What's being said about Blockchain

Recently I was selected as a 2016 DC Blockchain Summit Scholar and attended the conference at Georgetown University’s McDonough School of Business. In attendance were the industry’s leading minds. I’m writing this post to share some of what I thought were the best ideas and perspectives from the day.

First, if you’re like most of my friends then you’re probably wondering what blockchain is. Well, essentially it is a record, or ledger, of digital events. As most panelists said throughout the day – it’s a database. Except transactions are only executed if each side of a trade approves and only recorded if the majority of participants on the blockchain system reach a favorable consensus. Thus, there is no central authority. Blockchain is also closely tethered to the bitcoin cryptocurrency. Thus, bitcoin was also mentioned throughout the day.

Actually, most people are confused about the concept of blockchain/bitcoin, but the technologies are highly innovative and could have a significant impact on macroeconomic trends – especially in banking. Nations and governing bodies are taking notice and want in. That’s why Arizona Rep. David Schweikert’s opening remarks urged the audience to inform Capitol Hill on blockchain/bitcoin before the “control freaks” in government try to take over.

Don Tapscott, recently named a top 10 thinker by Thinkers50, began his keynote by highlighting the big prosperity paradox and growing social inequality. He points to blockchain as a solution to some of the world’s major issues. Blockchain can solve the problem of banking the unbanked who, increasingly, have access to computers in their pockets. An example he gave is mpesa.in, a company currently using mobile for financial transactions. Also, blockchain has various applications like the ability to protect ownership rights through immutable records and answer questions like: Who owns what? Who did what? For example, land titles can also be stored on a blockchain which could affect 70% of people in the world. Factom is an example of a company already leveraging this technology. Tapscott expanded on the land title example, saying that because transactions on the public ledger are indisputable, it would be more difficult for a dictator to illegally take property away from a constituent.

Alex Tapscott, Don Tapscott’s son, followed by addressing the apprehension around governance of blockchain. Alex suggested that governance doesn't mean government or control. It's about “self organization and collective interest.” There have to be set standards when dealing with transactions and that’s something that blockchain/bitcoin is currently lacking.

Alex Tapscott has a good point. The blockchain system is renowned for its decentralized, anonymous node characteristic, but the ability to anonymously transfer things like bitcoin over the network has been cause for concern. As Kevin Abar from the Department of Homeland Security Investigations pointed out, there is criminal activity going on within the blockchain/bitcoin system. FBI leader Alden Pelker expressed that the inability to identify who makes bitcoin transactions is scary for the FBI and its peer organizations. Abar proposed that there has to be an anti-money laundering code to combat the anonymity of criminal behavior. Maro Santori, Global Policy Counsel for Blockchain, stated that such issues are why these conversation are important. Blockchain and bitcoin have to be figured out and configured much like the Internet was in its infancy. There is a risk that law enforcement and policy makers could get blockchain and bitcoin governance wrong if they are not properly educated. As Santori says, “we’ve never had to deal with something this complex.”

Blyth Masters, CEO of Digital Asset Holdings, also spoke to remind us of the upside of blockchain - there is a real need for the business solutions that this technology can provide. She noted that the financial space has been operating for decades without any innovation and is under existential threat. Some firms are too big to fail, and “everyone else has a profit problem.” She believes blockchain is the answer and pointed to Australia as the perfect place to test it out. It is a big enough market, electronic ownership of assets is already in place, and their current system is coming to an end. The country’s finance industry is looking for something new. Masters’ unwavering belief in the technology has pushed her to dedicate her life to it since moving on from her senior executive role at J.P. Morgan.

Other financial services experts followed Masters and spoke on other aspects of blockchain - for example, it resolves the problem of highly assuring transactions and ownership of assets. Bill Hartnett, Managing Director at Citi, backed this up, saying that the real power of Blockchain is the data structure itself. It is a lineage of data and uses encryption to keep the data secured. Each participant of a trade has to approve with their unique key. Darrius Jones of USAA sees this as a way to change ownership of real estate, cars, etc. A roadblock that he noted though is that "people don't like making transactions on a public ledger."

So, there are obviously some pros and cons, and no one seems to have this completely figured out yet. But if you believe in something then like the saying goes, you’ll put your money where your mouth is. So, during the final panel of thought leaders, I got up and asked Jim Robeson, Co-Founder & Managing Partner at RRE Ventures, one simple question, “Why did you start investing in the blockchain and bitcoin space?” His answer was simple. “It enables people to do things that they just weren’t able to before.” To me, his response was the perfect summary and cap to the historic day. Despite all the discussion and brouhaha around blockchain (and subsequently bitcoin), it is an extremely valuable, innovative, and disruptive technology. That’s why corporations, governments, and regulators are taking notice. That’s why the DC Blockchain Summit came into existence.

I cannot definitively say how blockchain will affect banking and other macroeconomic trends, but if the fact that experts compare it to the Internet is any indication, I’m definitely going to be paying close attention.

Thank you to the Chamber of Digital Commerce and MIT Media Lab Digital Currency Initiative for the opportunity! I look forward to continuing to expand my knowledge from here.