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Finding a Path Forward For Blockchain
FinTech, Blockchain, Financial Services
Innovation is never easy. There are almost always failures, mistakes and doubts that stand in the way of any attempt to change the world: Apollo 1 caught fire on the launchpad and killed its three astronauts before Apollo 11 took man to the moon; the Wright Brothers’ first flight lasted just a hair under a minute and was met largely with skepticism by the press; and the internet gave us Pets.com before it ever gave us Google.
For some people, no other current innovative technology offers more promise for changing our lives quite like blockchain. By giving us a decentralized distributed network, blockchain offers us peer-to-peer (P2P) platforms where we get to engage directly with each other, eliminating our longstanding reliance on third-party authorities.
The word you hear a lot when it comes to blockchain is trust. In this era of seeing our data stolen off social networks and credit reporting databases and the internet, the decentralized distributed ledgers are seen as a way of giving us back a sense of security we’ve lost.
As Paolo Tasca, executive director of the UCL Centre for Blockchain Technologies, explained in the New York Times:
Under such systems, algorithms confirm the authenticity of each transaction and can record each party’s identity, along with their trust and reputation rating, in the blockchain, which acts as a kind of ledger. Misbehavior is prevented because it is impossible to tamper with or falsify the ledger, and accountability is improved because all actions can be independently audited by any participant.
It all sounds amazing; in fact, blockchain’s “beguiling transformation seems too good to be true,” as Tasca notes.
The challenge for blockchain at the moment is that the only innovation the technology has really given us so far is Bitcoin. And, well, the less said about Bitcoin right now, the better.
A recent report for the Monitoring, Evaluation, Research and Learning (MERL) Technology conference held in Washington, D.C. this past October points to how critical is that blockchain practitioners find a path forward so the technology can move beyond Bitcoin. The report – written by Christine Murphy, a social researcher at Social Solutions International and John Burg and Jean Paul Pétraud, fellows at the U.S. Agency for International Development – “documented 43 blockchain use-cases through internet searches” and uncovered “many generic decision trees and sales pitches available to convince development practitioners of the value blockchain will add to their work,” but then concluded that there was “a lack of detailed data about what happens when development interventions use blockchain technology.”
We found a proliferation of press releases, white papers, and persuasively written articles. However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development.
“Despite all the hype about how blockchain will bring unheralded transparency to processes and operations in low-trust environments, the industry is itself opaque,” the researchers added. “From this, we determined the lack of evidence supporting value claims of blockchain in the international development space is a critical gap for potential adopters.”
To be sure, not everyone accepts the reports findings. Avivah Litan, a vice president at global research and advisory firm Gartner, tells Computer World that the report “lacked balance” and “did not bother to ask why projects had not delivered on goals, such as improving transactional efficiency, transparency and privacy.”
But it’s inevitable that without tangible results beyond Bitcoin, doubts about blockchain will begin to grow. The economist Nouriel Roubini – who, granted, is nicknamed “Dr. Doom” – has already cast doubt on the technology, writing that “whereas the Internet quickly gave rise to email, the World Wide Web, and millions of commercial ventures, blockchain’s only application – cryptocurrencies such as Bitcoin – does not even fulfill its stated purpose.”
The promise of blockchain is far from dead. This is obvious when one looks at the investments being made across the healthcare industry on developing and piloting blockchain projects. But, fair or not, the longer it takes to begin delivering on a promise, the more people will feel like the promise is being broken.
Photo: Getty iStock