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Listen: Interview: From proof-of-concept to market reality for blockchain technology

Ahead of Platts first ever Digital Commodities Summit in London on November 14, 2017, James Rilett, Global Director of Innovation at S&P Global Platts spoke to our premier event sponsor, James Robert ("Bo") Collins, Founder of Matrix Global, on the key conference theme of how blockchain technology is moving from proof-of-concept to market reality. They talk extensively on how Bo has been involved and instrumental in driving these innovative adoption journeys, how market actors are responding to blockchain 'blockers' and 'accelerators', and what keeps Bo up at night when making his investment decisions?

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Podcast Transcript

Interview: From proof-of-concept to market reality for blockchain technology

With James Rilett, Global Director of Innovation at S&P Global Platts and James Robert ("Bo") Collins, Founder of Matrix Global

JAMES RILETT: Hello and welcome to this very special edition of the Platts Commodities Spotlight podcast. My name is James Rilett and I'm very excited to be joined today from Houston, Texas, (by) Mr 'Bo' Collins. Hi Bo.

'BO' COLLINS: Hi there.

JAMES RILETT: It's my privilege to introduce Mr Collins; to those of you who don't know, Bo served as president of the New York Mercantile Exchange from 2001-2004. At the time, the largest commodities exchange in the world. While he was there, instrumental in the creation and success of ClearPort Clearing, the first commercially-viable OTC clearing platform in the space.

These days, Mr Collins is a very active entrepreneur, currently involved with a number of successful and innovative ventures: Matrix Global, creator of the world's first futures contracts on crude oil storage; and Mr Collins also launched Renovatio PR, which is an incubator initiative to utilize innovative solutions such as cryptocurrency in block chain technology, improving infrastructure and logistics in the commodity space.

Before leading NYMEX, Mr Collins served as senior vice president at El Paso Merchant Energy, where he was the head derivatives trader in natural gas, and led the trading team -- it says here -- in the year 2000, more than one billion dollars of net annual income. That must have been pretty exciting, Bo?

'BO' COLLINS: That was very exciting. We were fortunate. I geared our portfolio in a manner that the market conditions just were perfect for, so we got lucky I guess.

JAMES RILETT: Well some people would say that you make your own luck. Thanks again for joining us today. The subject of our discussion here on this podcast is around the theme of an upcoming conference that we have in London: the Digital Commodities Summit. Really exciting list of speakers, topics, a great list of attendees. One of the themes that we're going to look into is this idea of taking new and emerging technology from proof of concept through to actually driving value in commodities markets. Are we operating in an era of exponential technological change, and if so what does it mean for market participants?

'BO' COLLINS: We are definitely in an environment of accelerating technological change. In fact, more so than probably ever in my 30-year career. I think what that means for participants is they're going to see over the next five to ten years dramatic improvements in the way that businesses operate; to the degree that these services get built effectively.

JAMES RILETT: You've driven some big changes in markets throughout your career. You've put markets onto screen that people said couldn't be moved; you continue to be involved with a number of businesses solving, I think, persisting problems -- or attempting to solve persisting problems-- in the commodity space. I wondered, as market participants look at an ever lengthening list of scary terms like artificial intelligence, machine learning, distributed ledger technology, cryptocurrency. How can market participants understand which trends are meaningful? What are you seeing as the key accelerating technologies?

'BO' COLLINS: Well, we're seeing the application of blockchain, across, what I would call the food chain of logistics; and there's a number of improvements you can make into logistics services. We're investing in one process right now related to Matrix Commodity Finance, which is an affiliate of ours, that is bringing alternative mechanisms of finance to the commodity space. And we're able to apply the block chain in a manner that creates significantly more efficiencies around the logistics food chain, and then ultimately we believe it will create efficiencies in the actual payment mechanism.

We think that there's a lot of low-hanging fruit in that part of the space, and that's just one element. I think you're going to see application of blockchain and especially virtual currency in ways that are solving problems that we haven't even thought of yet.

JAMES RILETT: Fantastic, very interesting. And just expanding on that, perhaps a little more specifically, is there anything that you're working on that is a particularly elegant application technology: something that's very new that we couldn't have done a couple of years ago?

'BO' COLLINS: Well, this particular instance of the logistical food chain. We are able to put a process together now that enables companies to reduce fraud dramatically at every step of the process, because you're applying systems that are specifically made to deal with non-trust relationships. And so, as a result, you have proof of identity, proof of transaction, proof of grade.

There's a number of ways that you can tighten up that process so that not only is it faster and more efficient, but it reduces the level of fraud. That's one example. Another example: an investment that an affiliate that we are running to specifically incubate blockchain opportunities that affiliates call Renovatio PR, and Renovatio is looking at an investment now in the swaps-related categories that radically change the relationship of counterparties to each other and reduces the amount of margin that needs to be included in the system.

Those are just the two examples out of our activity alone; and there are many many more that were not involved and that will improve all sorts of things. I've seen propositions with smart grid technology, I've seen propositions on SolarCoin. That's an existing ICO (initial coin offering) that has some interesting characteristics. So, I think the number of ideas and the number of potential ways to apply this successfully is extraordinary. I don't think I can count them.

JAMES RILETT: I know that feeling. Clearly, no shortage of opportunity. Often when people talk about disruptive technology in the context of traditional businesses, they talk about the concept of threat. Clearly, there is an implied threat and risk to taking on new technology. Kind of a throw-away statement often, but really in this uncharted investment arena, with technologies that are new and unproven and being deployed and developed in real time, what is it that keeps you up at night?

'BO' COLLINS: I would say significantly investing in technology that will not be the winner, for the lack of a better term, around sort of a market consensus. We've already seen now, you know, a number of different blockchains evolve with varying characteristics that are good or better or more efficient. It's going to be a very interesting process to be sure that you develop on the right thing.

The other thing that actually does keep me up at night is the amount of opportunity that we want to pursue. It's sort of an exciting thing to lay your head down on your pillow at night and can't turn your brain off from thinking because there's eight new ideas that got proposed to you over the last week.

So, there are so many opportunities right now in the space that I would like to not miss the ones that speak to our experience and, you know, I think you see something like going to the conference in November as a way to just open up even further your exposure to those opportunities.

JAMES RILETT: Yeah, that's exactly what we had in mind when we put together this conference. We think it's really important to engage with these themes, to tackle them head on and harness these opportunities. Platts has often found itself at the center of markets during periods of change, providing transparency, and services and solutions around that with our community is really, really important to us.

So, thank you very much for your time and a really interesting series of discussions, and I think we've only just scratched the surface of these topics. So, hopefully we've peaked some interest for some of the listeners. We'll be able to pick up on these themes in London at the Platts Digital Commodities Summit on the 14th of November. Bo, see you there.

'BO' COLLINS: Great, thank you so much.