Stefan Matthews on ‘Hashing it Out’ Episode 3: Blockchain is the perfect technology for regulatory compliance
Episode three of “Hashing it Out” features Stefan Matthews, the Executive Chairman and CEO of TAAL, Executive Chairman of nChain Group, and Executive Committee member at Bitcoin Association. Australian by decent, Matthews is now based in Zug, Switzerland, a 30-minute drive to Zurich where the next CoinGeek Conference will be broadcasted in June.
Prior to his work on Bitcoin (BSV), blockchain technology and data management space, Matthews spent nearly 20 years in the gambling industry, the very industry responsible for his initial encounters with both Dr. Craig Wright and Calvin Ayre.
Matthews’ first experience with the gambling industry was in the early 2000s, pitching a live stream gambling application to Rob Hines, the Group CEO of what was then called Jupiters. Even though Hines ended up giving the software a pass, he did offer Matthews a job at Centrebet, a sports betting company Jupiters had acquired several months earlier.
Around 2006, Centrebet wanted to IPO on the Australian Stock Exchange and this is when the story with Dr. Craig Wright begins.
“In preparation for the IPO, I had engaged BDO in Australia to undertake a security systems and control systems audit of the online operation and when the partner from BDO came in to introduce his audit team and he sat in our boardroom with me, he had three other individuals with him. One of them was Craig Steven Wright,” Matthews recounted.
“He spent a lot of time over about four or five months in in our office working not so much directly with me, but with three or four key members of my team,” Matthews added.
Once the IPO was completed, Dr. Wright left BDO and engaged with Centrebet in a different way. It was at this point when he started talking to Matthews personally about some of his ideas.
“I didn’t understand in the beginning what the nexus was between Craig’s rambling of ideas and things that he was working on…the man used to sit down and talk to me about all things about digital currencies, e-currencies, digital gold and a lot of technology related to that,” Matthews shared.
“During that period, he started to show me some of the material that he was working on that ended up in the Bitcoin whitepaper,” Matthews revealed.
Fast forward to the end of 2009/early 2010, Matthews left Centrebet when it was acquired by Sportingbet and joined the Bodog Group in London and the Philippines, which of course is how he first met Calvin Ayre.
After roughly 16 years of working in the gambling industry, Matthews decided to leave the sector and it was during this period that Dr. Wright got a hold of Matthews’ phone number, called him and said, “Of all the people in the world that I know, you’re the one that I would value an opinion from the most.”
“He said, ‘Look. I’m sick of running businesses…I don’t want to run companies. I don’t want to be responsible for human resource. I don’t want to be responsible for legal. I don’t want to be responsible for accounting. I don’t want to be responsible for all the things involved in running a company. All I want to do is sit in a room, create my own ideas, pass them off to other people who can take those ideas and build them into solutions,’” Matthews recalled of their conversation.
It was out of this fateful phone call between Matthews and Dr. Wright that ultimately the nChain Group was created.
“Craig and his family moved to London and he got his wish…he sits down there and he creates a thousand ideas a day and he trunks them through to the main office in London. There’s a very large team now of two hundred and fifty odd people in the nChain Group that take those ideas and do things with them,” Matthews shared.
nChain has had its eyes on the gambling industry for several years, in particular the online gambling industry, as a data-heavy space that can greatly benefit from blockchain technology.
“We’re seeing today a whole lot of movement of online gambling or gaming applications moving on to the blockchain. The sad thing, Becky, is that over the years, it’s been impractical for a lot of these applications to actually sit on Ethereum or BTC or whatever you might want to consider, because there have been and still are significant scaling issues,” Matthews pointed out.
“And of course, I’m lucky enough now to be working with a platform, Bitcoin SV or BSV, which doesn’t have those scaling issues,” he confirmed.
“I see gaming or gambling operators starting to port, move, build applications on BSV, one, because it has got the capacity to be able to scale enormously and secondly, because the transactional cost of running those applications is extremely low. And when I say extremely low, I’m talking in the area of one hundredth of a cent per transaction. That’s staggering compared to every other blockchain solution that exists in the market today. There is an enormous differentiation between BSV and the others,” he added.
While BSV fees are extremely low, there are gambling industry professionals who question the cost of putting every single piece of data—every single slot spin, for example—on chain because despite how low they are, the fees will start to add up.
“It comes back to understanding and solution design and not every single transaction has to necessarily go direct to the chain. This is part of the conversations I’ve been having recently with Dr. Wright, is around the use of overlay networks and how you design solutions so that you capture the benefits of the time stamping of transactions on the chain and you can do that without necessarily having all the data physically on the main chain,” Matthews explained.
“And the way to design that, of course, is through overlay networks that connect to the chain and you go to all your time and date stamps and everything else, which are completely immutable, that can be used for audit purposes and so on and so forth,” he added.
Matthews went on to express his surprise that regulators in the gambling space have not shown a greater interest blockchain technology. Perhaps they are simply unaware that building a fully regulatory compliant monitoring system for licensees is completely possible with the BSV blockchain.
“It’s only a matter of time before the broader understanding, both within the gambling operator ranks and also within the regulator ranks, start to understand this. And I know that my friends at nChain have had a number of discussions at various levels around this. But, if anyone in the industry that you address should sit down and have some workshops on this, it’s the regulators,” he advised.
In addition to nChain’s ties with the gambling industry, Matthews also sees parallels between the gambling world and TAAL Distributed Information Technologies Inc. (CSE:TAAL | FWB:9SQ1 | OTC: TAALF), a specialized mining company or “enterprise blockchain transaction processor,” because he sees mining operations as comparable to running an online gambling business.
“The other side of what I learned in the online gaming sector, especially when in late 2015, when I started to get involved in mining, I looked at how mining operations are set up. And the thing that struck me is that this was no different to running an online casino,” he revealed.
“If you’re running a mining operation, the mechanics are exactly the same as if you’re running 5000 online slot machines…your hashing machines are programed to give you a certain return…if they don’t, you’ve got to do further investigation because there’s milking going on, there’s scamming going on, because there’s broken machines that aren’t being repaired, there’s people stealing your hash. There’s all sorts of things going on,” Matthews explained.
Similar to the gambling industry, mining companies such as TAAL are considering the convergence of blockchain technology and artificial intelligence (AI) and how utilizing these technologies together will provide a competitive advantage.
“There’s no doubt in my mind some of the things that we’re thinking about around machine learning and AI will definitely converge into design and product areas that we’re working on over the next few years,” Matthews revealed.
In fact, Matthews’ keen interest in competitive advantages goes back to his time with Centrebet when he attended a keynote presentation of Clayton Christensen’s, the author of “The Innovator’s Dilemma.” My father, Dr. Samuel Liggero, also took a great interest in Christensen’s work and studied it closely towards the end of his career with Polaroid in the ‘90s. In fact, my father continues to teach Christensen’s philosophies on innovation to his graduate students at Tufts University to this day.
“When I started working with Bodog, you and I were talking one day and I actually mentioned to you about innovative technologies and competitive advantage and all those sorts of things and you said to me, ‘You should talk to my dad,’” Matthews recounted.
“We had a business event in Spain where we got all of our key people together and actually asked your dad to come and be a guest speaker at that around innovation and disruption. And of course, it was the discussions that I’ve had with him over dinner and it’s the interest that I had after listening to Christensen talk in Sydney,” he said.
“It ties in so bloody well with this whole area of digital assets, blockchain technology, artificial intelligence and everything else. My career has been blessed and privileged by the people that I work with, the people that I’ve met and the sequential progression from one thing to another. And it wouldn’t have happened if I hadn’t gone to a meeting back in early 2000 with Rob Hines on the Gold Coast,” Matthews concluded.
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