rails upon which the digital asset is transferred and in our own case, for example, we have created a digital asset called "bits of bullion" which represents a hundredth of a troy ounce of gold and the Bitcoin protocol and blockchain allow us to transfer gold between two people without any intermediaries and for them to then onwardly transmit, send and store that digital asset and, you know, this can be extended further into effectively becoming an asset registry, and in fact any other asset can be expressed in this way on the blockchain - so shares or bonds, claims - all of these things can be expressed as digital assets and then can be digitally transferred outside of all the existing clearing and settlement infrastructure that we have in legacy financial markets.
Sam Brown: Protocols such as Ripple and Ethereum have built upon blockchain technology and allow for applications beyond simply transacting monetary value. Applications such as the distribution of binding, self-enforcing and self-executing "smart contracts". The potential applications are clearly wide-reaching. What practical examples are you seeing and how do you see these developing over the next five years?
Adam Cleary: Ripple is already operational and in many ways it is a sort of alternative to the Bitcoin protocol but it has more similarities with the existing system in that it has a system of gateways, but it does, as you say, allow for smart contracts. Ethereum is a sort of development of Bitcoin creating its own blockchain and Ethereum effectively allows you to create smart contracts. It has its own currency called Ether and to some extent you can see the possibilities for disintermediating the legal profession which I know will not be welcome to you but, you know, the fact that you have contracts that can be enforceable with cryptographic and mathematical rules using the currency of the blockchain in question in order to settle those contracts periodically, effectively, mechanically setting things at future dates, means that to some extent you could disintermediate many of the functions that exist in terms of contractual relations today and also more widely in terms of the only way of enforcing a contract being a recurring to the state as we have today. Effectively you could enforce a contract in a decentralised and distributed way. So I think that is what we are seeing. In terms of practical examples, it is quite early days in the technology and Etherium has not really launched yet but even in the Bitcoin protocol there are things within the Bitcoin protocol which allow you to for example defer settlement to a future date and we have looked at the possibility of having sort of bills of exchange drawn on gold for example to 90 and 180 days so those are perhaps some early examples and there is a lot of technological development in this area so I think it is a very exciting area to watch in all of these different protocols.
Sam Brown: Thank you for listening. I hope you found that interesting and useful. If you do have any further questions please do not hesitate to get in contact with any one of our Tech team.