Bitcoin won’t break into the payments mainstream for some years to come, if ever. 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 notes that there have been a number of reboots (forks) of Bitcoin and Ether since their inception, and this “demonstrates the experimental nature of where we are today and why cryptocurrencies are not ready for prime time yet”.
The future could well be stablecoins, he argues. “We have IBM developing stablecoins, tied to the US dollar, Facebook about to launch one…In fact, some claim the stablecoin marketplace is already overloaded. Nevertheless, it does make sense to have a digital currency backed by real assets. Whether it be US dollars, gold, property or any other asset, true asset-backed stablecoin currencies should win over currencies backed by nothing.”
There’s little behind Bitcoin except the promise of a global currency without government, “and even that’s been pooped. China has successfully banned Bitcoin as a currency, Bitcoin trading, ICOs, and is now moving on to banning Bitcoin mining.”
Earlier this year, Skinner argued that the blockchain hype train had been derailed as people realised the technology wasn’t going to change things overnight.
In a blog post, he said: “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 observed. 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 wrote.
“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.”