By Michael Scott
Andre De Castro will admit to being “no holds barred” with his views. In a recent phone conversation, he let loose with an unencumbered flow of thoughts about the blockchain and all things related. But in the end, his unloading seemed to make sense.
He is an obvious contrarian — in many ways a lone voice amid all of the media hype around topics such as the Internet of Things (IoT), Ethereum and the a Bitcoin hard fork.
“Why aren’t people talking honestly about these things?” he asked. “I always seem to be the one talking about the stuff that others don’t want to talk about.”
So who is Andre De Castro? He is the CEO and founder of Blockchain of Things, Inc, a company that creates enterprise-class security infrastructure software by leveraging the cryptographic blockchain for the Industrial Internet of Things. Catenis Enterprise, the company’s flagship product, can be used to empower devices, systems and applications worldwide, making it easy to utilize the power of blockchains to enable peer-to-peer communication, governance, chain of custody and reliable messaging, all with military-grade encryption and security.
De Castro’s evolution into the world of blockchains and digital network connections is an interesting one. He said that several months after the 2008 financial collapse, he began to hear about Bitcoin. This curiosity led to his eventual involvement with cryptocurrency communities like Satoshi Square and the Bitcoin Center.
It was also around this time that he started an application called eCoinCashier, an ATM that one could carry in their pocket. He started connecting with individuals and quickly learned about the emerging regulatory environment for the Bitcoin/blockchain space. Recognizing that this highly regulated space was fraught with a lack of clarity, he set out to request a ruling from the FinCin regulatory body on several key elements critical to digital currency’s advancement.
“Most people get an expensive attorney to do these things but I’m an engineer,” said De Castro, with a wry chuckle. “I try to engineer around what I understand and what I hear.”
A 2014 administrative ruling De Castro received on software development and investment activities is largely credited with creating new avenues for corporations and startups to facilitate U.S.-based cryptocurrency activity.
“That ruling allowed me to buy and sell bitcoin with the Fed’s blessings,” he said. “It was very unique for me to get this ruling. Law firms in fact come up to me often and ask how the heck I was able to convince FinCin to allow me to do this.”
Having come from the world of enterprise software, De Castro began building a prototype of an idea using the blockchain as an information storage vehicle for points of control. That’s when a profound moment of truth set in.
“I started realizing that the prevailing IoT model as it currently exists was not going to work,” he said. “I kept ranting about the fact that it doesn’t work and won’t work because of significant point of failure issues. And no one has been listening to me. I’ve been speaking to deaf ears for about three years now.”
Ears began to perk up regarding his message when, on October 22nd of 2016, a DNS attack brought down the internet in the United States. And then a week later Johnson and Johnson had to come clean with the fact that the insulin pumps embedded in millions of humans walking around in the U.S. could be hacked due to a central point of failure.
Amazon Web Service’s (AWS) failure in February of this year was the icing on the cake, said De Castro.
“There are multiple layers to these sorts of problems,” he said. “That’s what I’ve been trying to tell people. In reality, there is nothing mysterious about the cloud. But some people think it’s magical and is going to protect things. But as we experienced recently with AWS, that simply is not true.”
De Castro said that these issues were the catalyst behind his decision to build a new infrastructure known as the Blockchain of Things that would offer a fresh approach.
“I put together a prototype and recruited two of my friends who are Bitcoin/blockchain engineers to start hacking up code,” he said. “We started testing things and began to understand why large corporations weren’t making significant advancements with the blockchain.”
He said that what they have created is not a separate blockchain but rather a Blockchain of Things, a layer two technology on top of the Bitcoin blockchain.
“I like to say that it is only production-useful blockchain in the world,” De Castro said. “Everything else in my opinion is smoke and mirrors.”
But Isn’t Ethereum the Answer?
There has been a ton of media buzz about Ethereum, the decentralized, blockchain-centric platform that runs smart contracts and applications as programmed without any downtime, censorship, fraud or third party interference. De Castro, in his normal “let’s put it out there” approach, had plenty to say about this notion.
“I think the Ethereum vision is beautiful,” he said. “My engineering team and I spent two and a half months assessing all of the excitement around Ethereum, thinking we might integrate it into what we were doing. That’s when we realized that the Ethereum architecture doesn’t work. Nothing about that system is functional for production. It’s first generation code, the architecture is just difficult at best. So no real company in their right mind would use it for production.”
De Castro labeled Ethereum as a fantastic promise with one primary thing going for it: that it’s a global computer that no outside authority can take down or alter.
“There’s nothing wrong with that,” De Castro said. “I mean, kudos to the Ethereum team. They are killing themselves trying to build something that will be incredible. Their vision is fantastic. But there is today’s reality and tomorrow’s promise. Those are two different things.”
The Ultimate Challenge
The quest that De Castro and his team have been on involves creating a system akin to a Bitcoin address on one end and another Bitcoin address on the other, allowing seamless communication between the devices in a fast and secure way.
“I kept scratching my head and it came crystal clear to me that Bitcoin has perfect security at its point of origin but not at the point of destination,” De Castro said. “I began thinking three years ago about how I might turn Bitcoin on its head and protect the point of destination. That, I thought, would be the perfect, peer-to-peer network that could be piggybacked off of. But what an engineering challenge.”
In solving this knotty problem, De Castro had to quickly clarify some misconceptions around encryption.
“Bitcoin doesn’t encrypt anything,” he said. “Sure it uses cryptography, but at the end of the day it’s an open ledger.”
So as a part of the Catenis model, De Castro and his team added encryption via the public/private key pairs endpoints. This provided them with the ability to protect and permission every endpoint on the Bitcoin network through their layer two technology. As a result, enterprises are able to send a transaction from one end to another as securely as possible.
De Castro said that another myth he had to overcome is that transactions on the blockchain are slow.
“Are you kidding me?” he asked. “Bitcoin transactions on average across 55 percent of the network occur at 400 milliseconds. The only reason why we wait for confirmations in the Bitcoin world is because of counterparty risk.”
“People who say there is a limit of seven transactions per second don’t know how the blockchain really works,” De Castro continued. “They fail to separate the difference between sending a transaction and getting that transaction added to the blockchain.
At the end of the day, De Castro said that his work with the Blockchain of Things and Catenis doesn’t involve a cryptocurrency. He said that the encoding they use is simply a means of enhancing the input/output of the Bitcoin system without any cryptocurrency value attached to the transaction.
“Our focus is on value — whatever that might be — transacted in real time,” he said. “The Catenis platform allows major businesses to place endpoints on all of their computers and devices that are cryptographically verified on both ends. This is what I call the Mercedes Benz of messaging, a real world application. Anything else is simply not reality in the world of enterprise.”