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Keir Finlow-Bates - A Non-Fungible Future

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Keir Finlow-Bates is the author of "Move Over Brokers: Here Comes The Blockchain" (, the founder of Chainfrog Limit (one of Finland's earliest blockchain startups), and a prolific inventor of blockchain technologies with 43 patents to his name.

Becoming interested in blockchain in late 2009, he has researched it full-time from 2016 onwards. Before that most of his 20-year career was spent as a software test engineer and manager, with a few short stints as a mathematics lecturer and a technical writer.

Keir lives in Finland with his Finnish wife and eight children, none of whom have left home yet.

You can find a collection of his short videos on blockchain concepts at his YouTube channel ( if you want to learn more, and he regularly posts articles and thoughts on LinkedIn (

Transcript (Semi-automated, forgive typos!)

John: Keir, welcome to the show.

Keir: Well, thank you for having me.

John: Oh, it's really a pleasure. You're a kindred spirit, for sure. You're actually a fellow mathematician so that's one of the many things I like about you. Okay, so let's talk a little bit about your background and how it is that you started to work in the blockchain space and then especially the NFT space. The reason that I asked you to be on the show today is that many of our clients are becoming curious about NFT's. They think there's a chance for increasing consumer engagement so you can kind of take us through your journey to discovering this area, I think would be great.

Keir: Right. Okay. Well, I guess it starts for me in 2010, which is when somebody gave me a copy of Satoshi Nakamoto's white paper on Bitcoin. At the time I was test manager for satellite navigation software company. In fact, we were working on mobile phone satellite navigation, and I always had an interest in cryptography in particular. Back in the late 90s, I'd worked as a security tester, so that really grabbed me. Unfortunately, I didn't go and buy lots of cheap Bitcoin, which is why I'm still working. But I did spend a lot of time digging through the source code, reading up about it and fell down the usual rabbit hole that blockchain people do which is learning about economics and things like that and what money actually is and what value is there's a whole psychology and sociology involved, too. So that was kind of the start. And then we had a lot of layoffs with the company I was working with in 2015 and at that point, I thought, do I want another job in another big company? And I thought I'll strike out on my own and Blockchain seemed to be the logical thing to go for.

John: Right.

Keir: Since then, I've just done what I can to keep up. Now, blockchain has become so big that you can't know everything. The nice thing was that about six, seven years ago, you could have an overview of the whole space and the last year, I'd say probably about half my attention has been on NFTs. So that's become a big issue.

John: Okay. That's great. Maybe you could introduce the topic for our audience. Could you kind of give an overview of how would you explain NFT's to somebody who really isn't that knowledgeable about the space?

Keir: Well, you can kind of come at them from two angles. You can come at them from the technical side and I do think that's worth having a bit of an understanding about and then you can cover them from the use case side, which is probably what most of the audience is actually going to be more interested in. And so I'll actually come to that second because you've got to get have a technical education wherever you can. What an NFT actually is, it is literally an entry in a ledger saying this person owns this entry, and then there's usually a point at the onto it saying, and if you follow this pointer, you'll find a file. And it really does boil down to something as simple as that. Blockchains work as ledgers that keep track of who owns what and the extra thing that they offer is that you control. When you're written down in the ledger as being the owner of something, you actually are the owner of that record as well. So it's like a database where only the owner of a particular record can change it subject to certain limitations. And the main change you can make is the owner of a record is changing the ownership to someone else. And that's kind of what ownership is really. When you own something, you control it. And if you hand it off to somebody else and they become the new owner, they now control it, and you don't. That, technically speaking, is what an NFT is. It's a record on a blockchain ledger saying that somebody owns something and they can then decide either to hold onto it or they can transfer the ownership to somebody else.

John: Right. I never thought about this that ownership is a social construct. That the idea there are things that people own them. That's really just true by agreement that a group of people agree that we are going to respect some way of keeping track of who owns what?

Keir: Yeah. There are actually different levels. The fact is, if you've got a pocket knife, right? And it's in your pocket, you own it by virtue of the fact that somebody would have to actually stick their hand in your pocket and steal it from you. So there are some basic things that you can own in a way that someone from prehistoric times would understand. This is my spare, because I'm holding onto it.

John: Right.

Keir: It gets a bit more complicated when you start moving on to possessions that you can't conveniently carry around in your pocket or as an earring on your ear or something like that. Then we have to start keeping track of who owns them through other means. For example, land. You know it is very inconvenient. You can't carry it around, and you don't want to have to post an army around it to defend it. And in a civilization, we have a concept of a land registry that says here's a list of the plots of land and here are the people who own them. And then if you sell your land, what happens is that your name is struck off the entry and the new owner's name is put on. But you have to go to the land registry and actually ask them to do that. And this is where blockchain becomes different because it kind of acts like a land registry. In that respect, it's a ledger. But you don't have to go to this administrator or this official or this bureaucrat and request that it be changed. You as the owner of that entry are the person who can change it. And this is really significant because it means you can't sensor transactions. Imagine, back to this hypothetical land registry. I'm living in a horrible country where they won't allow people who aren't citizens or who aren't of the race of the people who live there to own land, then the authorities can sense certain transactions. They can say, well, you're trying to sell your land to somebody who we don't like. We're not going to recognize that transaction request. Now, with the blockchain, they can't stop you. If you are the owner of a record on a blockchain, then that means you have the ability to change that, and nobody can stop you as long as you pay the transaction fees. As long as the change that you're trying to make reflects the underlying rules of the blockchain. And most blockchains have very liberal rules when it comes to what kind of transactions are and are not allowed.

John: Okay, that's fascinating, because that is a question I often get as soon as you say a blockchain is a kind of database, people say, well, what's the difference between that? And say, a database that lives on a Google server, right?

Keir: Yeah and the answer is that if it's a database living on a Google server being run by some company, then it's the admin of that company who ultimately has control over what changes can be made to the database, and you can make a request that your name be corrected if there's a spelling mistake or that some item in a game that's being represented on the database be transferred to somebody else. It is up to the company whether they want to respect that request or not. And the evidence is that it's not about any kind of sense of fairness. It's about economics. So if the company doesn't think it makes economic sense for them to make the change, they won't do it.

John: Right. That's fascinating. Okay, that's why I do this podcast, because honestly, I had always kind of thought about the fact that the database is controlled by a company means if a company goes out of business, the database may be gone. Right? And so you have your ownership. I mean, that is also a fact that the ownership may be more durable on a blockchain. But I haven't really fully grabbed this idea. The reassignment of ownership. Obviously, I'm familiar with Bitcoin and the idea of permission less economy, but yeah, that's fascinating. Alright, Keir, well, thank you very much for that point, because I think that's a deep point.

Keir: It does mean that you have to start thinking about ownership in a way that most people don't. I mean, this is one of the great things about blockchain. People think they understand money. For example, they understand it in the practical street sense of I've got dollar bills, and I want a sandwich. People generally don't have a clear understanding as to where it comes from, who's in control of it, what its limitations are. And when you start looking at cryptocurrency and you start digging in, you discover that actually economics is like religion. You have groups of people who have different beliefs about how economics works or should work, and they're all arguing with each other, and none of them can really prove that they have the right story. Then the question becomes one of which one gives you the most control in which circumstance. Government may favor a certain type of economics and a bunch of libertarian anarchists may prefer a different economic theory, and it's the same with ownership. It's something people don't think about. Kids have a basic understanding. If you've ever looked at a couple of three year old's fighting over a block, they have a sense that is mine. The word mine is a word that children learn surprisingly young age.

John: Yes. My 2-year old is a big fan of that word.

Keir: Right. Yeah, but when you actually think about what does mine mean? What does it mean for this object or this thing to be mine? Then it gets complicated. And when you start thinking about abstract entities, what does it mean for a mathematical theorem to be mine or an invention concept to be mine or a tune to be mine? And yet we do accord ownership in different ways for these different abstract things. So NFTs are another abstraction instantiated in a computer but you can't point into the computer or the network and say that's where the NFT is and now I'm going to grab it and hand it over. So it's fascinating stuff.

John: Yeah. Truly fascinating. Let's talk about some use cases. We should also define NFT means nonfungible token. Maybe people on the show who are listening to the show aren't aware of that and the idea there maybe just talk a little bit. It's got to be the world's worst name for something.

Keir: Well, actually, it's funny because people struggle with the term nonfungible, and yet it's simpler than the opposite which is fungible.

John: Right.

Keir: It's a sort of historical quirk that we actually started with cryptocurrencies, which are fungible. The idea being that, for example, the dollar is kind of fungible because you don't really care when someone repays you a ten dollar debt, whether they do it with this bank note or that one, as long as it's not a fake or something, where the serial numbers are recorded as being involved in a bank theft. Apart from that one $10 bill is pretty much like the next. And we call that fungible. And then at the other extreme, you have things that are nonfungible, which is only one, and it's unique. So, for example, a painting by Picasso is the classic example that's given. It's that painting and if you lend someone your Picasso and they return you Mondrian, you're not going to be happy because you want your Picasso back. You wouldn't be happy if you lent a Museum an artwork, and then they returned some other artwork and said, yeah, it's worth about the same. So paintings are nonfungible and the other thing is, you can't subdivide them. If they return you two halves of your Picasso rather than the whole thing. Again, somehow the value is lost. But another way of looking at it is that a nonfungible token is actually a fungible token, but there's only one. If you think about Bitcoin, there can only ever be 21 million bitcoins. Imagine if you issued a new kind of Bitcoin, but you only issued one and said that's the cap on the supply. There can't be more than one and also will not make them divisible. Bitcoins are divisible down to I think it's 18 decimal places or ten. I can't remember...

John: It's 100 million. I think, is the smallest 100 million Satoshis. I think that one Satoshi is the smallest unit.

Keir: That's right. In fact, we talk about bitcoins. They're just a construct. When you're working on the blockchain on the Bitcoin blockchain, everything is done in Satoshi, and you can't subdivide it to Satoshi. So if you issue one Satoshi on your Bitcoin clone and no more that Satoshi would be a nonfungible token.

John: Right.

Keir: Now, the other thing about a nonfungible token is in the current implementation. We add something to it called a pointer. So if you think back to it being a row in a ledger so the owner is one field in that row, then you can have as many rows as you like if you're inventing your own ledger. You could have owner and you could add other things like maybe the date it was created on and things like that, although you probably wouldn't bother because that's actually tracked for you on the blockchain because they are timestamped everything that happens on them. It's like a web address. It's a point and it says if you go to this address, you will find a file there. That's the NFT on the blockchain. But when you start talking about the bigger NFT, you say, right, well, I'm interested in actually seeing what that pointer is and going to the file and retrieving it and looking inside it. When you do that, you can have your NFT on the blockchain pointing to a JPEG directly, or you could have it pointing to a web page or a text file or a sound file. But what they actually do is they make it point to something called a metadata file, which is a text file that contains lots of information in both computer and human readable form.

John: Right.

Keir: So now you have your NFT. You own it and it has this web address, and when you follow the web address, you end up with a page on your screen and it gives you a whole bunch of information. And what that information is really up to the individual NFT creator, what they want it to be, right? Typically, we'll give it a name and a description, and we'll have an image information in there which is maybe a web point to an image file and whatever else you want to do. If you're using it for a game, maybe you'll put some statistics in there, but it's a sword and it's magical and it's plus three, and it only works at nighttime or something like that, but it's totally free. You can't decide as the individual implementer of a particular family of NFTs, exactly what information you want to provide.

John: Right. These are the kinds of properties in some sense, but this is fascinating because I think that there's a lot of talk about the Metaverse these days. It's almost cliché, and it's a shame that Facebook was allowed to claim that term for themselves. It's like if Google renamed themselves Internet or something. Anyway, that's his own topic. But fungibility, you're talking about paintings, but even just in real life, like regular people, my car is nonfungible. If I go to a valet and I give them my car and they come back with even the same make and model and year but it's not my car. It's going to be a problem. Right? So I think that nonfungibility is one of the key properties of the physical world to a larger when we live our lives. Many of the ways we interact with the world depend on nonfungibility and that's why I think it's such an important concept.

Keir: Yeah. And the thing is, what you've hit on there is that actually non fungibility is the default. It's actually harder to think of things that are truly fungible. An example might be pure gold. One atom of gold is identical to the next one from what we can tell. If you have a kilo of pure gold unless it's been shaped into a statue or some jewelry or something like that. If you hand it over as a deposit and you get back a different gold ingot, as long as it's exactly the same weight that you should not be bothered about. People generally don't get emotionally attached to a specific bar of gold that they have. Unless, of course, it was owned by someone famous and they scratched their name into it. Bar of gold owned by some pop star you like, and they scratched the name in it, and then they handed it over and they didn't get the original back. Then if you got that bar, you'd want to keep it. But even things that you think of as being incredibly fungible can have these extra inherent properties attached to them. This is what happened with your car. When the cars were rolling off the assembly line. When you went to the dealership, if they had ten in a row, you wouldn't care which one you got, but maybe you wouldn't want the one that was near the window and had too much sunlight or something. I don't know. But basically ten cars, you don't say to the car manufacturer, I want Ford Mondeo number 3267 this year. You just say, I want it in this color and they just take one off a lot and give it. But after you have driven it out and it starts gathering the empty coffee cups and burger wrappers on your own Christmas tree thing decoration hanging in the window, suddenly it becomes yours and you get familiar with it. Wears down in a certain way. And now, indeed, if you hand it over, you want your original car back. It's become nonfungible through your user.

John: Yeah. Now, I think that's right. And that is the default setting. And that's why I think that digital. If somebody flip digital ownership digital scarcity, the non fungibility. So important, if we are going to have this merger of the physical and virtual world which is happening. I mean, we are right now in a kind of light Metaverse having this conversation. This is a relatively new thing that we can have this conversation. And then our listeners are going to listen to our conversation in their cars. That's already amazing advance. But if we're going to go fully into the merger, we're going to need to keep track of uniqueness or the nonfungibility because the way we expect to interact with the world depends on nonfungibility. I think evolutionarily, that's what we expect. We don't expect fungible. We expect nonfungible.

Keir: And indeed, the digital world has that issue that in fact, in the digital world, you can make copies of things very easily. And then suddenly you're looking back at something that is fungible. If I listen to an audio clip and I like it, and I right click save on it. I get an identical copy, and then I can hand that on. I can email that to people, and then they can share it and then suddenly, like a virus, there are thousands of copies of this MP3, and they're all identical and you can't actually tell which one was the original.

John: Yes, that's right.

Keir: And NFTs don't solve that issue. But what they can do is they can create this token that is unique and unclonable. And unfortunately, the tokens at the moment point to remember those pointers I mentioned these URLs or web addresses, they point to files that can be easily copied. So there's no sort of digital rights management built into the system. When you have your NFT and it points to a picture of a crypto punk or a silly looking monkey or something. The fact that other people can see that monkey too, and they can even copy it, and they can even put it as their profile picture. The only thing that is different is that you have this token that the creator of the monkey picture has effectively signed saying, yeah, I know it's not the monkey. I know it doesn't give you control over the monkey, but it's something that I created in association with the monkey picture, and you now own it. So that's what I think is going to be of interest to the brand companies.

John: Yes. So that leads us to things, actually, amazingly, we're starting to even get a little bit tight on time. So I want to make sure we definitely get to use cases. I could talk to you for hours. It would be very easy for me to talk to you for hours. This whole idea of ownership being a social construct, I think, is incredibly interesting. That it's something we just expect. Suppose you have a pocket knife and you put it on the table and I put it in my pocket and you say, hey, that's my pocket knife. Now you're into needing to bring the law. Like, if I want to give it back to you, at some point, you have a claim of ownership that has to be acknowledged in some socially recognized way in order to get your pocket knife back when the police show up, right? So that's I think where NFT is in the real world will also make a difference, because when trade starts to happen, you're going to have a lot more trading that's facilitated. And we've talked about some of the neo barter stuff that's coming. You'll need to settle disputes that if you agree to trade something with me, and you don't give it to me. But on the blockchain, it says the item that you still have is mine. I have a claim. It's not your shirt anymore. It's my shirt and you have it so give me my shirt back. Right? So anyway, let's not get too distracted because I really want to hear your thoughts on use cases for brands and how you see, we talked a little bit before the show about what I see as two big kind of cases, one being brands, creating clubs, basically through NFT collections. And then you also have the kind of resurrection of a lot of things that used to happen in the mainstream where there used to be collectable items that would be in cereal boxes or inside Pop tarts or whatever that's going to come back where now it'll be a QR code, and you'll get a collectible item. And many of the things that used to happen in the real world can now happen digitally supported by NFTs and digital scarcity. The thing you got in the Cracker Jack box, to some extent was kind of unique because there were a lot of them, but they were not infinitely many, and you couldn't just duplicate them. So I think those ideas are going to come back, but I really like to open it up and hear your thoughts about brands that are trying to interact with consumers. What are some of your thoughts on the use of NFTs?

Keir: Yeah. Well, I think the first thing is you've got to recognize that the up and coming generation have a different attitude towards digital objects than people of a more advanced age like myself so I found it funny.

John: By the way, you're like, 45 or something, 50? I don't know how old?

Keir: Yeah, I'm 50.

John: So you're not exactly old.

Keir: I was starting to get there, I think. But the thing is, I kind of found it funny in that somebody would want to have a digital token with no utility, but my kids, they're fantastic. So for me, it's kind of like if you're going to have a Pokémon card, it's got to be a sheet of cardboard, and they're like, no, I'm perfectly happy if I've got it on my phone and I can call it up, I don't care whether it's a piece of cardboard on my desk or an image that can pop up through the app on my phone. They mean the same to me so that's a shift. And it's one that I think using the older generation have some difficulty with because we kind of grew up with a different world. However, of course, my dad thought I was ridiculous for thinking that certain kinds of comics were collectibles the idea that a Superman comic or a Batman comic could be valued beyond the entertainment you got from reading it.

John: Right.

Keir: So I think it's that kind of shift so that's the first thing I think brands need to keep in mind is that the different groups are going to have different concepts of what is of value of not, and these things are being valued. I agree with you in the short term, this kind of idea of I have this NFT, and I can effectively use it as a way of identifying myself. It's kind of a thing that you have, and it's an interesting thing that you have to identify yourself because you can pass it on. In that sense, it's a bit like saying that whoever has Excalibur is King of England, right? I've got Excalibur and King, if I decide I don't want to be anymore, I can hand it on to someone else. So I think that kind of the idea of building online societies and clubs based on that idea is the first utility case beyond just the desire to own. And it's probably the easiest one. We've got lots of technical stuff we can draw on in terms of identity and access management and identification and stuff. And we've got some of the pieces coming together. Now where you can have a browser, you can have an inbuilt digital wallet. That wallet knows that you are the owner of a particular token so you go to a website, the website can check and then let you in on and it's as simple as that. It's like logging onto Facebook. But you've got to have the token, right? And I think indeed, that's the first step. Then there's an area that I don't think it's worth going into today, which is the digital twin idea where you take physical objects and you actually embed microchips, RFID Tags or something in them. Now you have a way of an object being able to identify itself to your phone, and then your phone can identify itself back to the object. But it's something I've not investigated in depth because I'm not really a hardware kind of a person, but I know that there's lots of people looking at that kind of thing.

John: Right. Sometimes they can be symbolic. We talk a little bit about, say, a brand like Patron. Maybe there are famous objects associated with the brand, and you can stamp the famous object with an NFT, sell the NFT. Now the owner is part of this club. They can get together with networking, they can attend events, they get privileges, but it's really just a symbolic ownership because Patron is not going to actually surrender the object.

Keir: And even if they do, this is one of the problems. How do you tie real world events to virtual world events? If I have an NFT that represents a pair of expensive sunglasses and I have the sunglasses, you can't force me to sell both at the same time. You can do it in the patent world, right? You've got these things called terminal disclaimers, where you say these two patents have to be sold together. If you don't sell them together, then the patent office won't support you. Won't enforce them but it requires a third party to ensure that kind of thing. When it comes to the physical world, you might be able to make something disable. You could have a watch and say that if you can't regularly prove that you own the NFT, then the watch stops working. But it does seem a bit contrived to me, but as I said, I think there are people working on various tricks and techniques you can use to tie real world and digital representations of them together. The next utility case would probably the one that I see as the logical next step is the games industry. The gaming industry is ten times bigger than movies, which is ten times bigger than music, which is ten times bigger than books. So games are huge. So a lot of money around there. Yeah. And I think the incumbents are not keen on opening up. They like the lock in that they have. I can't use V-Bucks in Roblox, and I can't use Roblox in Fortnite, and they kind of want to keep it that way because they want you to, it's like gift cards to a store. Stores love gift cards because they like money, but you can only spend them in the store, not in the competition store. That's one of the reasons why I don't hand out gift cards to people. But I think that the up and coming contenders to join the gaming space have something to gain by opening up their world and actually making their economies more Liberal and free market. And because you can create an object in one game and then another game designer can say, I'll let people use it in my game.

John: Exactly.

Keir: You found the rare ring in this game. When you enter my game, it'll work there too. Or maybe it'll be something different, but it'll be something there. And then these objects will actually have value. And you see people selling World of Warcraft accounts. For example, on eBay. You'll actually have a proper marketplace. And then there's all sorts of possibilities where you have these NFTs that represent objects in one game, and they now represent objects in another game, and they start amassing value. And the game designers discover that they can actually bake in royalties and make profits when these in game items are resold. So there's a business model for them because of importance to a small game designer that they do open up because it's quite possible that a game that eventually fades in interest, that the objects created in it actually live beyond the game.

John: Yes, that's right. And that's where the brands we're talking to are very interested in branded items, items within games.

Keir: Right.

John: That you could have articles of clothing, high fashion clothing within the game, the Versace, whatever it might be, and take it from one game to the next.

Keir: Right. Yeah. And people seem to like to be able to show off. Yes.

John: Ownership and showing off owners. Yeah.

Keir: Exactly. So being able to go into one of these worlds and say, yeah, my avatars clothes are actually genuine Armani. There are people to whom that would mean something, and they would be willing to pay premium to the Armani clothing company to be able to do that.

John: Yes.

Keir: My kids get obsessed with fortnite skins. Can I please have a thousand V-Bucks so I can buy this skin and does it help you play the game any better? Well, no. Does it give you any extra abilities? No. What does it do? It makes me look like a pirate to the other people in the game, and they think that's worth two weeks of pocket money so just imagine them when they're 30, they will quite probably be spending thousands. So that when they go into the virtual world, whether it's a metaverse or a game or whatever, they will spend money so that their avatar has a Rolex on his wrist.

John: Well, human nature is not going to change. We may be in a different format, but we'll still be humans with the same urge.

Keir: Yeah.

John: Well, Keir, this has been fantastic. I really wish maybe we can do another episode to go do a deeper dive into use cases because I really enjoyed talking to you. How can people get in touch with you? What would be a good way for them to reach out?

Keir: Well, the easiest way is through LinkedIn. That's what I'm on the most, and I have an absolutely unique name, Keir Finlow-Bates so you can just search for me and find me there and I accept any request I get.

John: Okay and we'll put all of your information in the show notes. So any last advice for audience? Advise for young researchers? What advice would you offer?

Keir: Gosh. That's a tricky one. I'd say just do what you get passionate about. It would probably be the easiest one. It's a problem. If you're going to go and do something like a PhD, you will discover, then in the middle of it, it gets tedious because it's four years. But apart from that, if you're a researcher, then research stuff that you enjoy that you're passionate about, because that gives you the energy to just get far ahead of the crowds. There's nothing worse than a disillusioned researcher.

John: I totally agree with that. You've got to follow your energy. I think it's really important. Okay, Keir, I really enjoy this. Thank you so much. It's been great.

Keir: You're welcome.

John: Okay, that's it. I hope you enjoyed this conversation. If you did, please help us grow our audience by telling your friend about AigoraCast and leaving us a positive review on iTunes. Thanks.


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