From May 2nd through May 4th, over 1,500 participants from around the globe gathered in New York City to discuss a topic that has a lot of hype – blockchain technology. It’s clear that over the past year or two, the business community has moved beyond focusing on Bitcoin and is instead more interested in the underlying technology. The tagline for the CH&Co. co-sponsored Consensus 2016 event was “Making Blockchain Real” and right from the start an important question was posed: “is blockchain adoption 3-5 years away or more than 10 years away?” Even after days of panel discussions and speeches from startup founders, financial services executives, and regulatory representatives the question remains unclear. However, there were several themes, issues, and questions that clearly emerged. Here is an overview of the top things people from across the industry were talking about:
1. Standards are needed, but there is no consensus on how or when they should be established Though the Bitcoin blockchain is the most stable and widely used blockchain to date, there are several alternatives including Ethereum and Ripple. Due to a lack of governance, there are challenges in connecting these networks to one another. Additionally, while some organizations including Interledger and DTCC are attempting to create standards, more established protocols are needed for public systems. Eventually the community will need to agree on these protocol and interoperability standards (similar to the internet standards that were established). It’s important to note that there is not agreement in terms of when and how these standards should be created. Some believe an international organization should be formed to solve for this, while others prefer to have several blockchains developed until the community naturally pools support behind a consistent set of standards.
2. Legal risks and regulatory compliance issues remain a concern Enterprises are hesitant to make deep investments in blockchain production systems due to a fear of regulatory scrutiny, which is understandable considering the massive amount of pressure they’ve felt recently through regulatory compliance activities. However, it is imperative that this hesitation does not stop companies from experimentation. For more innovative ideas, regulations may be developed after implementation has occurred. In order to ensure compliance and limit legal risk throughout this development stage, these companies can onboard and partner with regulators and legal experts along the way.
3. Identity management is at the core of many issues With regards to many of the more interesting use cases for blockchain, most notably financial applications, there are still many questions around how to best handle identities. An underlying challenge seems to be whether governments will acknowledge these new forms of digital IDs as valid, and if so, will they require control over the authentication process? With that government control how do we ensure personal privacy and protection from abuse? Additionally, how do we best authenticate identities? Biometric tools have limitations and private keys can be forgotten/lost. There is still a lot to sort out.
4. Technical challenges around scalability, security, and privacy remain During the early days of the internet, few could have imagined a world in which we were running out of IP Addresses, but that day has come. Learning from this, many are worried about the limitations of the blockchain. Just how much data can actually be stored before there’s not enough computing power to keep the network running? Additionally, IT security experts and personal privacy experts are still unsure how the future will look in a blockchain world. How will private data be protected and secured efficiently and consistently? Ultimately, these questions will rely on companies experimenting further with hands-on implementations so we can learn what works best.
5. Blockchain projects are global and transversal People from all across the globe participated in the conference, demonstrating the reach that the blockchain revolution commands. Not only was there a diversity of peoples and cultures, but there was also a wide range of professionals with varying backgrounds. Legal experts, technical developers, money managers, bank executives, government officials, regulators, and several others were present. Since blockchain technology is a business enabler, it was not surprising to see all of these positions represented. All of their insights will be needed to help reach solutions to the many questions and issues that remain rampant across the community.
6. It’s still early days for blockchain Though the conference was all about “Making Blockchain Real,” there was very little concrete, production-ready blockchain systems shared. Of course, there were many startups building proof of concepts and there was no shortage of ideas being discussed, but there have not been enough real world implementations and results quite yet. Furthermore, the use cases being discussed mostly help optimize existing processes rather than transforming the marketplace in a disruptive manner. So what will the real breakthrough idea be? Only time will tell, but certainly it will leverage a best-in-class user experience built upon the blockchain’s core strengths:Transparency, Independence, and Immutability.
Overall, while there may have been more questions than answers, Consensus 2016 still served as an excellent opportunity to connect with some of the best thought leaders from the blockchain community. The event included insightful speeches and panel discussions from the likes of Vitalik Buterin (Ethereum), Balaji Srinivasan (21 Inc.), and Christopher Allen (Blockstream). Networking with additional representatives from other startups such as BlockSeer, Factom, Coin Sciences, and Lawnmower (a Startupbootcamp Fintech NY participant) was also invaluable. Ultimately, while we may need to wait a bit longer before getting a tangible sense of what this technology has to offer, it’s clear that the best minds in the world are all dedicated and focused on delivering that reality to truly make blockchain real.
Chappuis Halder & Co. is a consulting firm specialized in Financial Services with offices in North America, Europe and Asia. We support our clients in several ways to help deliver blockchain innovations, including:
Forming partnerships with blockchain startup companies
Coordinating the development of blockchain prototypes and proof of concepts
Managing the implementation and integration of blockchain applications into client environments
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