Can you tell us about Bluzelle and its mission?
We are a technology company, and our mission is to use blockchain technology to basically allow a new set of people to use financial products by lowering the cost of entry. In terms of insurance, what we believe is that blockchain can bring new insurance models. Theoretically, you have a generation that’s going to grow up not owning the same type of insurance that I did. My kids are probably never going to buy car insurance. They’ll live in a city like Singapore or New York, a major metropolis, where they’ll just use Uber or public transit. For an insurance company, that’s a major problem of how to get this person to buy insurance. With blockchain, you can start doing pay-per-use, short-term insurance and small insurance products that, before, might not have made a profit margin for them. Now, if you do daily insurance or pay-per-use insurance, blockchain takes a lot of the operational cost away so they can still make money on it.
For developing markets, you have this untapped world of people who want to use insurance, but previously it was way too expensive, and the cost of entry was too high. Blockchain can reduce those costs. Bluzelle provides the infrastructure technology to allow for that to happen. We work with insurance companies, and we built a middleware technology that allows us to build those use cases or products better. For insurance, we can do smart contracts, which allows them to issue insurance policies onto the blockchain and then do real-time claims management. With that type of model, you can apply it to several different use cases, whether it’s personal injury insurance, travel insurance or short-term bike insurance.
Are we on the verge of a major shift to blockchain technology?
Initially, everybody was aiming at enterprises and saying let’s get going, but the big companies have been pretty slow to adopt. That’s just the nature of being a big company. I think the major shift that’s happening now is companies are getting funded faster through token sales and ICOs [initial coin offerings] and now they can experiment and go direct to the customer for a lot of these financial technologies or applications that use blockchain. That should be a catalyst for the bigger enterprises to say we have to catch up now because these guys are actually moving ahead without us. Before, a lot of the companies that wanted to do these products were underfunded and had to rely on the banks and insurance companies to get the customers. Now it’s kind of the other way around.
How does Bluzelle use blockchain technology?
We do it in two ways. One is we built our own infrastructure, our middleware, a platform that allows big banks and insurers to get some of these customers or build these products. The other way is we are building a new decentralized database that is needed by all blockchain companies to store their data, instead of using a company like Oracle. What we’re saying is a decentralized database from us is going to be more secure, safer and far more reliable.
Can you explain how a decentralized database works?
For a traditional database—let’s say a centralized cloud—all your customer data is stored in one cloud. If any part of that cloud goes down or part of the network goes down, you have limited access to your data and you have to wait around. If somebody breaks in and steals all that customer data, that’s going to lead to data breaches and leaks.
In a decentralized manner, we’re taking that data and spreading it to hundreds of thousands of servers or nodes out there and only storing bits of data on all those networks. Even if a node or one server goes down, all the data is still present and alive, and you have access to it. You can’t steal any of it because you’d have to take over the entire network to put all the pieces of that data together. It’s similar to the way bitcoin, ethereum and blockchain technologies work. It’s decentralized and in multiple places and has encryption on each level.
In our situation, let’s say you have insurance customer data sitting there; it’s basically like Airbnb. What we’ve done is empowered hundreds of thousands of consumers to download our protocol, put their computer storage space up, and an insurance company can pay with a token to have all their data spread out on these hundreds of thousands of computers everywhere.
How secure is a system using individual computers?
We have confidence that once we deploy our protocol, it has the necessary security. The protocol itself has encryption built into it. We have encryption advisors. Once our consumer downloads it and they put the Bluzelle protocol onto their computer, it comes with that encryption built in. It would be the same as downloading the Bitcoin protocol and turning my computer into a mining space. The Bitcoin protocol itself has all the security built in.
How scalable is this kind of system?
Before, people used to look at it as, say, let’s take one of the blockchains—ethereum—and build it on there and put all the data on there. That isn’t scalable, because ethereum is good for smart contracts and validations of transactions but it can’t store large amounts of data, because the cost is too high to retrieve it. Now with products like ours, we’ll build up the database that’s needed by all these products. Now you can have that scalability and a more fluid system. You’re basically breaking it up and not having everything sit on one blockchain. You’re breaking all the technology components into different layers.
How is decentralized database storage going to change how companies operate, and will it have an impact on insurers and brokers?
It’s going to be a big change in the sense that consumers are almost going to demand it: Equifax gets hacked and a bunch of records are stolen; Uber the same thing. It’s just going to be a necessary response. Data breaches are getting worse and worse; the current centralized infrastructure isn’t working. Consumers are going to want their data in safer places, and they’re going to demand that. I think it will be a fundamental thing. As companies like us get out there and more blockchain projects are built on a decentralized database, companies may decide a decentralized system is better to store their data on.
Tell us about Bluzelle’s history.
We were founded in Vancouver and started in August 2014 to get going on blockchain projects. In February 2016, we moved to Singapore to focus on enterprises, like banks and insurers, and to get them to understand what this technology is. We did a bunch of projects for them, like payments on the blockchain, insurance on the blockchain, digital identity on the blockchain. Doing those projects, we realized there is a core database system missing in a decentralized internet, or the blockchain. We ran into this problem while doing these projects. We realized that, if we’re having that problem, other people are going to have that problem, so why don’t we just create the solution for it.
It was really because we looked at where we were in Vancouver and said if enterprises and financial enterprises are the early adopters for blockchain, we didn’t see enough customers in Canada and we realized Asia would probably adopt this faster. Singapore is a financial hub, so we’ll have more customers in a centralized area. From there, we could prove ourselves there and move into the rest of Asia. It’s really a matter of where those customers are in a smaller area that we can get to in a concentrated way.
Being in Asia and Singapore for the past two years, we realized a lot of the adoption of blockchain applications will come from Asia and Southeast Asia because there are a lot of developing markets there. They can skip technology generations, and they’re really understanding this much faster. You have this huge market. In Indonesia, you have almost 300 million people, and fewer than 5% have insurance. India, the same. Vietnam, the same. Insurance companies can really try out these lower-priced products and have a consumer base to test them on.