During a panel discussion at the recent ACT Cash Management Conference in London, experts weighed in on how blockchain technology could be a major disruptive force—for good or evil. Nevertheless, one thing was clear: whatever big change is coming, it’s not going to happen overnight.
Panelist John Rowland, executive director of Cicero compared blockchain to “the Force” in Star Wars—whether it’s used for good or evil depends on who is wielding it. He noted that people are still somewhat suspicious of bitcoin and by extension blockchain due to their association with nefarious or questionable practices (the Silk Road online black market, the Mt. Gox fiasco, etc.).
However, Rowland does see a lot of potential for blockchain. “I think it could improve a lot of pretty stodgy but very important things like clearing and settlement—things that people don’t really know or care much about as long as they work,” he said. “I think it will be disruptive, but I think the change will be incremental at least to start with. It takes time to embed new technologies. It will take a lot of time to bring people along and persuade them that blockchain is actually a reasonable solution.”
Clive Cooke, securities executive for R3, agreed that blockchain technology won’t simply change everything overnight. Nevertheless, he does see it changing things over time. Unfortunately, “there aren’t any experts out there right now that are going to tell you exactly how things are going to pan out,” he said.
Cooke sees blockchain particularly making changes to financial transactions. “When a transaction occurs, anyone associated with that trade—rather than keeping their own record—gets the record at the same time and nobody can change it. So it really is going to make a lot of difference and it’s going to be a big change,” he said.
Ben Zevenbergen, research assistant for the Oxford Internet Institute, explained that he has spent considerable time with developers of bitcoin and blockchain technology. He explained that while their intentions are good, they also want to completely get rid of banks; they want to remove the middle men. “So they certainly want to do good, but their conception of good is different from your conception of good,” he said. “They want to create a decentralized society that is technologically mediated.”
Zevenbergen said that blockchain is “definitely a hype,” and compared it to big data. Two or three years ago, all the talk was around big data and how certain things like theory, academia and social sciences would no longer be needed. “But it turned out that we need social sciences and theory more than ever,” he said. “We have so much data that we need to make sense of it. So it’s difficult to predict how these things go. It’s open technology; it can be redesigned in any way you want it to be. It really depends on how you use it; you can’t really say whether it’s good or bad.”
Colin Tyler, chief executive of ACT, sees blockchain as being “incredibly disruptive,” noting that its potential is not restricted to the financial space. “We’re really now talking about the ability to share information in a broader sense; it’s not just financial information,” he said. “So for businesses, it won’t just be about financial transactions; it will be the entire business strategy. If you want to make sure that someone actually believes in the authenticity of a product that you’re selling and that it’s getting to the right consumer or business, and you’re loading that into your system, you want to make sure that it’s absolutely right. The blockchain or distributed ledger technology that’s coming down the track will do exactly that for you.”
Nevertheless, it’s going to take time and money, Tyler stressed. Right now, blockchain technology is incredible expensive and it’s going to take a while before it gets down to usable levels. But he advised attendees to think about how many of their processes already use a blockchain-like model. “We’ve had blockchain in business for a long time; it’s called management blockchain,” he said. “If you want to check the veracity of a particular transaction, you basically use a bunch of people in it to make sure it’s right before you let go and make the payment. This is just an extension of that.”A longer version of this article appears in an upcoming edition of AFP Exchange.