In Blockchain We Trust: Building Beyond Finance

This panel discussion is about the use of blockchain beyond the financial markets. The discussion was part of Web Summit November 2018 in Lisbon, Portugal.

The three panelists are Hyperledger’s Brian Behlendorf; Tradeshift Inc’s Gert Sylvest; and NYIAX’s Carolina Abenante. The discussion is hosted by Cheddar’s Alex Heath.

The following are a few notes.

The crypto hype and volatility represent noise that can divert attention from the inherent opportunity of blockchain.

The utility of blockchain is contingent upon specific industry needs and may be influenced when regulatory frameworks are established that determine which information may need to be made transparent by industry participants.

Banks and the financial industry are presumed to be vulnerable to disruption. But in fact they are already so regulated that they will find blockchain helpful. Blockchain will be a tool for them and will not completely disrupt banking.

Central banks will ultimately issue their own crypto on blockchain.

However, in industries where margins are earned due to lack of transparency, whether finance or otherwise, those entities will be disrupted.

Companies represented by the panelists:
Developed in partnership with Nasdaq, NYIAX provides advertisers and publishers a platform to buy, sell, and re-trade premium advertising contracts in a forward/futures methodology.
Tradeshift is a web based business network and also a free invoicing platform founded by Christian Lanng, Mikkel Hippe Brun and Gert Sylvest.
Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology.
Cheddar is a live-streaming financial news network.

Blockchain Impacting Traditional Banking

As blockchain technology evolves from hype to practical  applications, the reality that banks (among many other middleman businesses) could become less relevant to the future of financial transactions has not been lost to those same stolid institutions.

In brief, blockchain offers the opportunity to transact finance faster, more transparently and less expensively than the services banks provide.  In fact, technically speaking, banks are not required. Hence traditional banks have  not been primary participants in the massive global movement of cryptocurrencies in the past few years.  In that light, the reality that traditional banking, as an industry, is at risk in the not-too-distant future is more real than at any point in the past.

Highlighting the point is The Financial Times reporting that JPMorgan has widened blockchain payments to more than 75 banks.

The article states that, “More than 75 of the world’s biggest banks are turning to blockchain to fight the threat of new payments rivals in what will be the regulated banking industry’s largest application of the distributed ledger technology underpinning cryptocurrencies.”

None of this would surprise those familiar with blockchain tech. But it might be surprising to those who don’t follow such developments that all the good, bad and ugly surrounding Bitcoin has real-world implications.

For all of us, our options for transacting value should continue to increase even more in the future.  Simultaneously, traditional banking should become less expensive.

Although it’s hard to envision a world where traditional banking will go away, it’s also conceivable that an all-out legal battle will ensue to mitigate loss of money and power that banks and their government partners have long enjoyed.

I would expect the blockchain circus to move from the hype of speculative irrationality to the world of courts and jurisprudence at the same time as blockchain starts to take steps towards the disintermediation of the legal profession. 

We live in interesting times.

Switzerland wants banks and cryptocurrencies to play nice

Let’s be real. The crypto world needs traditional banks. In spite of the promise (or hope) of ultimate disintermediation of the banking system, we still live in the world of fiat currencies. 

And even in a best case scenario of crypto become the default global currency, that would take some number of years.

In the mean time, Switzerland wants to become a central banking hub for the crypto universe.

Hence, the Swiss Bankers Association (SBA) have established operational guidelines for doing business with cryptocurrency or blockchain-based startups.

“According to the guidelines, banks should implement adequate know your customer (KYC) and anti-money laundering (AML) measures, before opening accounts for blockchain businesses.”

Blockchain Based Transactions

Trust. It’s why we use banks and other intermediaries. But with blockchain, transactions are visible to anyone with an internet connection. However, information about the sender and receiver are not visible. Private, secure banking is one of many things that blockchain facilitates.