Whilst blockchain has been knocking on the mainstream’s door for some years, it was only arguably as recently as this Sunday that it was allowed a significant foot in.
In from the cold and finally joining AI, Big Data and the Cloud around the fire, the announcement on Sunday that CBOE was now trading bitcoin futures suggests the technology behind it is now being taken seriously. Whatever your opinion in the various debates that surround the cryptocurrency – whether it is an asset or a currency, whether its shady past deserves legitimacy – few can deny the sustainability of the technology underlying bitcoin.
Have we finally cut the inaugural blockchain ribbon to the future?
Whatever understanding of blockchain you bring to this article, whether you understand it through analogies, or use seemingly Jabberwokian terms to describe it – the basic premise is that blockchain provides a digital and unerasable verification of value. In an age of increasingly virulent cyber breaches, the decentralised nature of the blockchain ledger model is deeply attractive to CIOs who are finding their budgets squeezed to keep escalating the IT arms race.
But have the last few years seen any real development for practical use cases for blockchain?
Fintech influencer and forward thinker, Chris Gledhill, compared blockchain to the emperor’s new clothes and indeed, this reporter agrees; many times, when asked, fintech companies across trade, payments and risk, have answered with an uneasy smile ‘we’re working on a blockchain solution’.
You can hardly blame them. ING Chief Innovation Officer, Ignacio Julia Vilar, told bobsguide that unless the technology could enhance the customer experience, then it was not the priority. With ING’s recent Zero-Knowledge Range Proof ledger launched from its hub, it suggests the bank is backing blockchain to succeed and improve customer experience.
But that’s not to say we’ve surpassed blockchain in-theory. Indeed, when JP Morgan pulled out of R3, the blockchain consortium, in April 2017 along with many high profile institutions, many saw it as a sign the technology was a long way off mainstream adoption. That is still the case as we approach 2018, but the technology is making inroads.
Scalability seems to be the most fundamental problem as the pure blockchains are limited by the number of transactions they can process in a given time. Ripple, the alternative payment network, spoke to bobsguide about its innovative approach to addressing the scalability issues, by deconstructing the blockchain and ascribing each part to a different task, thereby spreading the workload but maintaining the security, in order that the technology can scale without limit. Based on its Internet of Value model, Ripple look to provide instantaneous transaction and settlement that is double-spend proof.
We spoke to them at their Sibos stall, whilst their conference, Swell, was underway across the city; if ever there were a gauntlet thrown in the correspondent banking world, it would be this. With the likes of Santander, American Express, SEB and Standard Chartered investing and using the Ripple network, it finally suggests blockchain technology (specifically Interledger Protocol) is capable of dethroning messenger. Eventually. For the time being, as a Ripple spokesperson put it, the world is not quite ready to fully embrace Ripple’s potential, but the tipping point in coming soon.
Whatever happens to the bitcoin bubble, we may very well have started a fundamental shift towards blockchain technology in the financial sector. Faster payments, greater liquidity from a universal currency, and a more secure store of value are all a significant step closer than this time last year.
Here are our favourite articles outlining the developments of blockchain in 2017:
Everything you wanted to know about blockchain
How blockchain will transform capital markets: Interview with Horacio Bakarat, VP corporate strategy, Broadridge
Six shortcomings of blockchain: Answering the skeptics
Is blockchain at tipping point?
“It’s other people’s prerogative to use it however they want to, but bitcoin is the real killer app for blockchain”: Interview with BTCC CEO Bobby Lee
Taking blockchain treasury technology out of the sandbox
Innovate Finance: Blockchain Special