Sebastien Meunier is a financial services advisor and startup mentor with 15 years of experience in business transformation and innovation in finance.
In this opinion piece, Meunier takes a look at the many optimistic claims made for applications of blockchain, arguing that over-promising on the tech is not the best way forward.
Blockchain is a revolutionary technology that is a force for good.
You probably heard that it can help solve problems in charity. But did you know that you can end homeless hunger with blockchain? Actually it could help end poverty in all its forms, including solving the child poverty issues!
Blockchain is unbelievably powerful. Bitcoin, the first blockchain system, launched in 2009, can help end war, which is already something. But blockchain technology is even stronger: it will make guns smarter, preventing gun deaths, and save the world from nuclear holocaust. Boom.
Let's be clear, blockchain will completely revolutionize how we run the world. It will undo populism bigly, stop climate change, prevent the next financial crisis, disrupt Uber, give us control of our data, and transform everything from banking to government to our identities.
No industry shall be immune to the blockchain revolution:
- Blockchain will make banks disappear (by 2026 in case you wonder)
- Blockchain will transform our cities
- Blockchain will underpin our future energy system
- Blockchain could completely transform the music industry
- Blockchain is the glue that binds the Internet of Things
- Blockchain can help fight cyberattacks
- Blockchain will transform the practice of law
- Blockchain will transform media and entertainment
- Blockchain will change accounting business
- Blockchain could fight voter fraud
- Blockchain can disrupt healthcare in 5 ways
- Blockchain has the potential to revolutionize the supply chain
Imagine! If we had invented it earlier, blockchain could have prevented:
- The DNS's denial of service attack
- Soros leaks
- The biggest corruption case in Brazil's history
- The Wells Fargo scam
- Lehman Brothers
Can blockchain be more than a peace agent as well as an infinite source of food and wealth? Yes! Blockchain has recently become a source of life with the announcement of the birth of Plantoids, the first blockchain-based artificial life forms. Congratulations!
The section above was made from actual headlines.
At this point you probably understand that there is too much hype around blockchain or 'distributed ledger' technology.
Handling the hype
Readers: learn how to recognize snake oil, avoid ecstatic articles and white papers and preferably read and share balanced ones.
Blockchain technology is complex. Business problems are complex. An article about blockchain for business should be measured and not straightforward.
Writers: resist the temptation of sensational headlines for 'clicks'. Control your excitement and present all aspects of a story, not only the concept (we could trade loans and securities without intermediaries!), but also the reality (regulation, legacy, etc).
Publishers: prioritize balanced articles, challenge the writers, and if you publish opinion pieces, make sure you give voice to a variety of experts on your platform.
A realistic view
Blockchain technology is no magic, it is basically a combination of two existing technologies: public key infrastructure and protocols.
Immutable databases already exist (eg HDFS, couchDB). PKI systems (signature, encryption, etc) already exist. P2P systems already exist. Consensus protocols already exist (eg paxos, raft).
You don't necessarily need 'blockchain' to implement these features. The two differentiators of DLT are, in my opinion: (a) the control of the read/write access is truly decentralized and not logically centralized as for other distributed databases, and corollary (b) the ability to secure transactions in competing environments, without trusted third parties.
Blockchain is not a general-purpose solution for everything. It should be considered as an enabler to creating new decentralized services and solving specific business problems (such as the double-spend problem in trustless P2P environments for the brilliant bitcoin).
That said, many business processes are inefficient and heavily centralized.
Blockchain technology could be a solution for some of them, but other technologies could be as well - for instance, I can think of several ways to optimize a claim management process without using blockchain.
That being said, I do believe that blockchain technology can be very powerful for some specific use-cases. I have met promising startups and seen advanced proofs of concept at the banks I work with.
Now let's keep in mind that change is not only about technology: If you want to revolutionize financial services, you have to turn everything around from market regulations, organization and governance, to business models and operational processes!
It may happen, but it won't happen overnight.
In the meantime, you can still use cryptography and data replication protocols to develop incremental innovation - that's perfectly fine as long as you don't over-promise.
"A dream doesn't become reality through magic; it takes sweat, determination and hard work."
- Colin Powell.
Snake oil salesman via Wikipedia