Blockchain brings significant benefits to corporations, accommodating liquid and illiquid assets, reducing transaction costs and settlement times, and increasing transparency. Enterprises are racing to adopt Blockchain, and investment is flowing abundantly into the field.
R3 CEV, a consortium of 42 global banks investigating how to employ Blockchain technology in financial services, is expecting to raise up to $US200 million this year. New York tech startup, Digital Asset Holdings is building software to enable banks, investors, and other market participants to use Blockchain to improve the trading of loans, bonds, and other assets.
“As long as it is cheaper to perform a transaction inside your firm, keep it there. But if it is cheaper to go to the marketplace, do not try to do it internally.” - Wikinomics by Don Tapscott and Anthony Williams
“The worst place to develop a new business model is from within your existing business model.” – Clayton Christensen
Timing is indeed the most interesting variable. The internet of value resembles the web pre-Google. Crypto-currency is simply not ready for mainstream adoption, and there are still many significant implementation challenges to be resolved.
The Ethereum Foundation, the creators of Ether, a cryptocurrency competitor to bitcoin, is focusing on building the platform that could become the ‘App store’ of Blockchain applications. This platform enables decentralised applications based on smart contracts. Microsoft and Deloitte are both investing in Blockchain partnerships and Ethereum based products and services.
Hyperledger, spearheaded by the Linux Foundation and by IBM, is attempting to standardise some of its infrastructure and services to make it more consumable across business applications.
Partnerships between startups and top-tier consulting firms bring pragmatism, integration expertise and access to large, global portfolios of clients to the Blockchain ecosystem. The big five can also help startups navigate through the regulatory landscape, although old paradigm regulation will limit the potential of the innovation.
Even faced with the disruptive nature of Blockchain to the global financial ecosystem, and with numerous examples of illicit exploitation, government regulators have not yet approached Blockchain with a heavy hand. State committees from around the world engage in Bitcoin and Blockchain briefings with a mix of curiosity and caution. The risk of a future stifling regulatory framework is still high, but in general, it is acknowledged that this technological advancement can help restore legitimacy to government, enabling state services to become cheaper, better, faster and more transparent.
The ecosystem is growing, the hype is high, and the communities are working to overcome current implementation challenges. Some are approaching it tactically, and others strategically; some wish to control it, others to unleash it. But the train has left the station, is moving full speed ahead, and nothing will stop it now.
Read the final post in this series: Pragmatic Idealism over Hubris, Utopia, and Fundamentalism – Blockchain Part 5