Interview with Rick Schmitz from LTO Network
I had the pleasure of having lunch with Rick Schmitz from LTO Network at his office in Amsterdam after a mutual contact (Severin) introduced us to each other and we discussed both our businesses. Rick came across as a very knowledgable and entrepreneurial person. Here's a brief summary of our conversation.
Please tell me a bit more about yourself and, more importantly, how the idea about creating your own blockchain based project has begun?
I used to work as an M&A tax lawyer up to 2013 at PWC. Starting with our blockchain was not something that happened after a couple of drinks with friends, it was a journey that already begun in 2014. Arnold pointed me on a cool project (Ethereum) were they introduced smart contracts. For the purpose were we wanted to use it for back then it wasn't suited, so we decided to build our own deterministic workflow engine. We started to sell this workflow engine as a SaaS to companies as a centralized solution. We had implemented anchoring of data implemented already in 2016 to secure data integrity going around on the platform. We used the bitcoin blockchain back then.
The reason to start our own dedicated blockchain solution was winning the hackathon challenge from the Dutch Ministry of Justice back in 2017. The challenge was to speed up the process of an impoundment of a vehicle. Multiple actors using different systems needed to work together on the same process. Our workflow engine was perfect for this as it was based on a deterministic finite state machine technique. We modified the workflow engine in such a way it was possible to communicate the state change in the respective process to the other participant in the process. These actors didn't need to wait for an email, phone call or fax that a step was executed, they could all calculate it themselves on their own nodes.
This was unlocking a whole new level of efficiency that could change the way organizations and governments work together on repetitive processes. Then we decided to take this to the next level by adding also a public chain layer (as bitcoin was too slow and expensive) to secure the data transactions taking place in those private workflows.
Is this your first project or do you already have experiences from previous startups, projects or corporation we could hear about?
This is definitely not my first venture. I started lensdeal.nl, a website for online contacts in 2011. Sold that in 2016.
In 2012/2013 I started FIRM24.com, as a platform for entrepreneurs to incorporate entities. About 15% of all corporate notary work in the Netherlands flows through this platform. This company is still owned by me and my business partner. I became a passive shareholder there in 2016 to focus solely on the software branch (LTO Network).
How many years are you assuming that it will take for blockchain to become fully adopted in the ordinary life of everyday people?
If you notice blockchain, it's bad. Blockchain is nothing more than a technique which can be used to reduce friction and make things more efficient. This underlying technology is already being implemented in businesses today. Currently in smaller scales, but I've seen things moving to production phase already. Users won't even know they are using blockchain. I think in 2/3 years from now that the majority (more than 50%) of the large organizations have implemented blockchain in their day to day operational systems.
What helps for adoption are the tech giants (like Facebook with Whatsapp messenger) breaking the barriers. It might not be the best fit for the narrative of decentralization, but as a company we need to think in terms of making what users need, and not just build stuff we like.
How long have you been interested in blockchain technology and when did you enter into crypto yourself?
In December 2014 I was shown the ethereum project. I remember my business partner saying: "hey let's set up a node and purchase ETH for 1000 EUR to run these smart contracts to see if its useful for us". I said: "Do the research first and when you think we can use this technique let's set up a node and buy some ETH". He came back with the conclusion that smart contracts were not useful for anything except for holding and transferring something of value. Great for things like ICO's but that's about it. So we pulled the plug on Ethereum, didn't purchase EUR 1000 in ETH when it was almost free.
My first bitcoin I purchased was in 2016. So quite late to the party. The developers were in way earlier.
How would you introduce the concept to people who have not heard of LTO Network before?
LTO Network dual-layer approach enables collaborations between multiple organizations and departments via our decentralized workflows engine, where parties can keep using their own (legacy) systems to participate in a process while securing every data transaction in the LTO Network public chain.
What makes LTO unique?
We have the only permissionless private blockchain(s). You can start as a centralized workflow solution but can decide to decentralize the workflow by inviting other organizations on the respective workflow. This party can decide for themselves if they want to participate via the node of the invitee or to spin up their own node to communicate on the process. Permissions to participate as an actor are orchestrated in the workflow itself, and not by the network. This allows for ad hoc collaborations, which are happening all the time in the real world. Just to give you an example. What is a trucking company goes bankrupt the day that you need to ship your waste from A to B. If you would use hyperledger or another permissioned private chain, you would have a problem, as you would need to ask permission to join. And the bigger the consortium, the more bureaucratic and time consuming that process takes. We solved that to allow ad hoc collaborations on the fly. No other chain is designed like this.
Other unique selling points:
Parties can delete private chains to comply with GDPR (right to be forgotten) regulation.
Layer 1 is dedicated to anchoring so light weight and cost efficient to secure data transactions.
The hybridness of the network: It allows for both on-chain and off chain communication
What does future hold for LTO? Where do you see LTO Network in about a year?
Network adoption is key! We are a development toolkit and it must be used!
There are going to be a handful of fabrics that are there to stay that will work together and dominate the blockchain landscape. For decentralized workflows, we believe that we are the strongest player.
Our strategy is to start with low entry blockchain adoption. That is securing data transactions through anchoring on our layer 1. Our target is 15M transactions/month year end 2019.
Next phase will be certification. Introduction of certificates to check if any action or event is valid or allow to execute something. Think of permits needed for construction, transportation, shipping, ISO, CE, chamber of commerce data, etc). Our target is 5 production ready implementations year end 2019.
When you use certificates on a chain it is a small step to execute decentralized workflows to enable inter-organizational collaboration.
We focus on integrators that implement our tools and offer them an enterprise edition that provides them with plug & play integrations and extra features like Proxy re-encryption, Elastic scaling, and Search & indexing.
What have you learned this year so far that will be game changing in the next year?
That there are a lot of people that I have never met before that are willing to get the project to the next level in terms of setting up nodes, building stuff for the network and bringing us new leads to clients. We are investing in exactly these people as these are causing the snowball effect which is key for adoption. Talking about nodes, setting up a node is really easy. Here's a great write-up on how to do it yourself: https://medium.com/@stefan0000/lto-network-mining-in-5-steps-a492305c84ea