Interviews by Stephen Ibaraki
Toufi Saliba, Globally Renowned Entrepreneur and Innovator
This week, Stephen Ibaraki has an exclusive interview with Toufi Saliba.
Toufi Saliba is CEO, PrivacyShell and Chair of the ACM Practitioner Board Conference Committee. Toufi's background is mainly in Machine Learning, Decentralized Governance, Distributed Computing, and Cryptography. He has authored and co-authored several algorithms, protocols, and patents. Toufi's companies have had several exits for software that he built from the ground up. He sits on multiple Silicon Valley start-up boards, is the founder of the TodaQ Foundation and Chair of the ACM Practitioner Board Conference Committee.
Currently, Toufi runs a start-up factory and InfoSec advisory with Todd Gebhart (ex-Co-President of McAfee and Vice-Chairman of Intel Security) and Dann Toliver (ex-NASA scientist and cryptographer). The firm is called PrivacyShell Corp with offices in San Francisco, Palo Alto, and Toronto. PrivacyShell's portfolio founders have an aggregate of over $27B in exits. PrivacyShell academic partners are growing, currently from Cornell, Stanford, Maryland, Technion, University of Toronto, University of Illinois Urbana-Champaign, Berkley, and MIT.
Toufi's #1 goal in life is enhancing technology to help achieve global prosperity while building profitable businesses and enablements from within.
|Q:|| ||Toufi, thank you for sharing your deep experiences with our audience. Congratulations on your tremendous success.
| || ||Before we get into your participation at Financial Service Roundtable (FSR) Live Stream Blockchain event and ACM Blockchain Webinar, let's mine details of your life journey.|
|Q:|| ||Describe milestones in your life from the age of four?
A: "I grew up in a Catholic city in Lebanon during the war, so most of my childhood was in a bomb shelter. I learned to appreciate liberty and didn't like religious wars at all. At the age of 13 they discovered I had started a movement against the Syrians who occupied Lebanon at the time. It was a Thursday in the middle of the night when the Syrians first found out, surrounded my house and took me for interrogation. Long story short - it was the worst night of my life that turned out to be the best thing that ever happened to me. I dropped politics and focused on science. However, in parallel to my interest in liberty, I also had interest in technology (to the extent that I had access to). At the age of 11, I built a wireless Atari 1987 joystick clickless out of embedded mercury and disassembled remote control toys. My parents thought I was crazy (they still think I am crazy I guess). I never had a normal life when compared to peers and still don't. I've always been the odd one and thought I was weird, but I learned later on in life that outliers are okay if they find their unfair advantage (which gave me a boost)."
|Q:|| ||What triggered your interest in computer science?
A: "At first I was into hardware electronics, then was interested in politics until I was 14 when I realized it's a win/lose game. I prefer win/win situations and was naturally good in Math and Physics and was very, very bad at everything else. So I gravitated towards science at first, then computer science was the thing that I felt could combine my unfair advantage to give to the world many times more than I could take. I value someone's success in how much you can give to the world and not take. That of course is subjective to anyone vis-a-vis their potential and circumstances etc."
|Q:|| ||What are the stories behind your career highlights outside of the ACM?
A: "Well, there is my perspective of what I want to accomplish and haven't yet and then there is that of the other Toufis in parallel universes that have accomplished a lot more versus those that haven't accomplished a lot. So if you take all the Toufis since the moment I was born, I can certainly say in this universe I am at the upper 99.9th percentile. However, my perspective is I feel I am only at 2% of what I'm yet to accomplish. I measure accomplishments in how much you give to this world, comparatively speaking, given my potential I am at 2% or even below. Again, that's how I view myself. If you take everyone's view in the world of me, I am sure you'll get an average beyond 80% but they don't know my potential, so I am allowed to be subjective in how much I should be giving the world and haven't yet."
| || ||Now let's get into the ACM.|
|Q:|| ||Share your stories behind your journey with the ACM leading to be on the ACM Practitioner Board and chair of the conference subcommittee.
A: "I must say that ACM is one of those top-notch organizations that is so underrated, especially from a branding perspective and I know why. 110,000 global members that are often humble and are mainly the doers in the computer science world, meanwhile there are those who are loud about their doings but they still rely on ACM one way or another."
|Q:|| ||How would you describe the ACM and how the ACM is making a difference?
A: "So, let's go back to why we, homo-sapiens, have succeeded over other species. Quoting Yuval Noah Harrari, 'The truly unique trait of Sapiens is our ability to create and believe fiction'. Then he goes on saying, 'it is our ability to cooperate at large numbers'. So ACM is like the extreme of humanity on both of those points, but could definitely benefit from better branding though."
|Q:|| ||What are your roles with ACM and immediate goals?
A: "I like to use my unfair advantage in situations otherwise someone else could have done it better - so it isn't efficient effort to humanity. Instead, using my unfair advantage I take the intersections of what I have most of, what I excel in, what I'm passionate about, and find the intersection with what ACM needs most (from my point of view), and how ACM can become 'me' in the sense of what is the ACM's unfair advantage bringing to the world within that intersection. So I had a strong background in Artificial Intelligence, then came to Cryptography and co-authored a protocol that can enhance existing protocols' performance by 1000 fold, sometimes 1,000,000. Again, I am a believer that I am not special, I just happen to have this combination of elements - how can I bring this to the world? Well, how about we merge 890,000 global AI meetup members with 250,000 blockchainers….You want progressive revolution, watch it manifesting itself when those two are combined."
| || ||We will now discuss your interest in blockchain, the FSR blockchain event, and ACM blockchain Webinar.|
|Q:|| ||What triggered your interest in blockchain from the perspective as a researcher, a personal level and as a CEO?
A: "AI and Cryptography are like Romeo and Juliet, so I was like Romeo for so long, eyeing Juliet. I knew of fabulous folks like Nick Szabo and Silvio Micali long before Bitcoin and followed their work passionately. It was about time I got in from protocol and algorithm to technopreneur level."
|Q:|| ||There is a shift in the narrative from digital currencies to the underlying technology of blockchain and public ledger. What are the applications in smart contracts (digital rights, wagers, escrow), and the challenges and opportunities?
A: "I think that shift is not honest from a scientific perspective. Let's ask this question: What is a digital currency transaction? Even before bitcoin, bitgold or any crypto, it is still a smart-contract of some sort that is relying on an intermediary to enforce it. Blockchain technology in its purest form is learned from Bitcoin and can allow us to have other values exchanged and smart contract execution without relying on a central authority or an intermediary. Now why is that so important? Well, from security perspective, a centralized system has a single point of failure; decentralized systems are much more resilient to attacks and much more secure. In fact, if you were to even evaluate not only the security, but also the privacy of a properly built system on a centralized versus decentralized blockchain, you can have better privacy with the public one. Again, I said 'properly built', so I reserve the right to define that."
|Q:|| ||What about the pros and cons of blockchain with applications in e-commerce?
A: "I think most of this talk and everything I do revolves around the pros, so I'm glad I get to talk a bit about the cons.
- Turning beautiful sciences into cults.
- Speculative market, more like an online casino.
- Wrong apps, like supply chains. Blockchains don't magically solve problems on the ground.
- Too many promises that current blockchains cannot deliver on, which unfortunately is what the majority did. Luckily we can say that most people that have been fooled didn't lose hope looking for platforms that can truly deliver on those desired promises."
|Q:|| ||How about blockchain build out with global payments?
A: "There are no current blockchains that can deliver on all the promises of the blockchain, but there are those breakthroughs that are flying under the radar and will inevitably become mainstream one way or another for two reasons:
- We live in a universe that the path with the least resistance will win.
- The evolution from barter, to gold and cash to digital has helped, but the moment we can get rid of the intermediary we will. In fact, there are bigger opportunities for financial services and government in a decentralized platform than in a centralized."
|Q:|| ||Where is the future of blockchain in remittance?
A: "Large transactions are the easy ones. It is the small transactions that are difficult. Why? Electronically speaking, if transactions are on a ledger, decentralized or centralized, changing ownership has the same constant cost for $10 transactions or $99. Interestingly, most blockchains failed to deliver on the promises of the blockchain and went on delivering on remittances. Most cases aren't even benefiting from the decentralized nature and could have been done on a database or centralized database system. Zero benefits from the blockchain. Or I should say negative not even zero, because most blockchains today cost more than a centralized DB."
|Q:|| ||How is blockchain in p2p lending?
A: "This can be supernatural in places where lending is too complicated, a decentralized system managing the IOU transactions can be extremely beneficial."
|Q:|| ||What is the place for blockchain in microfinance?
A: "This can be super interesting, although we don't have history of data to back it up but we see tremendous amount of inbound traction from both ends of the spectrum. The demand for loans and the demand for lenders."
|Q:|| ||What are the implications of blockchain with digital fiat currency?
A: "Technically speaking, if fiat currencies decide to move to the blockchain they should be able to. The biggest impediment is humans restricting it. The machine can certainly welcome fiat to transition. In fact, we are in discussions with entire nations to do that move and end corruption in their countries moving forward. Or at least this type of corruption where governments have the power to print money anytime they want and they often abuse that power."
|Q:|| ||Where does blockchain provide opportunities in insurance fraud?
A: "The blockchain is flawless in keeping track of events in the order they occurred. This can introduce an opportunity to folks preventing fraud to also buy themselves audit immunity as they can get mathematical proof using the blockchain; irrefutable and immutable."
|Q:|| ||What are the challenges of blockchain in mutual models?
A: "I am not sure I understand that question. If you mean the private blockchains or consortium based where parties are selected somehow, this can fire back at those thinking of keeping that power in the house is more powerful. That mentality exists in the absence of blockchains, but the problem with introducing in a blockchain setting is that it creates a central point. In blockchain security you are as good as your centralized point. So it becomes harder to make a change, but attackers will likely use the centralized feature against itself."
|Q:|| ||How will blockchain have impact in securities with applications in equity, private markets, debt, crowdfunding, and derivatives?
A: "Many of the regulator requirements built around those areas in the existing centrally driven systems can become automated using the blockchain, if properly designed. I reserve the 'if properly designed' as I have seen smart contract attempts that are far from smart and far from properly designed."
|Q:|| ||How do you see the rollout of blockchain in record keeping and how will this impact financial services? For example, we have healthcare, title records, ownership, voting, and intellectual property.
A: "Each and every one of those subjects can be an entire talk on its own. In healthcare you can certainly give more power to users while still protecting their privacy and giving audit immunity to those processing the service, especially if it utilizes a public and truly decentralized blockchain. Often folks confuse public blockchain with publicly available information. This raises major useless debates and often ends up with a misunderstanding. I think folks can benefit from keeping all politics and opinions out of the equation and stick to facts. The fact is a truly decentralized blockchain is more secure than a private and centralized blockchain. Those that oppose #decentralization either don't understand it or intend on being malicious – IMPORTANT, I said ‘TRUE DECENTRALIZATION’; fake ones could even be more malicious than centralized."
|Q:|| ||Global payments are over 2 trillion by 2019, 40% of banking revenue. How will blockchain be the new back office with high speed, high volume transactions?
A: "I think you mean transaction fees. Although they may be 40% of banking fees, they certainly are less than 8% of financial services revenue. This can be considered a threat to their business unless exploring new territories, specifically the 2.5 billion smartphone holders that are currently unbanked."
|Q:|| ||Out of scores of blockchain applications, which will gain the most traction and why, in five and ten years?
A: "I actually see the future of blockchain from Toda Protocol lenses, so I might be subjective, but here's my take anyway. Toda Protocol is a blockchain protocol maximizing on both decentralizations and distributed computing. This gives the ability for devices to have the protocol at their kernel, and therefore my view of it as the next HTTP. While we will continue using HTTP for broadcasting and sharing information at masses in a less secure way, new applications that would require a transfer of ownership (partial or in full), can utilize the Toda Protocol. This can range from email exchanges to any files exchange that the senders and receivers do not need to trust each other but can trust cryptography. Application of this can be utilized in elimination of fraud, DDOS attacks, spam, can offer an audit trail, one way privacy protection, unprecedented security and the list goes on. We are basically introducing crypto-economics to every network exchange, so attackers will incur prohibitive costs. In a well-designed system using this protocol, the economics have to work in a way that it costs more to attack than to benefit."
|Q:|| ||With development, so rapid and fundamentally different, how can regulators manage the tech, not impede development and still protect market participants?
A: "I think regulators need not to evolve what they have in front of them for years, but instead need to understand the new security of the blockchain and introduce regulatory measures that can provide a healthy range for folks to operate in. For example, in present systems built on legacy foundations, regulators need to ensure data in a central database is not manipulated. So that ends up creating policy and procedures, best practices, review committees, audit, compliance folks, change managements, let alone disaster recovery and contingency plans. Instead, in a decentralized setting, the system will only function as initially specified, data becomes immutable and irrefutable and the rest can be provided in mathematical proofs that have several orders of magnitude higher fidelity over the old cumbersome manual system."
|Q:|| ||How will your customers trust their sensitive data in public ledgers?
A: "Interestingly, a properly designed system using the public blockchain can have better protection over a private blockchain. I reserve the word 'properly' to be defined depending on the system. For example, if I were to design a system that allows people to safeguard their sensitive data and have record of them having this data at a certain time. The system can generate a cryptographic hash from the user and insert onto the blockchain several random times, meanwhile the meaningful hash would be one of those random times that only the user knows which one it is and can use it at anytime in the future to prove to anyone that had the data at that time. This can be prior art, contract, invention, secret or anything."
|Q:|| ||How would you define blockchain?
A: "Recording cryptographic derivatives of events as time goes in a decentralized ledger or decentralized and distributed system in a way that every single event will impact the sum of current and future events, resulting in immutability and irrefutability of those events as they occur. This subsequently can be used for ownership transfer without having to depend on a single authority. Currently ownership is defined as an ownership of value in a subjective way of how we define value (us humans); however, the blockchain can facilitate the ownership transfer of anything, whether it has perceived value or not. This last point is very important and you won't see it with anyone else defining the blockchain yet. Or at least I haven't seen anyone defining it that way yet."
|Q:|| ||Who are the big players in the financial marketplace and why?
A: "This goes back to the regulatory question. Big players cannot play unless regulators are providing some guidelines. Currently the range of guidelines provided are very limited. However, crypto folks, can expand on any slither and build a castle. In the meantime, we hope regulators will quickly provide a range, otherwise big players will continue to find indirect ways (which may not necessarily be so bad in some cases but can definitely be better most of the time), if things are regulated properly so that they play on a much larger and impactful global scale. I think we need to come to this together (big and small), to arrive at the desired goal. I truly see the desired goal should be common between many of us here on earth. Global prosperity is my number one goal, I can't do it alone, a lot of things need to come together for this to happen. My co-panelist at the FSR seminar of May 9th describes it as increasing the size of the pie rather than increasing the slices separately."
|Q:|| ||What is the state of the Bitcoin marketplace and technology? What other cryptocurrencies look interesting?
A: "This can definitely be a topic on its own. Bitcoin continues to grow in community and value and giving life to offspring. There are currently over 1000 blockchains with Bitcoin DNA in them. Bitcoin cannot scale by design. The only way to scale Bitcoin is either changing the design like adopting new protocol such as Toda Protocol for Satoshis, for example, or doing it off-chain like Lightning Network."
|Q:|| ||How do you see Ethereum playing out?
A: "Ethereum is a fabulous way of writing smart contracts on a decentralized ledger. However, it still suffers scalability due to inheritance from Bitcoin DNA, but it also enjoys security for the same reason. Many are working on increasing the scalability, but critics are that it may come at a security cost. Basically changing proof of work to proof of stake is a game changer. Others are working on off-chain scalability called State Channel; this is basically like Lightning Network, but for Ethereum. Sharding is also underway. While all this is happening, we have been approached by some folks who can't disclose much on it yet, but they intend to use the Toda DNA to build an Ethereum cousin where security, privacy, scalability and efficiency are by design and not a fix to the design."
|Q:|| ||What are the regulatory hurdles with blockchain?
A: "I think the number one hurdle is the blockchain understanding by regulators. Blockchain can certainly facilitate the job of regulators if applications built on top of it are properly designed. However, it can also become a vehicle for folks to avoid regulatory compliance. This can start by changing the questions regulators ask. For example, as an AML regulator do you really need to know who is the person transferring funds between France and Japan to conclude that the fund is legitimate, or is it sufficient to know the money being transferred is legitimate. For example, Entity A paid its dues and taxes in France and is now purchasing Japanese goods. Sure, some regulators in France need to know who is behind entity A, but it may be irrelevant to AML regulators to know who as long as they know with certainty that it isn't an AML transaction they should be satisfied. Hint: The word 'certainty' is extremely important in this context."
|Q:|| ||How about standards with blockchain?
A: "Beyond interoperability, standards can be hindering innovation and overall evolution. As long as we define why we need a certain standard, computer scientists and cryptographers are more than qualified to build necessary standards that are malleable by design, yet deterministic when applied. The intent here is so we have a landscape that can evolve, but continue to be backward compatible throughout its evolutionary steps."
|Q:|| ||How do you see the integration of digital fiat currency and central banks with uses of blockchain in the financial services industry?
A: "The majority of people around the globe do not trust their own currency and their own government. Coincidently, the overlap between those people and those who need to evolve towards prosperity is staggering. One way to solve this is to continue down the political path and face corruptions every step of the way. Alternatively use technology to solve this. We did that with the Internet and we can do it again with the blockchain technology to provide a truly decentralized governance mechanism for the issuance of ongoing currency and therefore provide reliability into the economy. To answer the question, I think we will see bottom up and top down efforts concurrently. The desire for ending corruption and economic stability is unprecedented."
|Q:|| ||Where do you see in the future of Hyperledger?
A: "It's a permissioned blockchain, so can the work it does be substituted by a database? If the answer is 'yes', then one would ask, 'how is that an innovation over Bitcoin and Ethereum'? However, I don't dislike Hyperledger. Often when I give an answer, I prefer the reader not make a conclusion until reading the full answer or asking more questions if necessary. Hyperledger is a fabulous force, run by a mix of very different disciplines yet very successful people. Although I can't tell much about the immediate future, I can certainly see Blythe Masters pounce on opportunities to shift the entire effort of Hyperledger towards ledgerless blockchains that truly are decentralized and efficient and ledger blockchains that are efficient and decentralized, like Algorand. This will not happen right away, many folks internal to Hyperledger today are not going to support fully decentralized systems. Folks that know me, quote me for saying the following statement in a different shape, and I tweeted it recently: 'Those that oppose #decentralization either don't understand it or intend on being malicious'."
|Q:|| ||Ripple is gaining interest however there are challenges, can you discuss them?
A: "Here again the tweet above is even more applicable, at least in the eyes of regulators and most recently, prosecutors and law enforcement. Ripple is centralized, if they deny it, we have a bigger problem to worry about. If they don't deny it, then they are breaching too many laws to count. Again here, please readers, listeners and viewers, do not form an opinion over my answers from the first couple lines - either read through or ask questions. General rule, if you suspect I am a hater, then you are likely misunderstanding me. I don't care much to hate, I don't look to hate, in fact, I try in every single moment to find the positive thing and focus on it. If I fail on finding the positive thing, I state it out loud. Sometimes I may state some of the positive elements and discover more later. This is probably the situation with Ripple. They seem to be well intended, they seem to be working hard towards a better future, they definitely do a much better job than old SWIFT. They definitely hired some of the brightest minds, who in fact because they are bright, are currently questioning the legality of their own company themselves and don't want to fall in a trap of illegal currency creation and manipulation that the centralization is cornering them into."
|Q:|| ||How and why would the insurance industry want to use blockchain?
A: "If blockchain existed a long time ago, we wouldn't see the same growth of insurance companies the way we do today. This doesn't mean blockchain will replace them today. Quite the opposite, blockchain will enable insurance companies to extend their reach to other markets previously unattainable and will significantly reduce friction internally. Outside of large companies, the blockchain will enable a decentralized insurance issuance where I can be insurers for some and insured by others. Pools can be created and smart contracts can be initiated to provide immutability and irrefutability in the event of a disaster."
|Q:|| ||How and why would the banking industry want to use blockchain?
- "Opportunity: To extend their offering to a bigger market directly or indirectly.
- Existential threat prevention: If they don't and some of their competitors and majority of the people around the globe will be on the blockchain."
|Q:|| ||How and why would the payment industry want to use blockchain?
A: "End-to-end secure payment processing without the need of an intermediary may sound like a phenomenal idea to reduce friction and accelerate. However, existing blockchains by design are not efficient, not scalable but can accelerate extremely slow cross-border transactions and remittances; hence we see some progress in that area."
|Q:|| ||How about its applications in settlement – pros and cons?
A: "Can immediate, secure and frictionless settlements have cons?"
|Q:|| ||Where do you see the cryptocurrencies market developing and what are the pitfalls?
A: "Major pitfalls are noticed in:
- Short term gains of speculators, almost like an online casino of some sort. This isn't sustainable.
- Long term tactical pitfall is noticed with the creation of miners and companies basing their entire business model on the creation of friction.
- Fake decentralizations are the worst kind of planned attacks."
|Q:|| ||What were your most important outcomes from the FSR blockchain event?
A: "I am more than ever convinced, that the majority of successful folks are going to work together to accomplish global prosperity."
|Q:|| ||What were the most important questions from the ACM Blockchain webinar?
- "Will this scale?
- Will this be efficient?"
|Q:|| ||What three things continues to excite you?
- "Witnessing the evolution of sapiens towards kindness and 'givers' era.
- Participating in the progressive evolutions of science that can objectively have positive impacts by reducing friction.
- Participating in building one organism out of our planet."
|Q:|| ||What other areas particularly related to computing do you feel need to be brought into focus for discussion and policy?
A: "Definitely AI. I heard Fei-Fei Li say repeatedly after her taking the job of Chief AI/ML at Google that we need to democratize AI. I think soon she will likely enhance her statement by saying we need to decentralize AI, especially when she learns about the power of decentralizations from blockchain folks."
|Q:|| ||You have many interests. Can you talk further about them?
A: "This is a totally different question than the one above, but the answer can start with the same two words: Definitely AI. I have always been interested in evolutionary computational elements, self adaptive and learning from other intelligence to first build predictive analytics, then second to become more intelligent."
|Q:|| ||You choose the topic area. What do you see as the three top broader challenges facing us today and how do you propose they be solved?
First step: Education
- "Lack of understanding of blockchains.
- Lack of understanding of AI.
- Malicious use of blockchains and AI by takers.
Second step: Creating solidarity between true givers. Takers will not stand a chance, they always screw each other anyway.
Third step: After successfully accomplishing the first and second steps, then introduce full transparency in the approach of building AI and blockchain. The heart and brain of the future of our existence."
|Q:|| ||From your extensive speaking, travels, and work, please share up to three stories (amusing, surprising, unexpected, amazing).
A: "Okay, amusing - I have lots of those, but here's one. I have this subconscious ability that remembers faces and numbers without me consciously knowing or controlling it. I can't get it to work on demand, but here's an example of an instance that has happened many, many times. It's summer time, I am in Canada standing in the line-up to pay at Canadian Tire. I spotted someone in the line up and I asked, 'Were you on a red-eye flight from San Francisco to Toronto a few months ago?' He looked at me and answered, yes, but was a bit surprised. He wondered how I knew, so I explained that I also remembered the date and the seat number (he was sitting at 12F on the 14th of February). He then got really anxiously surprised and asked me, 'So were you like sitting next to me or behind me'? I answered no, I was just a passenger on the plane. He then asked if that was my first and last time. My answer was (before really freaking him out and getting to be absolutely concerned), that was my 114th flight from San Francisco to Toronto and I did that flight 12 times since then."
|Q:|| ||If you were conducting this interview, what questions would you ask, and then what would be your answers?
"Q1: Do you think you come across as delusional for having a goal of global prosperity?
A1: To the majority yes, especially the ones that miss some of the details or words I say. But that's okay, the majority don't understand the blockchain so not understanding me is totally expected.
Q2: What's your biggest challenge in negotiations?
A2: I get frustrated when the other side often assumes that I'm trying for a win/lose deal, when I never ever go for that. If anyone ever tells you otherwise, they are either lying or don't know me.
Q3: What did you learn from designing protocols that can benefit humanity?
A3: If you want outliers, you can't follow a steady process, you must figure out a way to be pseudorandom. If something worked for you 99 times, sure it will have a higher chance to work number 100 but that, in itself will reduce the chance if not eliminate, on finding outliers. (I stress pseudorandom)."
|Q:|| ||Toufi, with your demanding schedule, we are indeed fortunate to have you come in to do this interview. Thank you for sharing your deep experiences with our audience.