The Blockchain genie is outside the bottle in Oman

genie

Geopolitical risks continue to be a permanent factor in any macro framework, but so does technology innovation albeit of different nature. Nothing in the real world is independent and uncorrelated. Probabilistic thinking is just another modeling technique and hasn’t helped much when structural changes are about to take over.

Blockchain technology by now has sufficient characteristics to qualify for a threat and/or opportunity that could at some point bring structural changes on a broad enough scale. Even the fact that some disagree or incorrectly think that this validates the potential of Bitcoin as a currency or spend time/energy looking for nails everywhere to test the “Blockchain hammer”; all is in support of “Blockchain becoming the backbone of the 4th industrial revolution”. Not alone of course, because nothing happens in isolation. There are multiple problems that have been looking for solutions and a large group of them may be addressed efficiently by deploying Blockchain Technology. Problems with Fraud, Trust, Access, Validation of data of any kind, transfer of any kind of value, …..

It all started 9yrs ago when the Satoshi white paper became public and for the first couple of years, the focus was on using the new technology in transferring financial value without the conventional intermediaries.

Fast forward to today (actually over the last year or so) and

Blockchain is like a genie released out of the bottle.

 Four days in Muscat Oman attending the 1st Blockchain Symposium was a rich, immersive, and interactive experience.

This was my first participation in a Summit that was 100% cross-disciplinary. All ministries, all ministers, Central bank, regulators, businesses people, academia were amongst the 700 Omanis (by invitation-only) attending the first two days of the conference. Four closed working groups were setup for Day 3 and 4, and a local Cryptoexplorers roundtable was on another track. The detailed program here.

Omanis have started losing their sleep, as light-bulbs start popping up in their heads after the dense, amazing, interactive Blockchain immersion during the Summit.

The line-up of the speakers, panelists, moderators was top-notch and global. Congratulations to Marcelo Garcia, founder of BroadLights.org and Crypto Explorers.org, who brought us all into this happening.

Reflections & takeaways

Oman is a beautiful country to visit and the people are warm and open.

Thanks to Bitcoin’s price explosion and to the ERC20 standard that has made ICOs (wear sunglasses as you watch these “comets” being launched); the world is paying more attention to Blockchain technology.

Digital identity will become ubiquitous at the municipal and country level. The adoption has started. Estonia’s offerings and the Civic token run by Vinny Lingham as the CEO, are well known. There are more initiatives in this space. Procivis, your digital ID app with Daniel Gasteiger CEO, who was on stage with us at the Oman Summit, is launching already e-government services in the canton of Schaffhausen, Switzerland and more projects are in the pipeline in India and Astana. SICPA, a Swiss-based company who was focused on the security of bank notes for governments for more than 50yrs, is now focusing on securing digital assets for Estonia’s program and a broader offering of e-government services. Philippe Thévoz, VP of e-governments services at SICPA shared the transformation journey of the company from ink to cryptography.

Blockchain on smartphones apps leading mass adoption. The Freedom Phone available in India, a smartphone for less than $4, will scale the digitization efforts of the government (e.g. via Adahaar but not only) and push financial inclusion at another level.

Academia is getting seriously involved in Cryptocurrency Research and engineering and making clear that this an interdisciplinary area and should not be fenced in any one traditional domain. Cathy Mulligan, Co-Director at Imperial College Centre for Cryptocurrency is deeply involved in the university research and engineering with behavioral economists, productivity economists, computer scientists, and engineers. The focus is on scalability issues and the economic impact of blockchain technology. They have already done close to 40 proof of concepts and have a pipeline of projects looking to launch an ICO that they examine in terms of viability. Is a token necessary and what are the incentives that the smart contract automates.

Blockchain opens the way for exponential growth and network effects in banking, due to PSD2. A token that is leveraging the empowerment of consumers and banks, as dictated by PSD2 rules and spirit. With no crowdsale but with a recent funding of $18.5m (Series A from a group of European investors) Token.io is simplifying the multiple API integrations needed. Without tapping into the ICO market, Token is an open banking platform for people, businesses, and financial institutions to move money around by using digital identity and smart tokens so that any entity can give third parties access to their account details in a secure and simple way.

Blockchain and Bitcoin are not only relevant for banks. Blockchain pilots started in financial markets with post-trade and settlement being the focus. 2017 is not only the year that cryptocurrencies exploded and crowdfunding via ICOs surpassed early-stage VC funding, but the year that blockchain pilots spread across many more areas: supply chain, insurance, e-commerce etc. Management consulting firms and telecoms are two examples of non-financial stakeholders in the 4th industrial revolution that are already offering blockchain platforms for piloting projects in a safe, regulated way. The CEO of Swisscom Blockchain, Daniel Haudenschild, was the opening keynote speaker and spoke about the potential to pilot innovation on their platform around logistics and manufacturing. Currently, they are working on projects in healthcare, insurance, and banking. Massimiliano di Gregorio from PWC introduced the new Vulcan Digital Assets services platform for banks and corporates to pilot projects at the government level, for retail commerce and in financial markets with a focus on programmable money.

Blockchain as an enabling technology that requires the Triangle collaboration of the Public, Private sector and People to implement meaningful change and change business processes and social issues.  I cannot stress enough that

Blockchain should not be treated as a Hammer looking for Nails.

Blockchain can automate Trust between counterparties (even if they are “strangers”) and can allow value exchange between them in cheap, secure, fast ways that were not available before. But if you don’t face such issues, then don’t try to Blockchain everything.

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Efi Pylarinou is a Fintech thought-leader, consultant and investor. 

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One comment

  1. Hi, I believe I understand how blockchains work. However it seems that blockchain is taking on the role of a “golden bullet”, the solution to every known problem. I strongly endorse the statement in the article that says, “Blockchain should not be treated as a Hammer looking for Nails”. I think this is how the world sees blockchain. Having said that, given the number of experts who are espousing blockchain technology I suspect I am wrong. I will outline my thinking below and would really appreciate any help in clearing my misconceptions.

    In my way of thinking blockchain is a “write once, read many times database”. The write once aspect is dependent on there being a number of independent nodes that host copies of the distributed ledger (write once database), if there are not multiple independent nodes the write once protection would be lost. For there to be multiple nodes there needs to be an incentive, usually financial, that encourages the nodes to participate and ensure the write once protection. In a crypto-currency world like Bitcoin the mining reward provides the financial incentive. If, for example, a blockchain is used to support a property ownership register what is the financial incentive for the node owners especially as the node owners are unlikely to also be property owners of property on the blockchain if the blockchain is, for example, managing property in an emerging economy.

    Even if there is a way to ensure the security of the blockchain supporting the property register the regular claim I hear is that blockchain will reduce the cost of whatever it is hosting. I question this.

    Sticking with the property register example. There is far more to the cost of a property register than just the system holding the records of the properties. For example, a surveyor needs to survey the area, the surveyor will charge for this service, this cost will not go away because a blockchain is being used. Banks will need to have mechanism to place a hold on a property if they grant a loan over the property. This will take administrative work to do. This equals more costs. I could go on.

    So it seems to me that the database that underlies a system, whether it is a write once read many times blockchain or a more traditional database is but a small part of the overall costs. As I said above I would really appreciate any help in understanding what I have got wrong.

    Thanks – Tony.

    Like

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