Blockchain: It’s Like, This Thing

Blockchain: It’s Like, This Thing

The Money 2020 Blockchain Industry Primer was released on Friday, October 27, 2017, compiled by two research analysts from Credit Suisse. They attended eight blockchain-related panels at the Money 2020 Conference held in Las Vegas, the week of October 22, 2017. The primer summarizes the state – and the potential – of blockchain technology, as envisioned by a collection of industry experts. It confirmed that blockchain truly is in a state of post Big Bang congealing, ranking high on the energy meter, but not yet firm enough to stand on.

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Chief among the writers’ findings was the potential for blockchain technology to disrupt a wide range of enterprises, due largely to its primary advantage: censorship resistance. In other words, by having no single authority or governing body, it is able to remain neutral and free.

However, the report also highlights the potential for existing data systems to win out, at least temporarily, due to their established protocols of security and speed, their scalability, and overall cost effectiveness (cheaper to run).

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The slow verification process of transactions has long been a sticking point for financial organizations looking to leverage the centerless blockchain system. At this point, blockchain is not close to the thousands of verifications per seconds available through a standard credit card processor.

The speakers who presented at the conference paint a picture in which different players on the blockchain chessboard stand poised to excel in specific areas – Ethereum for computing and FileCoin for storage, for example. One could add to this pile, Ripple for smart contracts; a range of specialist applications, each vying to deliver a better, more dynamic solution.

High on the agenda is ICOs, the enfant terrible of the cryptocurrency business. The ICO concept straddles the border between innovative crowdsourcing of new startups on one side, and “rife for fraud, theft and general mismanagement” on the other. Hundreds of ICOs appear each day, and regulators across the world are at a loss in terms of keeping up. Governments and financial authorities like those in China have come out strongly against ICOs, whole most other countries struggle to keep pace with the sophistication and the international distribution of the companies and the investors. Yet the experts at the Money 2020 conference point out that the ICO business is also maturing quickly, with more mature business models and more complete governance and vetting processes.

So, as of late 2017, it appears that blockchain technology is a thing, but what kind of thing is yet to be seen.  Experts speaking at other conferences, as well as on podcasts and in other forms of media, tend to agree that the biggest industries, like banking, are taking the technology very seriously, seeing it as both a threat and a new and powerful tool, either way a disruptor to their current mode of operation. They have much to gain in building their proprietary blockchains for transaction clearing and money transfer, but just like the concept of cloud that came along a few years before the blockchain explosion, issues regarding public and private, security, cost and scalability, need to be resolved before full deployment occurs.

Money 2020 Conference - Wide Consensus on poor Govt regulation of industry

Perhaps the most troubling news that these types of experts can bring out in conferences like these is the gross inequity in preparedness that is already showing itself between countries, even before blockchain’s formal arrival. Speaking on the topic of regulation, Money 2020 speakers from Stanford University, Citigroup, and elsewhere, pointed out that “the US government is viewed as woefully behind other regions of the world in addressing this emerging industry. Neither congress nor regulatory agencies (CFTC, SEC, FINCEN, IRS) have provided comprehensive guidance and/or regulations related to how they will treat cryptocurrencies...The SEC has issued reports on individual ICOs, but has not provide [sic] a clear framework.”

It is often said that every war is fought using the techniques of the previous war, and similarly, when countries or governments permit themselves to approach 21st century cyber-economics with the slow and careful diligence of the pre-internet marketplace, they will find themselves eating the dust of entrepreneurs and entrepreneurially-minded countries and cities in any other region of the globe. Just as a for-instance pop quiz, how many times has Vitalik Buterin met with our current president? How many times has he met with Mr. Putin?

The Credit Suisse Blockchain report serves as a good end-of-term report card for a technology that is advancing in leaps and bounds, but is currently doing so in separate pockets – individual companies, large, small, old, and new, running pilot projects and testing the waters in relative isolation.

What is certain, however, is that the next Money 2020 Conferences scheduled for March, June and November, 2018 will not be duplicates of the Las Vegas session. Though they are just months away, the blockchain world moves much too quickly for that.

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