With interest growing in bitcoin’s blockchain and distributed ledger systems more broadly, industry events are increasingly focused on highlighting applications for the emerging technology beyond the world of finance.
This has included more time and investment dollars devoted to applications in fields such as identity and security that, while not explicitly financial, play an equally prominent role in the global transactions process. As further proof that interest in the technology is widening, Keynote 2015 dedicated a speaking slot to a less-frequently addressed area of impact of the technology – consumer protection.
There to speak to this subject was Joe Colangelo, executive director at Consumers’ Research, a US non-profit that was among the first to begin publishing monthly magazines dedicated to helping consumers make informed buying choices.
In an interview, Colangelo opened up about the more than 80-year-old organization’s increasingly active work in the bitcoin and wider blockchain industry, noting that he believes the technology could bring about a sea change in consumer protection.
Colangelo told CoinDesk:
“Consumers have always had to trust third parties in order to use money, even if it’s cash. The whole consumer protection model is based on the assumption that consumers can’t easily figure out which third parties are reliable.”
Rather than being left conducting the organization in ways that “made sense in the 1920s”, Colangelo is moving for Consumers’ Research to play an active role as these third parties are replaced by the blockchain’s ability to enable secure, peer-to-peer transactions.
As profiled in The Wall Street Journal, he recently organized a retreat at New Hampshire’s famed Bretton Woods that gathered industry luminaries including MIT Media Lab’s Michael J Casey and ChangeTip community manager Victoria van Eyk, among others.
The goal, Colangelo said, was to create a research document that can help inform regulators and legislators interested in the technology of its opportunities and benefits.
“I’ve gone to maybe half of the major bitcoin conferences in the last two years,” Colangelo explained. “We get this concentration of near genius and they talk about what they’re doing and then they leave.”
In total, Colangelo said 19,000 words were compiled by those gathered at the three-day event, research that is being compiled to be eventually distributed to the public.
New third parties
Of course, while bitcoin and blockchain technologies enable consumers to have direct control over their funds, many of the digital currency’s users interact with third parties. These include hosted web wallets, bitcoin exchanges and private key custodians who help bitcoin users safeguard their digital money.
Of these developments, Colangelo is most interested in multi-signature wallets, those that allow consumers to control their accounts, yet share access with other institutions as a way to ensure the safety of their funds.
Colangelo believes this application of the technology will be increasingly beneficial to consumers, especially when it becomes possible for personal data to be managed similarly.
“Social engineering is one of the major ways that people gain access to steal things, that gets incrementally harder when you’re dealing with multiple parties,” he said. “If I have a third party that helps me hold my bitcoin and I have one key with a partner like Third Key Solutions, I don’t think it’s twice as hard, I think it’s four times as hard.”
Ultimately, it’s this ability for bitcoin to allow consumers to programatically provide access to their money and data that Colangelo finds most appealing.
“You can start adding in other rules, like you cannot transfer more than 1 BTC per day out of this wallet and that’s mathematically proven. You can mitigate that risk down to zero if you can program the money to respond in certain ways.”
Colangelo suggested he looks forward to blockchains allowing consumers ownership over their personal data. In the future, he asserted, it could be possible to share data access with companies, without having to store the information on centralized servers.
“We won’t need to share our information, we can issue it temporarily to FitBit or Facebook or American Airlines and then revoke it. We can grant them 24-hour access and maintain that information,” he explained.
Small business empowerment
Colangelo also admitted to being a user of bitcoin products and having a broad personal interest in the technology. For example, he indicated he is considering receiving part of his paycheck in bitcoin through payroll solutions provider BitWage.
This is influencing his company’s editorial direction, as Colangelo spoke about his desire to launch a bitcoin-specific issue of Consumers’ Research that would review hardware products such as those offered by Case, KeepKey and Ledger.
Also a co-owner of California-based mead company Golden Coast Mead, Colangelo sees bitcoin and blockchain technology as potentially beneficial for tech-savvy small businesses.
Colangelo said he’s explored using colored coins, or digital assets managed on the bitcoin blockchain, to sell futures contracts for his company’s products, thereby allowing for the sale of pre-order purchases that could lower Golden Coast’s liability should products be produced that don’t meet sales expectations.
Hinting at the larger debate over private and public blockchains, he sought to paint bitcoin as an Internet-like utility that would benefit those without the resources to build perhaps more optimized distributed ledger alternatives.
“With the tech as it stands today, it would be easier to issue a colored coin for 500 bottles of mead than it would be for me to employ [blockchain] technology from someone like an Eris,” he said. “I’ll log in create to a blockchain, I’ll find a few other computers [to secure the network]. I could do it on a number of cloud providers, but at the end of the day, I can do it for free.”
This ability, he said, will extend to the financial industry, allowing smaller banks to offer better services at a lower cost, adding:
“JPMorgan will probably implement private blockchains, but an open-source alternative like bitcoin will allow Joe’s bank to compete on the same level from an efficiency standpoint.”
Promoting innovation
In his remarks, Colangelo was also keen to stress he believes those involved in the current bitcoin and blockchain ecosystem are coming together at a special time in history, one that will be looked at similarly to the dawn of the Internet.
Further, he remarked on what he saw the limitless abilities of the technology to help transform how consumers interact in similar ways.
“In 1994, we thought we did everything we could with the Internet, that maybe we’ll make graphics better,” he continued. “We couldn’t see Uber back then. Some of these third-party services might get written out of existence by a teenager who’s coding over the weekend and makes an open-source platform because the economics are there.”
However, he believes it will be increasingly important for organizations like Consumers’ Research to inform the public about these new offerings. At the end of the day, he said, bitcoin companies can’t expect working families to invest time and effort in understanding how a new wave of financial products might be of benefit.
Ultimately, he asserted it’s this sense of purpose that has encouraged him to align his brand with the technology, concluding:
“Even if Consumers’ Research doesn’t get vaulted to the front of CNBC when bitcoin does blow up, even if we don’t go along for the ride, we can say we did this important stuff when bitcoin was just a few thousand passionate people.”
Consumer protection image via Shutterstock