SLUSH 2016 Gems: Blockchain - The Holy Grail of FinTech
2016 was the year when the potential of Blockchain to change the world began to be fully understood.
Not so long ago people did not understand what the Internet was. Those who did not have an Internet strategy in the late 1990s were probably on the wrong side of the revolution curve. We have recently entered a new phase of technology development and the question everyone should be asking themselves is: what is the Blockchain strategy?
2016 was the year when the potential of Blockchain to revolutionize many industries began to be fully understood. The technology, that is said to change the world just like the Internet did, is being widely discussed. Only the laziest haven’t at least Googled what it’s all about.
Digital world is a part of our DNA
Let’s go back a little bit to Slush 2016, where some of the key thought leaders in the space of Blockchain shared their views on what the decentralized future will look like.
Nicolas Cary, co-founder of Blockchain, says:
“The digital world is part of our DNA now, it’s a part of how we share experiences, how we keep in touch with our loved ones and how we consume our entertainment. Why can’t money be digital too? It’s best not to have our heads stuck in the sand on this issue.”
It is crazy indeed that many trillion dollar financial industries have not yet been fundamentally transformed by technology. It appears that they hold no imagination for how things could be better. Transaction networks require three things to function: a currency, a settlement with a high degree of certainty and a ledger to keep track of who owns what. Banks have built centralized ledgers for a very long time. In essence, these ledgers are databases of accounts that are all kept in one place. While it is supposed to facilitate transactions, these financial transactions are still not an easy task to perform.
Blockchain has done a lot in the past 12 months, revolutionizing the way we transact.
“As a phenomenon Blockchain is rather abstract, it is hard to describe it in a few words, as it is so unlike the other technologies,” says Paul Puey from Airbitz.
“Blockchain is an incredibly important development in computer science and it’s going to fundamentally change the way the Internet functions and the way we interact and transact with each other,” says Nicolas Cary. “The best way to think of it is that it’s a ledger, but instead of being in one place it’s actually in a cloud. One can think of it as a spreadsheet in a cloud, which is globally replicated and distributed all over the world, and when an update happens in one place it happens in all those places simultaneously.”
You can be your own bank
The first thing that has been tested on the Blockchain is money, but it’s not the most important thing. Blockchain runs transactions 24/7, 365 days a year, as it doesn’t know what a bank holiday is and it has been running without error for nearly seven and a half years - any bank can be jealous of that.
Cryptocurrencies are gaining in popularity at a higher speed than ever before. For instance, as a risk asset Bitcoin has been particularly interesting in the past year. We’ve seen incredible volatility in markets in Venezuela, Brazil, Greece and Ukraine.
In times of global volatility, Bitcoin as an asset class is definitely overperforming. The exciting thing is that more and more people realize they no longer need a bank to perform financial transactions, as they can be their own bank and send money anywhere in the world in just one click, costing a few cents in transaction fees.
How would the decentralized Internet look?
Blockchain has moved us away from the original client-server logic, and the potential of Blockchain to also move the decentralized Internet forward is indeed huge. Furthermore, it’s not only about digital currencies as this is just one of the numerous applications of this technology.
You have a database that’s an immutable record keeping system - a big spreadsheet that nobody can change, but everyone can write to - that can serve as a basis for a global property right system.
Jutta Steiner from Ethcore says:
“I am really excited about non-financial use cases of Blockchain. Take a look for example at supply chains where a lot of information has to be transferred between many different actors. How do you make sure that the product you buy in the shop is authentic? Blockchain could be this tool that would allow to sent this strong financial signals, or information to all participants of the network. This tool in proving the authenticity of products really works, and it makes businesses so much cheaper, faster and significantly simplifies all key processes.”
Many things can be tracked with a system built on Blockchain - diamonds, artwork, land, stocks and bonds. There are also many companies that are currently tackling these issues. Blockchain indeed brings a good deal of transparency to places that need it desperately.
Blockchain can't do everything
As more and more use-cases for this magic technology occur, the understanding that Blockchain cannot yet solve every issue becomes clearer. The technology provides everyone with an out of the box organizational structure that everyone can use, but it is not a panacea to every problem. Obviously, you can’t put your dog on Blockchain or brew a coffee with it.
Jutta Steiner says:
“Disappointment might mostly come from the fact that it might take longer for a technology to mature. In other cases, I think it is a very powerful tool to redesign the Web.”
Thomas Conte from Microsoft Azure agrees:
“In order for this technology to be applicable, you have to have a communication between several parties, trying to optimize processes. Blockchain is really good at solving trust issues. You can't go back and modify stuff unless the whole community wants to do that. The power of Blockchain is in that it is able to make peer to peer transactions and remove the middlemen who create a limited trust.”
It’s never boring in the Blockchain community!
Communication between parties is essential here. After all, using Blockchain is more open than not using Blockchain. If managers want to drive their businesses forward, they need to think of where their gatekeepers are and what are the touchpoints with the outside world that they are trying to reform. Cooperation allows broader community access to technology and that is what really helps facilitate its adoption.
We have seen major shifts in the industry in the past 12 months. The whole Blockchain community is so open, so flexible and so driven by the idea to facilitate a tech revolution.
Elizabeth Stark from Lightning says:
“It’s so easy to learn about Blockchain, there's a lot of information about the technology out there. And it’s so easy to start a business developing Blockchain, you don't have to have decades of experience to work with it because Blockchain didn't exist decades ago. The whole community is so open, you can always ask your colleagues about issues you’re interested in. And it’s never boring here! There’s always some drama, it’s like a never-ending soap opera.”