New Hedera Governing Council President Adkins: 2024 Is Pivotal Year For Enterprise Blockchain Adoption
In this episode of the Blockchain Journal podcast, BlockchainJournal.com editor-in-chief David Berlind interviews Charles Adkins, the newly appointed president of the Hedera Governing Council. They discuss various topics related to blockchain, including educating executives and lawmakers, the differences between blockchain and databases, the intersection of blockchain and artificial intelligence, and why 2024 will be the year that enterprises must finally take full notice of blockchain if they don't want to be left behind.
David also asks Adkins about the somewhat unorthodox structure of blockchain ecosystems and which of the many use cases for blockchain as a platform are his favorites. The conversation provides insights into the current state and future potential of blockchain in various industries. See the video and full text transcript of the interview below.
By David BerlindPublished:December 13, 2023
Full text transcript of David Berlind's Interview of the new President of Hedera's Governing Council: Charles Adkins
David Berlind: Today is December 13th, 2023. I'm David Berlind, and this is the Blockchain Journal podcast.
Now out there in blockchain world, there are many EVM compatible blockchains at layer one. Hedera is one of the top 10 of those. And today my guest is Charles Adkins. He was just appointed today to be the president of the Hedera Governing Council.
Now, in the spirit of disclosure, I wanna mention that Hedera is a sponsor of Blockchain Journal. However, our job is not to advertise the virtues of Hedera or get anybody to adopt it. What we do here at Blockchain Journal is we try to educate enterprises on the efficacy of blockchain as a platform to drive new and improved business outcomes. And so today we're gonna talk a little bit about that with Charles. Charles, thanks very much for joining me here on the Blockchain Journal podcast.
Charles Adkins: Yeah, of course, David. Thanks for having me.
Berlind: Yeah, so congratulations on your appointment. We'll get to that at the end of the interview. We'll talk a little bit about the appointment. What I wanted to do was start off with some of the things that I saw on your LinkedIn profile because I think they're very interesting.
Now on your LinkedIn, you say that a part of your personal mission for 2024 is to transfer my energy, enthusiasm, optimism, and knowledge for blockchain, DLT, and advanced computing solutions to executives, boards, governments, and broader stakeholders. So first, let me start off with the big question. Let's talk a little bit about that experience you have in the Web3 and blockchain industry. What have you been doing all these years?
Adkins: Yeah, so I traditionally started out in Investment Banking with a very large, well-known firm and then actually moved into working at the US Department of Treasury in a security-cleared role under the Office of the Inspector General at [the] Department of Treasury. So I have a really good understanding of the traditional finance side and where there could be improvements and where there's been hiccups in the past.
Throughout that journey, I've always kept track of where blockchain was, cryptocurrencies, and every other form of payment that could possibly be out there. I learned about Bitcoin around 2014, and then moving forward, ended up as a vice president at Polygon. Soon after that... a few years after that. And then was at Aptos, which is a layer one that spun out of Facebook, which was the original DM chain, Libra coin, and Novi wallet which wasn't looked too generously upon by the US Congress. So luckily, that team was able to spin out, [and] create Aptos. They created Mysten Labs. There's several other people that were within that organization that spun out and are doing things on their own, which is really exciting for them.
Berlind: Okay, so you mentioned executives as one of the constituencies that you want to help understand the power of DLT and the transformative value of it.
And when I was just at the Boston Institutional Digital Assets Forum in Boston a few days ago for their end-of-year event, one of the people who was on stage – his name is Pat LaVecchia, he is CEO of Oasis Pro – and he talked about this problem when it comes to the executives, the decision-makers inside enterprises, where they are conflating the issue of cryptocurrency with blockchain in a way that some of the malaise and the negative headlines around cryptocurrency are essentially influencing their thoughts about blockchain-as-a-platform, and therefore they are not as interested in blockchain for any of its transformative power when it comes to maybe driving new or improved business outcomes. So how do you, when you're speaking to those executives, how do you break those two things apart and get them to really rethink their opinion on blockchain?
Adkins: Yeah, that's a great question and it's one of the biggest challenges I've had to battle over the last several years. And it's really getting those executives to understand that, you know, not thinking about these technologies quarter to quarter, it's thinking about it in the broader scope of the business overall and really understanding that the cryptocurrency side of things, while regulation is still very gray in the United States, at least, just understanding and empathizing with them having to deal with those risks and the possible stakeholders they may have to answer to. And so you really have to do have [to] take the time to do the educational walk-through of this is the difference of a blockchain. This is where cryptocurrency comes into play. You can leverage blockchain technology without diving deeply into cryptocurrency or deeply into trading and all of the headlines that are out there is not what is going to end up with your business because the way that a lot of those businesses had been run are not the way that a US registered business would be running.
Berlind: Okay, and the same question, because you mentioned governments, you have to convince lawmakers and regulators, particularly here in the US, who are looking at all of those negative headlines, and they're sort of doing the same thing. Their interest is to protect their constituencies, the public, and so because of the bad rap that cryptocurrency gets, they sort of throw out the baby with the bathwater, and next thing you know, they don't want to talk about blockchain. So how do you break through there? How do you get them to have that "A-ha!" moment, and say, oh, wait a minute. Yes, let's come up with some regulation around cryptocurrency itself, but let's be careful not to stifle innovation when it comes to blockchain itself because right now, as you probably know, in other jurisdictions around the world where there is some regulatory certainty taking shape, for example, Switzerland, Germany, Luxembourg, India, Singapore, innovation is taking off. Even many American firms are going to those jurisdictions and starting up some of their blockchain operations. How do you convince American lawmakers that they need to do something to allow that same innovation, those same investment dollars to flow here in the US.
Adkins: Yeah, I think with many technologies, we've seen the private sector and even the citizenry start to adopt the technology, which then ends up pushing the regulators to form frameworks around what those technologies are, and then the government to take broader adoption. I can understand it's very difficult for a government to take a stance on where blockchain and cryptocurrency is when they have current litigation going on with some cryptocurrency firms. That's going to be very difficult for them to take a side before those outcomes are really met.
I think that, you know, with the countries that are outside of the US that have broader adoption and I've used this example before specifically in decentralized finance and DeFi, I always use the analogy typically where you see people that boo-hoo DeFi, they've been able to go to an ATM and actually have it work. Where you see people that take broader adoption to DeFi is where they have issues with payment systems where they may have government overreach into their financial systems.
And so, they need those payment formats in order to live their day-to-day lives. I think government's understanding that the citizenry and private sector is more than likely going to be pushing and needing this technology at a rapid pace. They're gonna have to catch up with some of these frameworks here in the United States and this may be one of those technology cycles where the US does have to look outside of itself to understand what some of the best practices actually are because other people do have a headstart right now.
Berlind: I basically entered the whole blockchain industry, like I would say, maybe about a year and a half ago, almost two years ago, and I have attended events in Washington, D.C. and the situation generally hasn't changed when it comes to the logjam down there in terms of regulation around blockchain and cryptocurrency. So I understand the points you're making about the citizenry pushing for these types of payment solutions. However, while we wait for that, and while we wait for those cases that you talked about to resolve themselves, we still have this issue of enterprises that because there is a lack of regulatory certainty, they are fearful of making a move or doing anything when it comes to blockchain.
Of course, there are a handful of American enterprises that are moving forward and doing some interesting things here on US soil, but in general, you're seeing a hesitation because of all of this logjam — this gridlock — that's taking place in Washington, DC, which quite frankly shows no chance of improving anytime soon. So how can we get those lawmakers and regulators to at least give us a little bit of regulatory clarity so that blockchain-as-a-platform can flourish separate from citizens pushing for the ability to make payments.
Adkins: Yeah, we do need to have those advocates in Washington, D.C. Either people from the private sector, people like myself, the Governing Council members at Hedera are great examples of that.
Other large organizations that have adopted crypto, obviously, they're part of driving the financial benefits that we are able to have here in the United States. And so they need to have stronger voices towards Washington, D.C. in order to make those changes happen more quickly. And I think in order for them to have a strong voice, they need to improve their education around the industry itself. And that's where we really need to be vocal about the differences between blockchain adoption, cryptocurrency adoption, and where these sectors actually lie. Because just like the internet, just like other technologies, there are several areas where there's great benefits, there's several areas where there's risk, and I think we need to get a more clear definition of where those boundaries actually lie. And then that makes CEOs and other stakeholders more comfortable about being loud and vocal towards Washington, D.C.
Berlind: I'll give you a really good example of a question that I get asked and I know that other people get asked, which is, "Well, blockchain, as far as I know. it's just another database. So why do I need blockchain when I already have all of these older database technologies around?" How do you respond to that question? Because [of] database, a lot of people kind of understand the basic principles of a database. They may not know the underlying technology and exactly how it works, but we all use databases in everyday life. We encounter them in everything we do. And so there's some familiarity with what they are. How do you explain the differences between what it is blockchain does and how it can transform versus these older technologies?
Adkins: Yeah, I think really what we're seeing in that space and when that topic comes up is the idea that as technology is improving over time with AI being layered into the conversation as well, you're seeing that many databases become single failure points for a lot of businesses. And then it's also becomes an issue when you talk about collaboration and all of the laws that are coming down regarding PII – personally identifying information – GDPR, these are the types of things that databases typically will hold. Raw information that's not cryptographically hashed, not cryptographically held.
An example — Starbucks and Spotify are able to do a partnership, however, they can't share personally identifying information of each other's customer base. And so that's going to take a 12 to 18-month legal process in order for them to update terms of service [and] notify their customers. Whereas if they had a blockchain-based — a DLT based — data clean room in order to share this hashed information, it makes that partnership basically a smart contract that we're able to share this information, [and] do marketing activations based on that. And then talking about the AI part, it's... you're going to have to really keep up to speed at decentralizing your information. And frankly, databases are still a little bit slow. There hasn't been a lot of advancement as far as the technology and databases, really.
There are several blockchains out there. Obviously Hedera, I would speak about myself that actually perform better than typical databases. Even if you'd like to connect a consensus service to a traditional database, it's going to improve the actual performance of it. And with AI creating more data, with computing power increasing, these traditional databases are... they need either rapid hardware improvement, but the better option is to actually decentralize that data, have it protected against theft and PII malware. And that's really the way to do it.
Unfortunately, I think just like life insurance, a lot of these companies may have something bad happen to them before they realize that and wish they had done so and made those changes in hindsight. But hopefully, we can speak to enough people before something like that happens.
Berlind: Yeah. So let's talk about that intersection you brought up of artificial intelligence and blockchain. Where do you see blockchain playing a really important role as when it comes to the evolution of artificial intelligence? Obviously, a lot of people, particularly given the headlines, are terrified of artificial intelligence kind of running away and taking over. So how can blockchain play a role in giving them some assurances that this is not going to happen?
Adkins: Yeah, I think one of the areas that I've seen AI really taking off just from a consumer-facing side that most people would understand is with deep fake videos or with images, for example. You see AI-generated images, for example, but also with creating fake social accounts and those fake social accounts can also interact with advertising. So now you're... you're speaking to CMOs who may have an advertising budget that they're spending on a platform like let's say Instagram. Now they have AI bots that have been created that look like real humans interacting with those ad budgets and really draining the ad budgets and there's not actually a human behind those accounts.
So the utilization of blockchain when you're thinking about actually verifying – and I call it "give yourself the proof of human," you store that on blockchain and when you're connecting with all these other platforms out there, those platforms should have the right to know that there's actually a human behind that, that PII should be protected on a DLT or a blockchain, and it should only be able to be verified with the information that you want your data to be shared with that platform.
Berlind: So with the artificial intelligence solutions – whatever they may be out there – are they themselves diving into the corpus of data that is stored on the blockchain to figure this out and then responding appropriately? Is that what you're implying?
Adkins: So, the AI that's out there right now, it can read kind of the transactional history, the behavioral history of a specific wallet. However, as we know on most blockchains, when you're looking through a transparent public blockchain, public permissionless blockchain, it's not necessarily showing your name, your phone number, your email address. You're not getting any personalized information. But what it does, it is giving you some of the behavior that you've taken through a chain and it is saying that you are a human being.
So, I think one of the things that hasn't been happening is it's very difficult – although I'm sure we're getting there – which is more improvement to be needed, is that AI doesn't necessarily, and it doesn't have the ability yet to pass the AML KYC process of creating a blockchain wallet. I'm sure it can in many instances, but in mass, it's very difficult to do that and that's where that proof of human really comes into play.
And it's the acceleration of this technology, I think, is what most executives and government should be paying attention to. It's not necessarily that it's here today, it's that the velocity of it is faster than any other technology that we've seen in the past.
Berlind: There are two other possible use cases for AI when it comes to blockchain. I was interviewing Mrinal Manohar, who's the CEO of Casper Labs, the other day about a survey that they did to gauge the sentiment about artificial intelligence when it comes to blockchain. And one of the applications that he raised was this possibility of immutably recording the data on which AI depends so that you don't end up having some sort of corpus of data that can be tampered with, and then that would influence what AI does with that data next. You want to have these sort of tamper-proof data sets. So, that's one application he spoke of. And the other one that I've heard of the bias that's in AI and maybe you just in the same way that when any software is making a decision, that decision is an event in the workflow of its code, and those events themselves could be recorded on-chain and then that creates a very transparent record of the decisions that some particular artificial intelligence solution made so that if somebody has to go back and audit that, or customers want to see it or regulators want to see it, blockchain being a great kind of multi-party transparency engine, they can. What do you think about those two other applications?
Adkins: No, that's 100% correct. And I think that's where a lot of the creators are hoping to see blockchain come in and help because AI has been utilizing a lot of their writing, a lot of their lyrics, data, [and] artwork to generate what it's able to generate. So that the latter use case that you mentioned is actually really good at giving that auditable trail for where that data that AI is used to come out to its output.
The other is, the first one you mentioned is great for small, small language models or very niche language models where you need to keep guardrails on where data is being pulled from, you house that on blockchain. Let's say it's a specific legal framework and that's only the type of language you want to use with an AI model, store that within a blockchain and only access that, and let the AI access that particular set of data.
Those are both incredible use cases that I hope we see grow over time and actually more quickly than, than not.
Berlind: Well, of course, I hope to see some sort of prototype of either of these two applications. They do require some re-engineering of the artificial intelligence code itself, right? If you're going to be adding data to the blockchain as some sort of AI solution is making decisions, then that AI solution has to be coded to say, okay, full stop at this point and let's record something to the blockchain, and then let's move on." And I haven't seen anything like that. I'm sure something like that is out there. Maybe if anybody who's watching this knows of it, please send it my way. I'd love to see more. But we do need some changes and those changes are kind of slow in coming, particularly given how quickly things are moving on the AI front and how many people are taking advantage of it. I'm sure companies that make those solutions are kind of like, "Okay, that's a neat idea, but right now, we're just going so fast and delivering the actual value, we can worry about this later."
Adkins: Yeah, I really hope that is paid attention to fairly quickly because it is one of those things that has such high velocity that, you can't get the toothpaste back in the tube with AI and we need to have some guardrails around there, and think about the ethics behind how it's being used.
Berlind: Sure. On your profile, you also said 2024 is a pivotal year for these technologies, full stop. What'd you mean by that?
Adkins: I think a lot of it is about the conversation that we've just had about AI. It's one of those situations where AI does have such velocity and it is learning upon its own results at such a rapid and compounding pace that I think having those blockchain solutions there that — especially the ones that you mentioned – around parameters of what data sets are being pulled from, or at least an auditable trail of how these things are getting their outputs, are very important before it gets so far away from the original source that doing that back tracing actually becomes impossible. And I think we probably only have 2024 to get that right. And so I hope, like you said, there's people out there working on this because it's very important.
Berlind: When I read that, what I thought about was something that I use when I'm talking to executives and lawmakers or regulators, which is "The train is leaving the station." We see enough activity in the international, global brands, [and the] enterprise space, where so many companies are getting involved with blockchain that it's reminiscent to me of the late 90s when Amazon came around and it wasn't long before a lot of retailers were pretty much bankrupt. And that was an example of where Jeff Bezos saw the promise in the internet and e-commerce and just jumped on it, and then as a result of that, I use this phrase, "A bunch of companies got Amazoned."
And so I look at blockchain as sort of the same thing. It's a very transformative technology. It can really drive some new and improved business outcomes better than prior technologies. So when I read that statement about "full stop 2024," what I thought of was that you were saying that, "If you are a global brand or an enterprise and you don't get on this train right now, you're going to get Amazoned, you're going to get left behind because your competitors, other companies in your industry, startups, they are going to leverage this technology in a way that ultimately puts you out of business because you just weren't paying close enough attention to how transformative it is." What's your thoughts on that?
Adkins: Yeah, definitely on the optimism side and the opportunity side, this is something that people need to start getting into now. And I know, I'm a lot older than hopefully I look. But yeah, I mean, an example I use is kind of like yours is [in] 1994 Pizza Hut puts up a website and everyone's, you know, there's no, no reason for them to have a website. You can't do online ordering. Bank of America was the first online payment system. They didn't come until three years later. So the only thing you could do on Pizza Hut's website was collect an email address.
And everyone thought, this is really stupid. You go to this website, you put in your email address, and like, you know, no big deal. So three years later, Bank of America starts online payment systems. And who's the first person to do online ordering or email-based ordering? And who has a database of over a million email addresses because they just thought, "Hey, this world wide web thing may have something here." And so, Pizza Hut obviously took off during that timeframe. And a lot of it had to do with their email marketing because they got on really quickly.
[The] same thing is happening right now. There are enterprises that are doing blockchain-based loyalty systems and they're able to create these social loyalty platforms that have network effects to them, where now instead of you earning points on your own, all of your family is joined together in like a smart contract group, you all earn together.
You're able to share those points interactively and it's driving more value to the brand and it's driving more return purchases to the brands. And so these are things that people really need to start thinking about just from a commercial standpoint. It's not all about data and safety and protection. There actually is really strong consumer use cases for this as well. And I couldn't agree more that people should really get on this now. In that particular post, I wasn't referring to this, but it's something I truly believe in.
Berlind: It's something that I think about. I think if you wait to 2025, you may be watching the back of the train, the caboose with no hope of catching up.
I want to come around to the appointment and the news – the big news today – that you are now the president of the Hedera Governing Council. But before we get into the details of that, I just want to help our audience to understand the unorthodox nature of the organizations that typically support the different blockchain ecosystems out there.
When I got into this business and I started to learn more about that it struck me as being unlike any other corporate structure I have ever seen in any of the companies that I've worked for or covered in my 30 years of journalism. So maybe you can just generally talk about that structure and why it exists and we see it not only on Hedera but other blockchains as well?
Adkins: Yeah, I mean, typically blockchains will have somebody that's running the technology side of things, doing the product builds. They'll have a foundation that works through with financial support and token economics and different things of that nature. And it really is separate business systems that tend to work together in order to drive that. And I think, you know, having that decentralized nature of governance is really important within a blockchain, because you do want that to be a public and permissionless system where there is nobody that actually is able to corrupt the system or there is no balance of power that's going to fall out of balance. You want everybody to be involved within that network, including the community and ecosystem partners. And that's something that's very different with blockchain, Web3, Hedera’s governance. It's it is very different than traditional business structures. And I think even without blockchain involved, it is a governance model that you may see more of in the future with just typical businesses, actually spread risk across a larger breadth of people.
Berlind: You mentioned there's the company that does the engineering. You mentioned the foundation. And in my observation, you see these foundations and a lot of their – in a lot of cases, they are incentivizing development by supporting the developers out there who are building on that particular blockchain, which by the way, now that you've been talking about the 1990s and you saw that movie back then, you probably also saw the movie when all of the different Unix makers – HP, IBM AIX, SunOS, SCO, they were doing the same sort of thing. They were incentivizing developers with investment to build on their platform on the hopes that their platform would start to become sort of the de facto standard version of Unix. And I think I see that same sort of pattern evolving here in the blockchain industry and it's that foundation's role at each of the different blockchains where that same activity is taking place.
So you mentioned the engineering, you mentioned the Foundation. So let's talk a little bit about the structure of Hedera, just so everybody understands. What are the main organizations or branches ecosystem in the Hedera world?
Adkins: Yeah, so there's HBAR Foundation, which is obviously our foundation. There's Hedera, which has the Governing Council. And then there's Swirlds Labs, which, you know, Mance [Harmon] and [Dr.] Leemon [Baird] are running still. And that is basically the technology provider that is supposed to be building the consumer-facing products, assisting with those builds, and maintaining the actual DLT system.
Berlind: Okay, and so the HBAR Foundation is this foundation that incentivizes the developers, is that right?
Berlind: Yeah, that's what they do. Let's talk about the council. You're the president of the Hedera Governing Council, so how does that work?
Adkins: Yeah, the Governing Council is a set — currently it's 29 members — hoping to get up to 39 fairly soon, mostly major corporations. There are some universities involved as well. And really what they do from a governance standpoint is they make sure that the network is being maintained through running validator nodes or the Hedera hash graph blockchain or DLT – or basically, graph – however you want to call it.
And really they also are able to build proof of concept use cases within their larger organizations, which kind of goes back to the very beginning of how do we support pushing this information and this technology forward. It's having those large companies. They're building those proof of concepts and in many cases, further than proof of concepts, they're building commercial activations on the Hedera blockchain, which they're also able to participate in doing that. So, it's a really important group of people. They all strongly believe in blockchain technology at their core. They have the best hardware out there in order to run these validator nodes for us right now. Obviously, on the roadmap is to broaden that scope out to the general population as well. And those are, those are things that are also in the plans.
Berlind: Okay, so you're talking about moving to a completely permissionless environment, similar to that of like Bitcoin or Ethereum. Among the governing council though, who are some of the companies that are in that council?
Adkins: Yeah, so we have people like Deutsche Telekom. There's also Avery Dennison, who's created Atma.io, which is a really great... it's a really great supply chain tracking technology, which works really, really well. We have UCL — University College of London — and several other members that everybody's well familiar with out there like DLA Piper, who has TOKO. There's so many, I can't even, I'm trying to think of them all right now, but I haven't even had a chance to meet all of them quite yet.
Berlind: I think one of the more recent companies to join was Dell. I think I saw that.
Adkins: Dell is on it. Dell is definitely one of them. Yes.
Berlind: Yep. Yeah, so it's interesting. So as you say, a lot of these companies are themselves doing conducting pilots on Hedera. So that's very interesting.
When you think about all the use cases out there and across the different companies you mentioned, other members of the Governing Council, other companies that are doing things on other chains, you talked about all the customer loyalty and engagement programs, certainly a lot of activity going on out there. Some of the more preeminent programs that I've been looking at are Nike and what they're doing with the dotSwoosh program or Starbucks with their Odyssey program. We've reviewed some of that here on Blockchain Journal. What are your personal favorite use cases? What are the ones you like to talk about the most?
Adkins: Yeah, I think all of those are really important. I actually... I am more drawn towards the enterprise use cases like supply chain parts authentication. Those types of things are really important in a world where counterfeiting and authenticity mean a big deal. Those are really important when we're thinking about climate change and ESG initiatives with these large corporations and those need to be audited quite often. Those are really great workable solutions that you can put on-chain.
On that same side though, you do need the consumer applications there as well. Obviously, Hedera does have NFTs. There's great NFT communities built around that ecosystem. So there is a community groundswell from the bottom up. And then we have our enterprises working from the top down and hopefully we all meet at the middle with the right timing. [It's the] same way the internet kind of started out. And even, you know, we were speaking about that grant structure. It's like at the beginning of the internet, you have universities asking for grants from the military to do simple packet switching back and forth. And so this whole idea of grant systems are.
it's decades upon decades of years old to make sure development is improved. And so I think we're doing the right thing and we're gonna meet there with the right timing.
Berlind: And just to be clear, when you talk about universities getting investment to packet switching, what we're talking about there is the Defense Agency Research Project, DARPA, and what eventually turned into the internet.
Adkins: Yeah, I'm sure my entire screen turned black and white and started playing just some kind of minstrel music when I was explaining that.
Berlind: Okay, well, Charles Adkins, congratulations on your appointment to the president of Hedera's governing council. Wish you the best of luck and we'll keep an eye on what it is you do and how you execute your vision there. I want to thank you very much for joining us here on the Blockchain Journal podcast.
Adkins: Yeah, thank you for having me.
Berlind: We've been speaking to Charles Adkins, as I just said, he was today appointed to the president — the position of president – at the Hedera Governing Council.
I'm David Berlind, I'm the editor[-in-chief] of Blockchain Journal. Blockchain Journal is where enterprises and global brands can come to learn about everything they need to know in order to put blockchain to use, drive new, and improve business outcomes for their organizations.
You can please visit us at blockchainjournal.com. At the end of this video, we'll throw up some QR codes so it makes it really easy to find us on our website, on YouTube to see other videos like this one, on Twitter, on LinkedIn, and also we'll put up a splash page for Charles so you can find him on LinkedIn and Twitter. So thanks very much for joining us.