by Chris Skinner, independent commentator on the financial markets through his blog, TheFinanser.com
I just gave a presentation on blockchain. I haven’t been asked to make a specific presentation on blockchain for over a year, so it meant dusting off some rusty notes and slides and thinking about where we are today.
I know that I spent most of the year saying that blockchain was in the trough of disillusionment. This is the moment when a technology moves past the hype and media headlines and becomes something people are actually trying to use. The bigger the technology, the harder it is to use.
Cloud and Big Data went through this hyper curve and moved gradually out of the trough into the mainstream over a period of about five years. It appears that blockchain will take longer because, unlike Big Data and Cloud, it is not something related to one company’s internal structures. Instead, blockchain is about industry infrastructures and replacing industry infrastructures takes a lot more time and effort because you have to agree things up front with more groups likely to be affected by the change.
Governments, financial institutions and corporations are going to have to agree what they want a blockchain for, how it is going to work and the management and method of its implementation before it can succeed. And this is the biggest gating factor to this technology.
The technology itself is not so difficult – blockchain and distributed ledgers are basically databases that can be shared with trust and managed by the internet – but the agreement about how this technology will work between the different institutions involved is the key. After all, a blockchain deployed by a single institution – a NASDAQ or Australian Stock Exchange – is easy. There’s just one company involved and one company managing everything. A blockchain deployed for a single industry – clearing and settlement replacing Central Counterparty Processing (CCPs) for example – is likely to be far more difficult to agree.
As a result, I think many people out there have lost the plot with blockchain. They think it’s dead in the water, stillborn and going nowhere. I think they’re wrong. I still claim that this technology is massively transformational. After all, if we can replace identity schemes with decentralised digital identities; if we can replace supply chains with digital chains; if we can get rid of all the paper in the real estate trade; if we can eradicate the use of purchase orders, bills of lading and letters of credit; if we can prove that the money you give to charity goes to the donor you wished to give to; if we can show you that the line-caught tune sustainably farmed was line-caught and sustainably farmed … if we can do all of these things with this technology , which we can, then that has the potential to change our world.
I just wish we could get there quicker; have the institutions involved in agreeing these structures, agree these things faster; get a movement that takes us past proof of stake and proof of concept to production of stake and production of concept. But it is all taking time.
It’s not the technology. It’s the application of the technology to complex processes that requires thought.
That’s why blockchain is languishing out of the media headlines and out of the mainstream conferences, and residing as a discussion I dust off once a year. This will change … but it just takes time.