Hype or (game changing) Ledger?
I’ve been ‘banging on about blockchain’ for a while; first publishing Distributed Ledger Technologies (DLT) for public good; leadership, collaboration and innovation in 2017. Today, I remain as positive about the potential for DLT (of which blockchain is one example) as I was in 2017. Whilst my interest has endured it feels that many have been on a rollercoaster as the intervening years have given us a fascinating illustration of a true tech hype cycle.
Amara’s law, named after computer scientist Roy Amara, states that we tend to overestimate the impact of a new technology in the short term but underestimate it in the long term. The 4IR has given us a wealth of new technology to test this principle: the Internet of Things, big data, AI and (of course) blockchain.
There was a huge amount of hype around blockchain, linked initially to Bitcoin, the most (in)famous blockchain application and although Bitcoin seems here to stay, the price has fallen and there are concerns over energy consumption and environmental costs.
In 2016, 2017 there were over 2400 blockchain/ crypto ICOs and many millions of dollars raised at the mere mention of blockchain. I think we will see many of these quietly disappear as they run out of money without finding either a real-life use case or traction.
So, a pressing need remains for a better understanding of potential use cases. We need more focus and coalescing around problems which positively fit a DLT solution rather than some of the reverse crow barring which we’ve seen in certain instances.
My prediction – also very much a hope – is that as the hype fades steady progress will be made: in the realm of cryptocurrencies as well as areas such as health, mobility, energy, supply chains and more. I think there will be experimentation and development across varied sectors but with greater rationalization within sector; increased consideration of and consolidation around potentially transformational use cases rather than “blockchain for all”.
I am not alone in my continued optimism: “blockchain is the future and it is the technology that China will be the leaders in,” President Xi Jinping announced last Autumn.
Libra: have the scales fallen from the claim?
It seems clear that Facebook’s attempt to dazzle us all with its own currency will fall far from its initial claims and, in 2020, may well look more like a payment mechanism, debit card style perhaps rather than “Facebook money” or could it even be cancelled?
A successful consumer application will make a huge difference to faith in this technology however and Bitcoin wallets through WhatsApp may prove to be one such ‘breakthrough’ application?
Another prediction in this election year is that concerns about the influence Facebook exerts over our democratic processes is not going away any time soon!
Central Bank Digital Currencies [CBDCs]
Now this looks interesting and likely to produce something this year. 2020 could certainly see China’s digital yuan being launched to the public in some form. India and South Korea are also likely to start trailing the technology to run a central digital currency. Similarly, the World Economic Forums CBDC group of around 45 Central Banks is likely to move the debate on a deal and I expect to see more countries pass legislation to legitimize cryptos. In the UK it is more than helpful that the next Governor of the Bank comes from the Financial Conduct Authority so that close-knit relationship should flourish in 2020 and beyond… will we be looking at an ABC (Andrew Bailey Coin)?
Moving on from the money, we should also consider some of the other likely movers on the block.
Cross border trade:
We are entering a period in which global goods tracking will become crucial and it will be important for those within logistics to truly understand how supply chains work between countries. There are helpful experiments currently well underway in this country with products such as wine imports from Australia and red meat. For those who want a guarantee that there’s no horse in the lasagna, will we see a DLT application that guarantees a farm to fork assurance of provenance?
Similarly, smart contracts will develop at pace this year as will experiments at the ports, in shipping and aviation. Perhaps most uplifting, DLT could provide a boost to our very democratic process itself not just through voting experiments, such as that planned in Utah this coming November – allowing electronic voting for citizens underpinned by a DLT solution – but in its application against fake news which is currently polluting our political and public discourse.
No silver bullet but still more than worthy of our attention:
In my 2017 report, I tried to avoid the pitfalls of Amara’s law – neither overestimating the impact by claiming DLT was a silver bullet nor underestimating the impact by refusing to get excited about the possibilities and opportunities. I still believe DLT is worth significant exploration and experimentation. We need to see, both nationally and globally, increased leadership to enable the necessary public/private/individual collaborations.
Progress on interoperability and regulation:
One cause for optimism is the progress being made on interoperability and regulation. Although there are significant differences between major DLT protocols such as Quorum, Besu, Fabric and Corda there is dialogue for collaboration and research into how assets on different chains can co-exist. Multi-cloud deployments are also something to watch.
On regulation, Wyoming have formulated a model in which digital assets are separated into three distinctive categories; clarifying the difference between virtual currencies and digital securities and deeming all intangible personal property. This is likely to be an approach followed by other jurisdictions.
Why it matters:
Devastating bush fires across Australia, floods across the North of England, crop failures across Africa, tensions in the Middle East; be it climate or conflict, health or mobility, literacy or democracy itself, it’s clear that brave purposed policy development is urgently required which can enable and unleash the potentially integrated interoperating elements of the 4IR.
More than two years on from my initial report it seems as true today as it was then that if we are to move towards “Distributed Ledger Technology for public good” it will indeed be the real test of effective, courageous, purposed leadership, collaboration and innovation. Not a technology in search of solutions but a purposed, appropriately analysed, tried then tested, piece of a coherent talent and technology transformation.