The cryptonomist had the opportunity to meet Dr. Paolo Tasca, university professor at UCL (University College of London) and founder and chairman of the DLT Science Foundation and the UCL Center for Blockchain Technologies.
After attending the P2P Financial System 2023 event at the Bank of Italy headquarters in Rome, organized by Dr. Paolo Tasca himself, we had the opportunity to speak with him to better understand the functionalities, developments and future of the booming blockchain technology.
In the interview we tried to get the opinion and vision of Dr. Tasca to extrapolate across blockchain.
We tried to cover different topics because this is such an important technology for the future of finance.
As a first question, I wanted to start with a personal question: you are probably one of the most important exponents of research into blockchain technologies. Why did you choose this path?
“I left in 2011, after doing my PhD at ETH Zurich, because I had approached the crypto world. At the time, Bitcoin represented 90% of the entire crypto ecosystem, and there were only a dozen digital currencies. This emerging economy fascinated me for two reasons.
The first was that the data was free, and if you are an economist and work with data and different models, an economy like the decentralized one was a ‘Pandora’, a huge opportunity. It was very interesting because it gave me a way to use this data to analyze both the emerging economy and its differences from traditional finance.
The second reason was that in this emerging economy there was a monopoly when it came to crypto exchanges. Very few platforms offered this specific service, with over 70 percent of volume handled by just one platform. So my motivation was to build a crypto exchange in the Swiss market where I worked.
So I can say that I was looking for a first approach, both from a scientific point of view and from an entrepreneurial point of view. I wanted to create an infrastructure that would create an on/off ramp between the traditional and digital economies.”
The basis of your work is of course the research and development of blockchain technologies. With this in mind, how important is government cooperation in development and research? How important is trust in institutions?
“This is very important. It was no coincidence that the first application of blockchain (DLT) was a decentralized form of currency. There are several applications of blockchain that can be developed, but the first was Bitcoin.
Therefore, because it was a financial application, I always thought it would have a disruptive impact on the financial market, one of the most regulated markets in the world. That’s why I’ve always been in favor of dialogue between regulators and innovators when it comes to the crypto world.
Because on the one hand you have an actor pushing for innovation (new forms of financing, payment transactions, currencies) and on the other hand you have a regulator with a government mandate, with the obligation to maintain financial stability and confidence in the economy. to enforce. the currency issued by the central bank (taking into account all other existing government authorities).
I have always tried to imagine a dialogue between these two actors, so much so that the first edition of the P2P conference was organized in 2015 at the German Central Bank, and at the time it was a surreal landscape compared to today.
I managed to bring together a completely different audience, there were people from anarchist and anti-capitalist backgrounds and at the same time the institutions in suits and double-breasted jackets.
These two worlds have become very close in the past ten years, despite the great division between them.”
So do you think we are going in the right direction?
“It depends, it is interesting to observe, because if these two realities meet in the middle, then this can be called the right direction. But if there is an imbalance at the point where they meet, then I don’t think this is the right direction.
I think we are moving towards an industrialization of what was the ‘anarchist’ model of the early movements to undermine traditional finance.
I see a conformation that deviates from the traditional model, for example look at institutions like BlackRock entering the bitcoin world through spot ETFs.
So the question is whether the approach that is now taking place is actually going in the right direction, I have my doubts about that.
Not that I am an anti-capitalist anarchist, but we all need to remember that the institutions that exist today were designed by us in a socio-economic context that was very different from that of today.
This means that we must have the mental elasticity to adapt the institutions to the new world. How should these institutions be redesigned?”
One of the trendiest developing technologies of the past year is undoubtedly artificial intelligence. Is there a possibility of integration with blockchain? Can this technology and AI be combined in the near future?
“We are not only looking at blockchain, but in terms of digital technologies, as a foundation we have funded a new research center that is being established.
The goal is to develop and promote a decentralized form of AI, we are still at the beginning, but there is a lot of interest in it. Indeed, it is a goal of several blockchains, one of the most important, to integrate artificial intelligence into their architecture designed a few years ago.
The convergence of the two can give rise to transformations in protocols or governance architectures. It could even give rise to new blockchains, different from the blockchains we know so far.”
The use of blockchain is often questioned in terms of environmental sustainability. Proof of work technologies in particular have been criticized for their excessive energy consumption. Is there a way to use this technology without such a big impact on the environment?
“At UCL, my team and I have conducted several studies on the environmental impact of blockchain.
We compared the energy consumed by Bitcoin to the energy consumed by all other major proof-of-stake (PoS) systems.
We have devised new models to measure the energy impact of these blockchains, parameterized by the number of transactions per second. The research shows that several blockchains are CO2 neutral and negative.
The argument that blockchains are not sustainable must be debunked. So much so that even Bitcoin has been switching to renewable forms of energy in recent years. Various studies prove this.
In the beginning, there were several reports about bitcoin consumption, which was certainly true at the time, but this is no longer the case.
The development of these technologies must be carefully considered.
Blockchain companies also pay close attention to ESG (environmental, social and governance) standards.
Ethereum itself, by moving to proof of stake, was symbolic of this change the industry is going through. So from that point of view I no longer see it as a problem, but as a successful attempt at improvement.
I can add that we, as DLT Science Foundation, will soon launch a dashboard of products created by our intelligence unit, and among these products is one that will do a track&rank to create healthy competition between the different blockchains . A kind of assessment in terms of consumption statistics.”
Finally, do you think blockchain technology will change the world? What do you expect to see in the coming years?
“I am very surprised at the general disinterest and lack of education about these new technologies in society.
By the way, Italy is one of the least educated countries in terms of financial literacy, and the consequences will be seen later.
We are moving towards global progress and most citizens are not being given the right tools to adapt. Even the media, not the sectoral media, but the more mainstream media, don’t bother to talk about it enough, even in a general sense.
It occurs to me that the FTX scandal is being linked to Bitcoin in the more general media, calling it yet another ‘Bitcoin scam’. In reality, we know it was an ‘accounting fraud’ that had nothing to do with Bitcoin and the crypto world in general.” There is ignorance that creates misinformation.
If this gap continues to grow, there will be no small problems in the future and there will be no room for real innovation.
I, as the head of this foundation and as a university professor, and you, as the media, have a moral obligation to try to reduce this gap. Through information programs, education, etc.
We try to educate not only market players, but also ordinary people. I would like to see more festivals and more conferences talking about these new technologies.
What I expect is exponential growth in technology adoption, but only if this education gap is closed.”