Blockchain has exploded onto the global financial scene at such a speed that many organisations have been caught napping. A few of them, being lean and agile, have taken the leap to adapt and explore what great opportunities may lie ahead.
Others, being slow and wary, are still studying the space, perhaps waiting for the right moment to strike. And, just when that will be, nobody knows. However, the fact is that the blockchain is currently in a sprint.
At the UK Blockchain Summit last week, there were strong views that the technology could have massive benefits for the future of enterprises. A huge gathering resembling a Bruce Springsteen concert consisted of more than 2500 enthusiasts, tech geeks, academics, students and business professionals.
Surprisingly though, as global economies recovered from the 2008 financial crisis 5 years ago, only a few people had heard of blockchain; fewer still took it seriously. However, so much has happened since then. In the aftermath of the mortgage-driven crisis, the consumer markets realised that the financial system was broken.
Centralised and monopolised by a closed network of greedy behemoths (banks), their friendly overseers (regulators) and cross-eyed monitors (credit rating agencies), all of whom, to some extent had perpetrated the failures of the past, it was acknowledged that the ‘good times’ had to end.
To democratise the global financial system, as it were, would require a different approach and set of rules; an open network with no intermediary oversight, but rather, decentralised decision-making and validation that is made by the majority consensus of its participants. In that instant, the birth of the Distributed Ledger Technology (DLT) system unleashed a cluster of novel technology products, cryptocurrencies, and the ensuing Initial Coin Offerings (ICOs).
The Extent of Disruption
As of today, the blockchain revolution has gained full steam. In redefining the digital revolution, it has brought more clarity to potentially transform business models, with new innovations being launched to harness the abundant prospects across all industries. But, in some quarters, the rise and rise of the Bitcoin has been beset by rumours that it is all hype, a fraud, a pyramid scheme, and that a bubble is waiting to burst. For those, who were old enough to witness the last tech bubble in 2000, there are many similarities. And yet, this time, it feels a little bit different.
“Experts” reckon that Blockchain, Ethereum and other DLTs will disrupt the boundaries of not only financial services, but the very nature of humankind. They will impact the supply chain, healthcare, government, telecoms, and every other industry that would greatly benefit from a high level of trust, collaboration and transparency.
In short, DLTs have the potential to influence behavioural decision-making. But this is not necessarily for the better. Recent research has shown a direct correlation between a rise in addictive gambling across the financial markets and online gaming, to the adoption of cryptocurrencies, facilitated by “token’ reward payments. Warren Buffett calls it the “pulse-action”, a behavioural trait that precedes market bubbles, in analysing the 1929 stock market crash, and this largely explains his sceptical outlook of the Bitcoin.
From a positive perspective, credible evidence shows that organisations are exploiting DLTs to transform their overall business performance and client relationships. For example, there is a noticeable change in the way some governments now communicate, focusing on using enhanced digital strategies to protect trusted records and improve interactions with their citizens.
Complex policy-making and slow implementation diminishes the role of the government, being viewed as obstructive, rather not constructive, in the development process. In Antwerp, Belgium, the local government has leveraged the blockchain to create a more effective and efficient digital framework for the city. This has enabled them to communicate in a way that enhances their service delivery. There are other similar case studies, which prove that blockchain could change the way the world does business.
It is inconceivable that the trailblazers’ distrust of Bitcoin is without foundation, given their stellar track records. Regardless, whether it soars into the galaxy or crashes down to Earth, it is plausible that the impact of the underlying blockchain technology will be felt for many years to come.
Klaus Schwab is “convinced that we are at the beginning of The Fourth Industrial Revolution that will fundamentally change the way we live, work and relate to one another.” If not for those prophetic words, one is inclined to agree that the alternative store of value created by DLTs is the antifragile remedy that the world needs. In the end, the network effect could be globally disruptive.