Blockchain - Hype or Hope?

Few things make me as happy as the Gartner Hype Cycle model. And what should be spinning its wheels in the Trough of Disillusionment right now but my old friend Blockchain. This means it’s about to break big – as the December Bitcoin spike may suggest. In only three years from now, 77% of banks will have Blockchain technologies in production systems.

As both a working theoretical concept with a proven practical application and as a wonderful piece of design, the Gartner Hype Cycle takes some beating. Testament to its robustness is that it always proves its worth as a predictive schema for new tech. But it’s the names for the sectors that make me smile every time I see them – the ‘Peak of Inflated Expectations’ for example. Glorious stuff.

Blockchain has moved fairly quickly to its current place in the Trough of Disillusionment. Which means of course that it’s all set to ascend the Slope of Enlightenment to reach the Plateau of Productivity and a working future as a useful, widely-embraced, productive technology. In fact, from here forward, this is where Blockchain gets interesting.

Breaking news: Blockchain not Boring

According to PwC, by 2020, 77% of banks will have Blockchain technologies in production systems. This fact alone proves that Blockchain is the future, it’s no longer the shiny new over-hyped poster-boy of FinTech innovation.

Whilst the perception of Blockchain is jaded, the reality is:

• Investments are increasing (Venture Capital investment in blockchain companies rose by a fifth to $544m last year, according to KPMG).
• Patents related to Bitcoin are being regularly filed – with Bank of America recently filing three

As the PwC report points out Payments Infrastructure isn’t the only application for Blockchain in FS – close on its heels are Fund Transfer Infrastructure and Digital Identity Management. Insurance companies are exploring its potential use in claims processes, and the banking sector also investigating its application for supply chain management.

And in the light of escalating cyber-attacks and global political volatility, Blockchain’s resilience in the face of outages or attacks and its inherent immutability should see it come increasingly into fashion.

Beyond Financial Services

Blockchain’s future relevance in the Financial Services industry is no longer in question, and it is proving a great driver of innovation. One such area discussed in a white paper published by Serguei Popov, is the potential for using Blockchain to deliver micropayments in the Industrial Internet of Things. This is very timely as importance of micropayments will increase in the rapidly developing IoT industry, and paying a fee that is larger than the amount of value being transferred won’t make sense.

But those of use working in Financial Services we may be somewhat over-familiar now with Blockchain talk; so it’s well worth taking off our FS sunglasses to recognise the potential impact beyond banking and payments. A few such areas include:

Protecting Intellectual Property

US startup Binded has no less an aim than to “democratize copyright”. Its starting point is helping photographers protect their intellectual property. The underlying technology? You guessed it. Blockchain enables photographers to create a permanent record of their copyright in a recognised, transparent and secure public database.

Sharing Patient Data

Sharing electronic healthcare records across various healthcare providers can be problematic as these platforms are not standardised across organisations. Blockchain has several possible applications including ‘pre-authorising’ sharing of a patient's information. A recent Computerworld blog looks at how research and theory is set to move into reality.

Fighting Fakes in Retail

A recent fascinating blog by Retail in Detail talks about the impact Blockchain is set to have in combatting fake goods. By allowing the registration of every transaction associated with a given object, Blockchain can stem the introduction into the marketplace of fakes. While this fits with re-selling high value items (individual works of art, diamonds) some companies want to use Blockchain to record everything that happens in the global retail supply chain.

Digital Voting

Admittedly this one for now remains in the largely theoretical arena, but I have to say it seems a perfect application for Blockchain. Security remains the single biggest challenge in the way of moving elections online. Blockchain can allow any online voter to verify and validate their vote, but still remain anonymous.

So despite a level of regulatory uncertainty, Blockchain is proving to be exactly what a new technology platform needs to be to survive and thrive: inspiring.

People from all sectors and geographies have the vision to see what Blockchain can do, how it can drive new business models, and how we can all generate wealth – at the same time as logging our accounting more efficiently.

So make no mistake, Blockchain isn’t an FSI flash-in-the-pan, it is, as I write, ascending the Slope of Enlightenment. It’s here to stay.

The Blockchain Revolution is Just Beginning

While the future of Blockchain is still admittedly blurry, and questions still remain around security, scalability and governance as it grows, the potential is enormous. Blockchain technologies can become the gold standard for all sorts of applications where rigorous security goes hand in hand with public transparency. But this needs a concerted focus on infrastructure to make it a living and breathing reality.

Blockchain is inherently a collaborative platform, both in terms of how it is – in practice – used, and (perhaps more important) in terms of the mindset-change it drives. It is part of the new world of banking; partnership and collaboration will be essential for driving the technology forward and people essential for putting it to work. Using Blockchain as the driver for innovation means partnering with companies who understand it, have bought into it, and are invested in steering it to the Plateau of Productivity.

What’s not to like?