In Philadelphia, a crew of veteran software and business people is coalescing around blockchain as the next big software thing.
"It's one of the most beautiful ideas I've ever heard," says Thomas Jay Rush, an Internet-scheduling pioneer who is developing what he calls "accounting for the revolution"' at his new firm, Philadelphia-based Quickblocks.
The firm is built on a blockchain system, which tracks payments in electronic-signature-protected, decentralized, rapidly updating, readily verified networks. Evolving from the Bitcoin electronic currency, blockchain is being applied by developers to design faster, cheaper, safer ways of transferring money and managing other complex transactions.
"I love this idea of a shared global ledger, where every person can see what's going on, and there's no server — it's stored everywhere all the time," Rush told me. "And it updates through identical copies spread throughout the world, on a consensus algorithm in which all those machines agree the data is what it says it is."
Starting in 2015, Silicon Valley investors — and individual blockchain-currency buyers — have pumped more than $100 million each into the largest the blockchain start-ups such as Boston-based Circle Financial, which is working on ways to "send money like a text," and Coinbase, of San Francisco, which is setting up a "digital asset exchange." Proponents say the technology's potential is outgrowing Bitcoin and other popular blockchain-based currencies, whose valuations have been volatile.
For non-engineers, using blockchain "is nowhere as easy as it should be," Rush says. Plugging into a blockchain network, "you get these crazy hexadecimal numbers" using 16 numbers and symbols. That leaves room for the start-ups to simplify the blockchain interface and, they hope, get paid for making it useful to more people.
"When the Internet came out around 1994, I had the same exact feeling: 'This is going to be something really interesting,' " Rush said.
"This is the most disruptive technology since I started in the 1990s," says Joe Guagliardo, head of the technology law group at Pepper Hamilton LLP. He worked in the early internet years at FNX, the Wayne-based securities-trading systems developer, later bought by SunGard. Guagliardo is promoting blockchain as a reliable, efficient, transparent system for clients in the banking industry.
Rush and Guagliardo have signed up more than 300 people for the monthly Philadelphia Ethereum Meetups, which attract developers and others interested in blockchain and the Ethereum electronic currency, which has been approved by Microsoft, IBM, and SAP for applications development using their business software.
That includes an Aug. 7 evening program at Inquirer and philly.com offices where Ed Zabar, boss at Verif-y, will talk about Initial Coin Offerings (ICOs), in which backers buy Ethereum or other virtual currencies to gain access to a developer's technology. Registration is required at https://www.meetup.com/Philadelphia-Ethereum-Meetup/
Zabar, a former investment banker at New York's Oberon Securities Co. and Philadelphia's Fairmount Partners (where partner Charles Robbins encouraged him to start Verif-y), holds degrees from Columbia and NYU, served as a military procurement agent after his Israeli Army service, made a small fortune in the dot.com boom and lost it in the bust, and was late for work at the World Trade Center the day terrorists wrecked it."
Zabar's firm is developing a blockchain-based system to challenge National Student Clearinghouse, Equifax, and other firms in the business of buying college and employment records and using them to help employers verify resume claims.
"The verification industry is selling your history, without paying you, or being able to really verify," Zabar says. "We give the user the ability to manage their own records, and employers the ability to really verify and trust that information," so if any school or employer sees wrong information, they can flag it for all users.
Rush, a former IBM researcher, says he invested in Bitcoin in the mid-2010s, lost money in the Mount Gox scandal (which resulted in criminal charges against people who allegedly stole Bitcoins), and got into Ethereum "because it lets you write software on top of a blockchain." It's possible to write code in the earlier Bitcoin system, for use in specific financial applications, "but it was very difficult. Ethereum is a leap forward. This is absolutely going to change the world."
Guagliardo says Philadelphia has attracted a string of blockchain-focused operations, though not on the scale of New York or the West Coast tech centers.
Lykke ("Lucky"), a Switzerland-based digital-assets exchange that uses blockchain to settle transactions, has a Philadelphia operations team headed by Michael Klena and Tom Miller, a colleague of Guagliardo's from FNX. Other Philly blockchain startups include Clinical Blockchain, which is developing the technology for clinical trials and other health-care information applications; Amino Payments, the advertising payment system backed by Philadelphia-based FirstRound Capital; and Alpha Point, which is developing a platform to apply blockchain for financial trading.