Blockchain Platforms Like Hyperledger More Promising Than R3’s Corda: Deloitte
Anticipating the largest international Blockchain-related event, Cointelegraph had a chat with Jens Hermann Paulsen, Senior Consultant at Deloitte Blockchain Institute.
Like-minded people should connect, as this is the only way to drive innovation forward. We recently shared our excitement about Deloitte Germany becoming a sponsor and a partner at BlockShow Europe 2017 organized by Cointelegraph Events which is to come to Munich in just two days.
Cointelegraph Events is on a great mission educating and connecting people in the Blockchain industry to ensure it continues changing the world. With a partner like Deloitte Germany, Cointelegraph Events will certainly do more.
Anticipating the largest international Blockchain-related event to commence, Cointelegraph had a chat with Milan Sallaba, Partner at Deloitte and Technology Sector Head, and one of the key speakers at the BlockShow Europe 2017, and Jens Hermann Paulsen, Senior Consultant and Deloitte Blockchain Institute.
Sallaba and Paulsen shared their thoughts on the blockchain revolution marching across industries, and the contribution of Deloitte in its facilitation through extensive research of technology and bringing it into practice.
For this very purpose Deloitte has established the Deloitte Blockchain Institute (DBI). As Paulsen explains, DBI has been consciously set up as industry- and platform-agnostic, function spanning (consulting, legal/tax, audit) center of competence for blockchain technology and is embedded in a broader EMEA and worldwide Deloitte network.
“Our holistic approach enables us to not only focus on the technical capabilities of Blockchain but to also e.g. understand the legal enforceability of a use case, or to consider impact on credit ratings or to bring out the nuances in a particular business case. Our holistic approach enables us to not only focus on the technical capabilities of Blockchain but to also e.g. understand the legal enforceability of a use case, or to consider impact on credit ratings or to bring out the nuances in a particular business case. We constantly work to trigger new ideas through our point-of-views, in addition to developing proof of concepts. For our clients we develop minimum viable products (MVP) which facilitate a broader, often Board-level debate, and we also work with clients in e.g. insurance or energy sectors to integrate blockchain-based functionality into ERP-systems.”
Implementation of Blockchain is a bumpy road
Deloitte Blockchain Institute is actively researching Blockchain technology looking for areas that could indeed be improved with Blockchain. Implementation of technology is not an easy process which often meets a huge number of challenges.
For instance, adoption of public Blockchains might be hindered by regulatory hurdles, while severe security issues create obstacles on the way of integration of private Blockchain networks.
We have seen examples when investors and Blockchain partnerships came to an understanding that Blockchain might be not the best solution for financial and banking systems. In Sallaba’s view, instead of focusing on efficiency improvements e.g. for the way stocks are traded globally across markets, we should initially aim smaller to reap immediate benefits, and the big use cases will follow in due course.
“The issues and challenges referenced should be seen in the context of unrealistic expectations that blockchain is a silver bullet enabling massive, game-changing improvements almost instantaneously. Regardless of the industry or sector, use cases should focus on a limited scope and functionality where blockchain can make a tangible difference from the outset.”
Sallaba refers to energy certificates verifying a particular renewable power source, or bonded loans, which conventionally are heavily paper based, and representing certain difficulties for banks in tracking actual ownership. Blockchain can add transparency and value in these type of examples quickly.
Blockchain a perfect bureaucrat?
Blockchain technology is often referred to as the “perfect bureaucrat”, having a huge potential to improve the efficiency of relations between the governments and citizens. A number of projects popped up in Estonia, Sweden, Russia and Switzerland, which embraced the value of Blockchain for upgrading government services.
Sallaba told Cointelegraph:
“Blockchain could offer a tremendous opportunity for governments to improve processes and to provide innovative services. We are confident we will see increasing adoption and rollout in the coming years. Digitisation facilitates direct communication between citizens and governments, and opening up access by overcoming issues around distance, opening hours, process speeds etc. “
While believing that Blockchain technology might have found one more perfect niche to revolutionize, Sallaba thinks that adoption, nevertheless, will differ by countries. He continues:
“Nordics/Baltics traditionally are first movers in terms of governmental digitalization and it is no surprise to see Sweden’s effort to record land titles on a blockchain. Japan just started to recognize Bitcoins as legal tender, and Switzerland has experimented with local authorities that would accept Bitcoins to pay administrative fees.”
At BlockShow Europe 2017, Milan Sallaba will share company’s updates on bringing Blockchain technology into operations.
Welcome to the club!
There are numerous “clubs” nowadays which have been put together to research Blockchain technology. R3 suddenly fell out of love with Blockchain. Another open source collaborative effort, Hyperledger, is now working on promoting cross-industry Blockchain technologies. Certain questions arise concerning the motivation and efficiency of such efforts.
“Success of ‘clubs’ or consortia depends on the setup and governance, the stated aim, and also on the degree of alignment of interests of member organisations. As we have seen with R3 / Corda, bigger is not always better, and smaller consortia may be more successful in commercializing blockchain.”
Sallaba emphasizes the power of a community of interested experts in open source collaborative projects, compared to an inevitably more narrow, ‘closed’ members-only attempt. In his opinion, models such as the open-source, collaborative Hyperledger effort ultimately appear more promising when the aim is mainstream, commercial adoption.
“There are some industry consortia, such as e.g. b3i (Blockchain Insurance Industry Initiative) or the recently announced TBCASprint, which have the potential to be successful provided they focus on platform elements where mutual benefits are readily evident.”
“Creating a “one-size-fits-all” consortium is indeed problematic from my perspective. Further I think working in a closed shop anticipating to create a better platform than a whole community of interested experts is unrealistic.”
Eyes set on Asia
A community of Blockchain technology enthusiasts has already proved, and not even once, to be more flexible, open, and ready for a change, sometimes even disrupting their own industry.
Inspired by a decentralized technology, the community showed that innovation really knows no borders, with regions eager to learn from each other, share knowledge and expertise. For instance, Asia seems to be a region to extract lessons from.
While the global fintech is growing rapidly, the industry seems to be booming in Asia and particularly in China. Here we turn to numbers - last year Asia surpassed the US and Europe in terms of investment volume in fintech industry reaching $1,2 bln vs $900 mln in the US and $200 mln in Europe.
“Asia’s financial services sector is fast-growing in general. And in China in particular, the regulatory framework is seen as comparatively flexible, nurturing Fintech activity and innovation, with investors doing their bit to drive markets higher. Investments in the US and Europe arguably have been more conservative, possibly underpinning the view that whilst the financial sector may have its fair share of problems and inefficiencies, banks as organisations are not about to vanish.”
We’ve got talents!
One cannot deny that Blockchain revolution is marching across industries, but how to facilitate it? Industry experts often point out the lack of talents in the sphere. Let me disagree.
Recently, at Cointelegraph we ran a Blockchain Oscar, results of this awesome competition you all will see in Munich. But that’s not the point I am trying to make here. The amount of applications we have got exceeded all our expectations, so what kind of lack of talents are there?
There are talents, dozens of them, they only need to be supported and guided by more experienced colleagues, who would connect them to the industries needing their innovative solutions. This is one of many purposes of various accelerating programs.
Sallaba says that Deloitte is strongly emphasizing collaborative work with startups. He explains:
“Deloitte does support many startups including some which specifically focus on blockchain-based industry solutions, and we have strategic partnerships with some blockchain startups and even create joint solutions. In addition, we have invested in startups (such as SETL) and we haves spun-out a part of our team to create Nucoa and continue to work closely with established programs such as nexussquared.”
Nevertheless, Sallaba points, Deloitte consciously chooses not to run an accelerator specifically for blockchain startups.
Sallaba and Paulsen agree:
“Blockchain is not a use case in itself, of course, and evaluating whether an accelerator should e.g. focus on a technology (primarily facilitating a tech community) or an industry (emphasizing industry-specific solutions and provision of access for startups to global players) is not straightforward and provides advantages and drawbacks both ways.”
The Deloitte Digital Disruptors is one example among a few focusing on supporting talented teams. With “Bridge by Deloitte” Deloitte attempts to purposefully match enterprises and startups to accelerate innovation.