(bright orchestral music) >> I'm Peter Burris and welcome to another Cube Conversation from our beautiful studios here in Palo Alto, California. Not a great show today. First off, being joined by my colleague at SiliconANGLE Wikibon, Dave Vellante. >> Peter >> But the real star of the show, Nick Curcuru with MasterCard. Welcome to The Cube Nick. >> Thanks for having me. >> So Nick, MasterCard, 165 million transactions an hour. A financial juggernaut. Blockchain, interesting technology, a lot of applications. How are they going to come together? >> Well, the biggest thing that we look at when we look at those two technologies: our world which is the network and you look at blockchain, is they're the challenge. And I think we have the opportunity to actually meet the challenge and those challenges are speed, transparency of the transaction itself, and actually even trying to reduce the cost of those transactions, especially when you talk cross border. You know when you're going from country to country right now blockchain has a big cost in order to let that happen. The other component is that transparency. I need to know who I am dealing with on the other side and create an auditable trail to understand how that transaction is going through, and again this is something that we do within our core business and again, we're trying to make that meet and then work on the speed. Again, one of the things we pride ourselves are on that 165 million transactions per hour, making it a smooth flow, making it seamless, making it frictionless, that we can do. So again, can we do the same now with blockchain. You know, and for us, we're experimenting now with our B2B, but we hopefully will be able to move that right into individuals as well, to the consumer level. >> So, we're a decade into when Satoshi, whoever he or she was created Bitcoin. >> Or them. >> Or them and yeah, was it the Russians? People are asking that question, so who knows? But, of course a lot of people have been facing negative comments in the press, et cetera. What was your motivation for exploring blockchain, starting to experiment with it? Take us through that if you would. >> Well you know part of what we started to see is that it started to gain traction. That was the biggest thing, and as you start to take a look at more and more people that started to use that technology, it's one of those items that in the beginning we're like okay it's nice it's a hobby right as it started to come out. But as you started to see some more heavyweights come into the place to use it and actually utilize what that technology can provide, we're like, there is something here. Again, MasterCard, our CEO has been very good to say, we need to always be thinking outside of our core. What else do we have to be able to include to allow our MasterCard stakeholders, our banks, our issuers, and everyone, the opportunities that we can continuously expand. So our CEO has been really good about that. And when blockchain started to gain some momentum, he goes, we need to actually take a look, so our guys in the labs, our smart people that sit there in O'Fallon and New York City started to explore how do we take what we know, apply it here to help with that particular way a transaction is being done, and then, can we really allow ourselves and blockchain to grow? So, that's pretty much where we started. Again, it was a little hobby, we started to see it pick up momentum, and about three years ago we were like, there is something here. We need to actually begin to think about how we can interact with this form of payment. >> So what are you actually doing? Are you experimenting, kicking the tires, trying to figure out the use cases? >> That's actually everything that we're doing. Right now, we've actually got a few patents that have just come out, which is very good for what we are trying to accomplish. Right now, we're in the B2B space because that's what we're watching mostly is being used right now is in that business to business space. So we're out there piloting. We actually have set up a whole bunch of APIs to allow people to actually put the blockchain inside, whether it's a mobile device that you want to use, or within the Internet of things. So we have developed a set of APIs that we have got out there that we are allowing our different people within B2B to use, to experiment, to start to say, hey give us feedback on how are they operating. Is it seamless, is it frictionless, are we reducing that operational time, making it efficient, reducing those costs. So that's what we're beginning to roll out. And again, our goal is, if we can do it in B2B, how do we finally get it to the consumer? Because again, that's going to be a big part of what people are going to want to do, to be able to do those transactions amongst themselves. >> When you think about things like AML and Know Your Customer KYC, do you see blockchain as having a role there or does it sort of accentuate your need to understand different ways to know your customer and fight money laundering. >> Well that's actually a big part of it. That's the whole thing we talk about being able to authorization and authentication. So there is a big thing, again, when you deal with blockchain, people, you got the wire in transit right? And there are people trying to skim off that, trying to find a way to get into your bank account, basically, because that's really what you're exposing because you're making a payment. So the question for us is okay, again, that's a core competency of ours is data in motion and securing the transaction while it's in motion before that. So for us, when you start to take a look at the way we can do the authorization and authentication becomes a big deal. And our core competency is to do that, to make sure that you can't have anti-money laundering, to make sure that you can't have fraud existing because we can verify it's you who is transacting with Dave, that you are the two people transacting, just like we do with a card, right? And when you do the pin, chip, we know it's you. Even with our new products like new data with biometrics, we know it's you. We can validate and verify and authenticate it's you. That's where we think we can provide tremendous value with the blockchain. >> So blockchain is kind of a hot new technology, but there's got to be more than just the fact that it's a hot new technology. Give us some examples of some use cases that you're envisioning that will be made possible and will be sustained with the blockchain approach. >> A lot of it is actually, if you take a look at the supply chain, the ability to make sure that when I need goods and services, not only, I don't have to wait for it. I think actually one of the best stories that we heard when it came down to the blockchain is how, actually the Defense Department has used it. So for example, if you can imagine, on an aircraft carrier, there's a plane that went down, right? That needed a part. Or I think it was a helicopter, sorry. And it needed a part. Well the question was it's in the middle of the Pacific Ocean. So how do you get the part there? Well if you go through the normal channels, to get that helicopter up and running, it's going to take you two to three months to get it there. But using blockchain, because it's anonymous and you have some privacy within it, being able to say, can you send me the specs? This particular ship had a metal 3D printer on it. So not only were they able to send the specs via blockchain in an anonymous manner so no one else could pick it up, they could actually put it on the ship. They could actually create the part, and what's really kind of cool is they actually put a flaw. They put a scratch across the part itself so that you knew the guys who sent it are the guys that you are getting it from and no one else picked it up along the way. So that's one way to be able to do it, to actually create the parts that you need when you need them in a secure manner. The other part, if you believe it or not, I was just at a sports conference, and the other thing was is can I actually use blockchain to transfer my tickets? So you're in Palo Alton. I got 9ers tickets. I'm a season ticket holder, and what I want to be able to do is send you my tickets, but you need to know it's me who has the tickets, not a fraudster, right, that's going up there saying I got two tickets for sale or whatever it may be. So I can use blockchain in an anonymous transaction You send me the funds, you know it's me, and I can send you the tickets because I am a verified, valid ticket holder. So there is another case where it is consumer to consumer. >> But coming back to the B2B examples, there are a lot of circumstances when a business realizes that entering into a transaction is signaling an enormous amount of information other than just the part that they're getting or the business activity that they're performing, and so it has the potential to be a great technology to dramatically focus the characteristics of the transaction just on the transaction and keep all the other signaling that might otherwise be picked up on out of the equation. Is that right? >> Yeah, that's absolutely correct. The other part is it creates that efficiency in that transaction itself. We're always worried about can you reduce paperwork? We did that, that's the 80's and 90's, right? And then it became into now we got these electronic transfers. But what blockchain is allowing you to do is almost in real time to be able to order those goods and services and get them delivered when you need them and be able to run those transactions. That's a big part to it. Now we're getting faster and better at what we're doing. We're not letting antiquated processes and procedures really bog us down. And again, the blockchain allows you to do that, allows an easier transfer of cash amongst the providers, a lower cost in many cases on that transfer when you're talking about the funds, more of the ability to actually interact with the consumer itself, especially if you've got artificial intelligence, because one of the other use cases in the supply chain is the auto-ordering. Right, so this thing is learning, it's understanding what's coming off the shelves, what's going on the shelves, where it needs to be. Can I actually that to help me distribute my products amongst my warehouses, amongst my stores? Blockchain is doing that. It's automating that and allows those transactions, both I need this and you sent it to me as well as actually going through and making the financial transaction happen. >> So you guys must be having some mind-melting conversations inside your company. (laughing) When you think about the examples that you gave those transactions, I presume, the ticket transaction, doesn't require a trusted third party to validate that transaction because the technology of blockchain is doing that and then yet, but MasterCard is a trusted third party. So how are you thinking about, this might change your business? You've still got amazing assets. You've got a brand, you've got a network, you've got your partnerships, you've got the relationships that you have with the suppliers and customers and consumers, et cetera. So how do you think about that notion of when you talk to the world of crypto. Oh let's find where there's a trusted third party and we can disintermediate that. So what do you think all this means for the future of financial services and companies like MasterCard? >> Well, you know for us it's not the ability to say that one is going to... for a lot of folks, their complaint is, what we hear is, blockchain is going to take over everything. Cryptocurrency is going to... no it's how you actually have to live within that, because you're going to have to have multiple ways to do that. So that's how we feel we can make that help those folks in the transition. So that trusted third party, okay you can have five trusted third parties take care of your credit cards, your debit cards, your blockchain, your cryptocurrency. Our goal is, just come to us. Let's get you that solution. We can help embed that API. We can give you some flexibility. We can give you the reach of being able to have you know 22,000 banks and issuers worldwide at your disposal if you need that. So again, that's where we see ourselves really playing a good role, and that's how it's going to change our business. >> But it's, related to that, it's we can bring the scale, we can bring your operational certainty, we can bring you all the things because at the end of the day, it's still a computer, right, and it has to stay up and it has to be auditable and it has to be backed up and that's something that there's not a lot of companies that know how to operate at the kind of scale you guys do. >> Technology platform is critical. >> Absolutely >> Yes, absolutely. And again, that's when you look at quadruple and quint- types of redundancy, not just primary and secondary. I mean we are running four or five types of redundancy to make sure those networks are up and running. >> So Nick, I got a question because one of the things that I find interesting about all this and I know that you and I have talked about this, Dave, is that a blockchain presumes that there's some sort of contract in the middle of all this, but the processes of running contracts are complex. The design of the blockchain is crucial ultimately to the behavior and the success of the blockchain. Not a lot of tools to do that. How do you think the future of blockchain design is going to evolve so that issues like scale, technological, operational certainty, et cetera, come into play? >> Well, it's almost, as you take a look at it, it's almost the way that you have to be interacting today. So you've got the edge where the transaction is happening right and you've got the core part of the business where you're using that machine learning, the artificial intelligence to help you make better decisions. And then of course, you've got the deep learning. So as you look at those technologies, it's how you're handling within that contract, where things need to be done. Right, so again, if you're looking at how we supply a shelf, well that's not going to be done potentially at the edge. That's potentially in your core. It could be part of deep learning, but then how do you bring it to the edge to make that transaction go through to make that part of blockchain? So as you think about the contracts, something that's real important with blockchain is picking the right partner to go to market with because, again, you're looking at those technologies you want to make sure are in place. >> So, you're adding to a notion of scale and operational certainty, the expertise associated with how do you design these things well so that they can be put in an operation and you don't have to, you know, the immutability issue doesn't come and bite you in the butt in six months. >> Yeah, absolutely. So again, what you're looking for is, what we always look for are those people that have the right ability for scale, have the global experience that we really need, because again, when you think about it, you're in a global economy, so you're really looking to see how those people interact and can they do it. You're looking for that partner. You're not looking for the guy who's got the coolest, latest technology. Those are always fine to know about, but again, you're always worried about scale at this point. You're looking at flexibility. You know, how do I, how can I be flexible in the way I'm making those contracts and those contracts always change. It's not like there's a template, all right? Almost with blockchain, it's almost individual companies and B2B are coming back with their own types of contracts. >> Sure. >> And that's the part that you also have to have make sure is available to you, both from a technology standpoint and being able to you know actually operationalize it. >> Peter, at the top, talked about the transaction volumes being you know limited, you were talking about Bitcoin transaction volumes. Obviously, in the near term anyway, limits some of the use cases, but I wonder how you guys are thinking about solving that problem. Do you see that as MasterCard's role or is that, is Google, a Google-like company going to solve that? Is it going to be a partnership? How do you see that shaking out? >> It is going to be, it's a collaborative partnership, so again, we have conversations with people like, the Googles of the world, the Microsofts, the Dells, and people like that. It's a collaboration now. So just like four years ago. Remember Hadoop's community? >> Yeah. >> So we see it, there is a blockchain community because we are all seeing the same issues, but what's nice is, because of the experience that we're having through being part of a community, we're helping each other solve those particular problems. Because again, Google sees a different part of blockchain. Right, we see a different part of blockchain. And when you start to bring those resources together and you start talking to them and the Microsofts and the Dells and even the Amazons of the world. When you start putting everybody into a room, we're frenemies at that point. Because we're all trying to solve the same problem. We all have different interests within the major issue, but if we can do it together, tide rises all boats, right? >> The best innovations are combinatorial. >> Correct. >> Taking a lot of folks with expertise and mature technology and bringing it together and creating something new not just because you're creating something new but because you have the social reach to actually have it happen in the marketplace. >> Absolutely. >> Nick Curcuru, MasterCard, thanks very much for being on The Cube and talking about blockchain. >> Appreciate it. >> Thank you for having me, thanks guys. (orchestral music fading out)