The Dutch National Bitcoin Congress was held on June 24 and attended by bankers who appear to be enthusiastic about the blockchain. However, despite the name, the event largely ignored the existence of bitcoin and its trustless, peer to peer transaction network.
If any of the speakers at the Dutch National Bitcoin Congress (NBC) summed up the day's general atmosphere, it's British digital transaction consultant David Birch, who said:
"The future of money isn't Bitcoin [...] and the future of Bitcoin isn't money."
In a sold-out room packed with suits, the Dutch financial sector gathered to discuss blockchain technology, smart contracts, digital title deeds and shared supply chains — anything but the decentralized, stateless, bankless, community-driven digital currency. They even avoided the word “Bitcoin,” as if it were cursed. “The B-word” was the term du jour.
The NBC was hosted at ING's national headquarters in Amsterdam and organized by Bitcoin Properly co-producer Rutger van Zuidam and well-known Dutch trend-watcher Vincent Everts. It's the second edition of the congress, after the introduction at the ABN Amro bank's Innovation Centre a year ago.
As opposed to the previous edition, however, with speakers such as Trace Mayer, Tuur Demeester and Mike Hearn, and contrary to its own name, this year’s version of the congress was not about Bitcoin.
This time, speakers included the previously mentioned Birch, Eris' Casey Kuhlman, IBM's Arjéh van Oijen, trend-watcher Sander Duivestijn, former Dutch Central Bank director Lex Hoogduin, and of course a handful of bank CIOs. They all had two things in common — skepticism regarding Bitcoin, and enthusiasm regarding blockchain technology.
The biggest news of the day came from last year’s host. ABN Amro revealed that it’s in the experimental phase of developing its own Ripple clone: ABN Trade. In cooperation with Cegeka Nederland, the bank has forked the open-source Ripple protocol, stripped it from its internal XRP currency, and is considering deploying it along whole supply chains of trade networks. If implemented correctly, and adopted widely, this could further automate international trade, removing friction from the process.
But ABN Trade is not, of course, a blockchain.
A blockchain is a very specific technological advancement that allows for a series of transactions to be immutably recorded in blocks that are cryptographically linked together in a chain. The technology allows for peer-to-peer transactions through a public and shared ledger, hence essentially getting rid of the need for a trusted middleman.
But much like Ripple itself, ABN Trade is centrally controlled. That means that if the central control is in any way compromised, the entire network may be as well. Moreover, as opposed to Bitcoin, the system is not trustless, and therefore lacks the single most important innovation blockchain technology has introduced to the world.
A Telling Sign
ABN Trade seemed indicative of how the Dutch financial sector is approaching blockchain technology as a whole. Bitcoin has revealed how outdated the existing financial infrastructure is, and banks realize this. They know that the process of transacting money and assets will need to improve drastically, as they are suddenly faced with competition from the fintech sector. These banks are not naive. They have seen what happened to the record industry, to printed media and to Kodak.
The Dutch are historically known for their progressive mindset, in particular when it comes to trade. Throughout the centuries, a number of financial innovations have been incepted or adopted early in the Netherlands, such as paper money, stocks and central banking. The current financial sector is taking steps to live up to this tradition. It wants to improve and adopt new technologies, so the focus at the congress lay on possibilities, not on risks. Dutch Banks are willing to experiment and to innovate.
But they are not willing to give up control.
Or as ING CIO Brunon Bartkiewicz put it:
“We need to build the new digital infrastructure. For tens of years, we have build the infrastructure for payments in the way of building the clearing houses and the SWIFTs of this world. We need to build the new digital platform […] because as a matter of fact, I don't see anybody else who can do that.”
The Dutch banks present at the congress ultimately want to be able to control the shared ledgers on which title deeds, smart contracts, supply chains and anything else can be programmed. This is not surprising. Banks have made a living out of being middlemen. Their business model involves acting as a third party, and trust is their core product.
But more importantly, Dutch banks aren't willing to give up control over the flow of money — at all. As exemplified by Birch's opening statement, they aren't even willing to really acknowledge the existence of blockchain-based money. Bitcoin the currency, for them, is some kind of weird asset or a byproduct of the blockchain, at best, and a joke at worst. The Dutch financial sector still considers itself the sole gatekeeper and guardian of money, and anything that is not administered by them can therefore not possibly be regarded as such.
Therein lies the inherent irony. If the NBC really is indicative of the Dutch financial sector, it looks like banks are embracing blockchain technology without embracing two of its core attributes: trustless transactions and peer-to-peer money.
Thus, it will be interesting to see how this space will develop. Because the longer the financial industry will deny or ignore these inherent qualities of blockchain technology, the greater the odds that the other B-word will eventually become completely obsolete. The B is for Banks, that is.