The blockchain hype train has been derailed as people realise that the technology won’t change things overnight.
That’s the view of FinTech heavyweight Chris Skinner, Chair of the European networking forum The Financial Services Club and Nordic Finance Innovation.
In a blog post, he says: “I used to blog about blockchain and DLT almost once a week … four years ago. Today, I hardly blog about it at all. I guess it just shows what’s top of mind and what’s not at any time in FinTech and, right now, blockchain is not top of mind. In fact, most of the conferences I go to these days it’s a surprise if anyone is talking about blockchain or DLT at all. It’s a no-no. How can a rising technology that everyone loved fall so fast? Is DLT dead? Where do we go from here?”
Blockchain and DLT need to get agreement about how to use them before they can work and use cases involve areas that have the most complex structures, and therefore the most complex agreements, Skinner observes. Digital identity involves agreements between governments, corporations, financial institutions and citizens before it can be applied. Similarly, another major use case – clearing and settlement – needs agreements between financial institutions, clearing authorities, cross-border infrastructures, government authorities and central banks before it can be applied.
“In fact, if you look at any of the major areas blockchain can make a difference, it involves complex discussions around structural change before it can work. That’s why it takes a long time, and doesn’t happen overnight,” Skinner writes.
“This is why many commentators are now writing negative news about blockchain and DLT which, BTW, are not the same. A distributed ledger can work without a blockchain, as demonstrated by Corda from R3 – a blockchain-inspired open source distributed ledger platform.”
Financial services execs have been lining up to criticise the blockchain space this week.
“Blockchain has been way oversold. I think the fundamental technology is very interesting, but it’s been very slow to roll-out,” commented Wells Fargo CEO Tim Sloan.
“There are interesting possibilities with blockchain and to ignore that would be a bad idea. We’re just saying we don’t know the business model yet,” observed. Mastercard CEO Ajaypal Banga.
Meanwhile, Bank of America Tech and Operations Chief, Cathy Bessant, claimed that she hasn’t seen one use case that even scales beyond an individual or a small set of transactions. “All of the big tech companies will come and say ‘blockchain, blockchain, blockchain.’ I say, ‘Show me the use case. You bring me the use case and I’ll try it’. I want it to work. Spiritually, I want it to make us better, faster, cheaper, more transparent, more, you know, all of those things,” she said.