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August 21, 2017 Issue

CEOCFO MAGAZINE

 

Q&A with John P. Toohey, CEO and Co-Founder and Cherie Duncan, COO and Co-Founder of Hypatia Technologies providing Compliance as a Service using Permissioned Blockchain allows Gaming and Healthcare Companies and Government Regulators to Safely and Securely Share Documents

 

             

 

John P. Toohey, CEO and Co-Founder       Cherie Duncan, COO and Co-Founder

 

Hypatia Technologies

https://hypatia-tech.com/

 

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published Ė August 21, 2017

 

CEOCFO: Mr. Toohey, would you tell us the concept behind Hypatia Technologies?

Mr. Toohey: The core idea and motivation behind Hypatia comes from highly regulated industries such as Real Money Gaming, Health Care, Clinical Drug Trials, etc. National and state Regulators require individuals, in addition to corporations, to be vetted and licensed. The process involved extensive background checks on the individual and requires the disclosure of a significant amount of Personal Identity Information (PII), Personal Financial Information (PFI) and Personal Health Information (PHI). This information is used to perform credit checks, drug tests, criminal background checks, and generally to ensure that the individual being licensed is beyond reproach.

 

The individual submitting this sensitive information has no visibility or control into who views the information, or where it is stored. Compounding this is the requirement to submit near identical data to hundreds of jurisdictions worldwide. In additional to the potential loss of privacy to the individual, the regulators are burdened with securing and protecting access to the data, in accordance with their own privacy laws and regulations.

 

CEOCFO: Where does Hypatia Technologies come in?

Mr. Toohey: We are building a platform that leverages core Blockchain and strong crypto technologies. We can guarantee that if you, for example, need to send a set of supporting documents to a regulator, those documents are encrypted using a public key from the regulator, the regulators have permission to decrypt the documents but once the regulator has looked at your documents and has passed or certified the documents, they are re-encrypted again with a shared secret key. The owner of the data gets the keep one part of that key. Anytime going forward if an employee of a regulator wants to look at the documents again, the employee of the company or the owner of the data will get a notification on their mobile device and they will have to grant permission, so the control is given back to the owner of the documents.

 

Because we are on a Permissioned Blockchain, all of the regulators in the Hypatia network, will get a view of all of the certified documents from the Blockchain. They do not actually get to see inside the document without getting permission but they get to see that a certain regulator in one space has certified data such as a valid driverís license and they will accept that certification without asking you to resubmit a driverís license. This approached ensure the privacy of the dataís owner and at the same time, can relieve regulators of the requirements for the safe and secure storage of data.

 

CEOCFO: Are the regulators in general familiar with blockchain , are there concerns and how does that fit in with approaching regulators?

Mr. Toohey: The short answer is no they are not. It would be a mistake to approach regulators, at least at this stage and present them a Blockchain based solution for some problem they may or may not have. Regulators are often government employees and they are not really looking for leading-edge technologies. One thing they do understand is security and privacy, so our approach is to talk about how secure our system is and closely controlled access to all the data is guaranteed by the system. We discuss how we reduce friction within their processes by allowing data to be shared among different regulators and allow them to certify more and more people, which at the end of the day for most regulators often means increasing the tax base for a given jurisdiction. We are speeding up the process that they use today and at the same time, making it more secure and then guaranteeing the privacy of the individuals involved.

 

Ms. Duncan: There is this hype cycle around Blockchain and regulators are starting to ask questions about how blockchain would affect our industry and if there is any benefit. For example, John is the keynote speaker at two gaming conferences that are coming up for regulators where he is just talking about Blockchain technology and what that might mean to their industry.

 

CEOCFO: I understand you are a new company, what is your timetable?

Mr. Toohey: We are currently building the platform but with any startup, especially technology startups, many things need to happen in parallel. I evangelize as much as possible to potential customers and potential users of our products. One of the reasons we picked Real Money Gaming to begin with, is that we have a large network of vendors, regulators, and individuals who are in that industry that we can reach out to and evangelize the product. We have developers working on the project to lead the platform and of course the normal fun stuff of chasing money like any technology startup. We are closing our Seed round this week.

 

CEOCFO: What are the biggest challenges in the technology side in creating the system that you would like to present?

Mr. Toohey: The challenges are separating the current hype around Blockchain from the actual practical applications. Not every business process needs Blockchain technology. In general, a public Blockchain, from a transactional point of view can be extremely slow and unwieldy. It is difficult to search a Blockchain. There are many applications that need to be built on top of a Blockchain to make them more manageable. At Hypatia, we added a Search Engine, a Query Engine and a Rules Engine to implement business logic.

 

Right now there is this idea that many use cases can be solved with a Blockchain and that is certainly not true. In fact, most of the problems that I see a lot of companies using a Blockchain for would be far better solved just using a shared central database. I think there is a shake-up coming to the overall industry. We already see companies in the FinTech industry moving away from the Blockchain into distributed ledgers with different applications built on-top of that. There is starting to become a realization that the Crypto Currencies, such as Bitcoin and ZCash, are separate from a lot of the things Blockchain startups are trying to do. We are simply leveraging the underlying technology that drives and enables the Crypto Currency platforms.

 

Ms. Duncan: The other challenge is we are integrating with the blockchain which is a new technology and we are doing strong encryption in security, some of the cutting-edge technology and finding resources is a challenge, especially qualified resources that can jump in and provide immediate value.

 

CEOCFO: How do licensee concerns come into play?

Mr. Toohey: In the last four or five years for example, the notion of data privacy has become more and more fixated in peopleís minds so  whether it was Target being breached and losing all the credit card numbers and email addresses, to some of the banks being hacked. People these days are used to getting new debit cards from their bank with literally no explanation as to why they need a new card and they are starting to realize that their information has been compromised somewhere in the bank supply chain. People are more and more aware of the need for security around their personal information and are becoming more insistent on controlling access to this information. Increasingly, people are becoming more aware of just how valuable their personal data really is. It is not just a social security number getting hacked; your email address can be linked to what you view on Netflix which can be linked to stuff you post on Facebook. Profiles can and are being built about individuals based on all the data we supply into this thing we call the net. Security is a hard problem. Regulators are becoming more focused on this issue also, both from a customer service perspective and from a regulatory perspective. Hypatiaís focus on Zero Knowledge Privacy and security makes it ideally placed to meet the concerns of both individuals and regulators.

 

Ms. Duncan: We have been speaking to some of the licensees and we have some stories where a licensee is licensed by over 300 jurisdictions and randomly chosen to do drug screening from all 300 jurisdictions throughout the year. They might do fifteen drug screens in a year, which is insanity. Our platform integrates with the drug screening company directly and then shares that information with the other jurisdictions you are licensed in so that your requirement for doing random drug screenings are leveraged across the 300 jurisdictions. It is the same with credit reporting and the destruction of the information. We had one individual we spoke to that runs a large company and his information was inappropriately disposed of and then his information for his entire family was made public and he had issues with identity for his entire family that was part of the application process.

 

CEOCFO: Does the investment community understand and is there an aha moment when you are telling your story?

Mr. Toohey: In the sense that we have a general use case which is given a regulated environment, where people have to submit personal information and it has to be shared among different regulators, our platform provides a solid solution for that. We also have a specific use case where we are working with regulators right now around being licensed for a gaming environment like New Jersey, Nevada, Washington State or New York State. They do start to understand that people have to submit a lot of this information. Fundamentally, the idea of granting secure, safe and time-limited access to personal data to a regulator or outside agency resonates with them.  

 

CEOCFO: What is the competitive landscape?

Mr. Toohey: The ones that I have seen so far are similar to us in the sense that they picked a market segment that they are familiar with and then they are building upon it to meet the requirements of that market. We are very much influenced by Peter Thiel when he said a key goal for a startup is to try to become a monopoly. Competition is the antithesis to capitalism because if you have to compete you will compete on prices and resources and at the end everybody loses. By taking the Real Money Gaming environment in North America and Europe to begin with we are hoping to establish a monopoly in that space. In addition to the technology edge that we have, we also have a lot of connections with regulators and we understand the process. I have gone through the licensing process myself and I know how invasive it can be so we are trying to monopolize one particular market and once we have done that, we can start to pivot towards more open markets in healthcare and supply chain management. Then we will be able to leverage our experience and the solid platform that we built for this one particular sector.

 

CEOCFO: Final thoughts?

Mr. Toohey: This is an exciting time for technology, Private and Public BlockChain solutions promise to solve difficult problems across a broad swatch of industries, from financial services, supply chain management, healthcare, asset tracking and provenance, and beyond. Itís being called Web 3.0, and it has the attention of every major vendor, supplier and even national governments. But itís important to not be caught up in the hype, and dig deep into what Blockchain is, and what itís not. When you have a core requirement for an application that enables the secure, safe sharing of data between non-trusting entities, and one that requires all these entities to be in agreement about the data, then a Blockchain may be the solution. Otherwise a shared cloud based database may be a better answer.



 

ďBut itís important to not be caught up in the hype, and dig deep into what Blockchain is, and what its not. When you have a core requirement for an application that enables the secure, safe sharing of data between non-trusting entities, and one that requires all these entities to be in agreement about the data, then a Blockchain may be the solution. Otherwise a shared cloud based database may be a better answer.Ē- John P. Toohey


 

Hypatia Technologies

https://hypatia-tech.com/



 


 

 



 

 


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