Based on Fenchurch Street, it’s not so often I mosey down to Canary Wharf. I suffer a terrible contradiction of mind when I do.
Its Dubai-lite pastiche is soulless and underwhelming, yet as a location, its essence is one of unassailable purpose: a financial powerhouse, driving upwards of £100bn into the UK economy every year.
I ask brothers Guy and Hugh Halford-Thompson, respectively chief executive and chief innovation officer at BTL, about this. Why – alongside offices in Vancouver and Calgary – did they choose One Canada Square as the nerve centre of the world’s first public blockchain company?
“One of the big things for Hugh and me”, says Guy, “is that previously, we founded a company in the bitcoin space. That was really kind of grassroots trading, a brokerage. And when we focused on blockchain, we focused on enterprise. We founded BTL to bridge the gap. We asked ourselves: How do we take this amazing technology and apply it to traditional industry?’.”
BTL has created an enterprise-focused blockchain platform, Interbit, which enables companies to build business applications faster, with greater efficiency, heavily reduced maintenance, and fewer security vulnerabilities. Industry heavyweights in the finance and energy space are already using the platform to explore the opportunities of private blockchains.
The pair certainly have a rapport that one might consider brotherly love – a fraternal dichotomy, with Guy undoubtedly the elder brother. Perhaps for the best, the two actually work some 5,000 miles away from one another, with Hugh in London, while Guy stays in Canada. Both British by birth, the latter moved to Canada – a slight twang in his accent, but still plainly a Brit. To neither in particular, I pose the question: “what’s it like working with your brother?”
“It’s great,” says Hugh, “when we’ve got to make a decision...”
“...I just make the decision,” Guy pipes in.
“That doesn’t really happen,” murmurs Hugh.
“I think I do,” says Guy, before they both burst into laughter.
“What have I started?” I wonder out loud.
“When there are hard decisions to make, we either ending up agreeing very quickly, or if we disagree, it’s because one of us is missing a bit of information. It usually ends up working very smoothly”, says Hugh. To which Guy adds: “I think there’s a huge trust element when you’re building a company. Having someone you can rely on and trust is so important. You see so many companies that fail because of disagreements. So from a trust and reliability aspect, being brothers is the foundation of the company.”
Like many fintech firms, it all started on Old Street. In fact, readers might recall that the pair’s other company, QuickBitcoin, was responsible for the UK’s first Bitcoin ATM – in Shoreditch, naturally.
The move to the Wharf came via an invitation to join Level 39, the Canary Wharf Group’s exclusive incubator for fintech firms, which towers over East London, the city at its feet. The move was, says Guy, “an opportunity to become close to the banks, the finance space. We’re doing a lot of work in energy as well, and a lot of the energy companies we’re working with have big offices here. The UK is the fintech capital of the world: we’re seeing a hell of a lot of traction and opportunities here.”
For the uninitiated, the best way to think of blockchain technology is in terms of financial transactions. Historically, we relied on intermediaries like banks and governments to ensure trust and certainty, which authenticated and kept records.
Unlike traditional, tangible transactions (such as cash), when making a digital transaction, the need for intermediaries becomes particularly acute, because the files are easy to reproduce for fraudulent purposes.
Blockchain uses a decentralised public ledger on a network of replicated databases synchronised via the internet – meaning if one node in the network fails, the data will not be lost. The ledger is visible to anyone within the network, meaning the records it keeps are easily verifiable. This cuts out the need for a central administrator, and therefore any chance of error or fraud, while drastically reducing labour costs.
The siblings argue that blockchain is “fundamentally changing how we think about handling data”. In contrast to my above description, Guy says that due to its roots in bitcoin, “a lot of people see blockchain associated with just finance and payments, but that’s really just scratching the surface. That’s kind of like saying the internet is only really good for email.”
As Open Banking and the update to the Payment Service Directive (PSD2) approaches, an increasing number of firms are being forced to open up their data. Asides fro
m regulation, by creating secure channels between institutions using Interbit – cutting out the need for an intermediary – it makes the process of say, a trade, far quicker and easier, not to mention more secure.
“Every time two companies trade, it’s a lot more efficient if they can access some bits of each other’s data. Right now they do the trade and then there’s a whole back-office process before they’re synced up. But if they can share some element of that data in real time, in a controlled environment, it’s a lot more efficient.”
Interbit is still in the test stages, having completed trials with energy behemoths – BP and ENI, for example. The brothers tell me that some of the most exciting problems they’re solving are in fact some that might appear to be the most boring. Hugh gives the example of the confirmations process of a trade.
“The pilot was put together with a couple of goals. One was to prove the technology, and show how it can be deployed in their back office processes. So we chose the confirmations process, which effectively works like this: each trader puts in their trade, their back offices needs to confirm that they’ve each written down the same thing. Traditionally that’s done reconciling over email and over the phone. But if they’re storing the trades on a single ledger, generated in a secure blockchain space between two parties, there’s no disputes, there’s no reconciliation – you’re all looking at the same data.”
BTL was listed on the Toronto Venture Exchange (TSX) in 2015, which is not dissimilar to the UK’s Aim market. There are myriad companies in the R&D stage, some more speculative than others. Most firms in the space gravitate towards the VC route, but these two clearly take what they’re doing with utmost seriousness.
“We saw an opportunity. The space is moving so fast, and being a listed company has allowed us to grow at the pace of the industry. It’s allowed us to raise capital as and when we need it. That capital has come at significantly less cost than it would if we’d taken the VC route – the VC route is very aggressive. Also, as a side effect of that, it’s allowed us to provide a platform of legitimacy – when we go and work with a company like BP or Visa, being publicly listed makes it a lot easier for them to work with us.”
The way BTL has been running trials is what Guy calls a “thin wedge approach”. There’s no doubt he says, that putting all energy trading on the blockchain would improve efficiency and, subsequently, lead to massive savings. Many in the blockchain space insist the technology is that most platitudinous of all business jargon: “a disruptor”. But the substantial risk of “disruption” to a global corporation could be catastrophic.
“We picked confirmation because we knew it was an area we could demonstrate value quite quickly, validate the tech, validate the business cases, and allow the companies to demonstrate internally the value of Interbit. Once we’ve done that, we can then start to bring additional parts of that process onto the same platform over time. It’s innovation rather than trying to disrupt and change everything at once.”
This desire for rapid change is where many in the blockchain space fall short. “I see a lot of blockchain startups drowning in success, says Guy. “They see all these opportunities, they take them all on at once, and they ultimately fail, because the projects are too large.”
The brothers are transitioning into a private beta, not yet open to the public, with the goal of taking it to a late beta or version 1.0 by the end of the year.
Elliott Haworth is business features writer at City A.M.