OPINION: When Will Blockchain Deliver?03.27.2018
Like children asking the eternal question “Are we there yet?” on the family road trip, the industry continues to ask “When will we see a blockchain-based platform in production?”
The answer to both is “In a while.”
The US Department of Defense’s ARPANET adopted the TCP/IP messaging protocol on January 1, 1983, but the World Wide Web would not be born until six years later when Tim Berners-Lee successfully connected to a remote server via the Hypertext Transfer Protocol.
Satoshi Nakamoto proposed bitcoin, and its empowering blockchain, in his 2009 whitepaper, which started trading a year later.
If the technologies’ pace of evolution mirror each other then 2016 should have been the start of the Cambrian Explosion of business plans like the mid-1990s with the Web.
Check. There are plans to sell gold, simplify syndicated loans, and even pay for personal dental appointments on various blockchains.
However, it took close to a decade to go from Lycos, Pets.com, and GeoCities to Google, Amazon, and Facebook. The same process is unfolding again on Wall Street.
Blockchain technology is in that adolescent stage where the there have been enough proofs-of-concept to demonstrate how its adoption will improve processes in the middle- and back offices. But delivering those benefits are still a year or two away.
One of the more high-profile implementations, the Australia Securities Exchange’s project to replace its equities post-trade Clearing House Electronic Subregister System with a platform incorporating blockchain technology from Digital Asset Holdings, likely will go live in approximately two years, according to DAH CEO Blythe Masters.
Similarly, the Depository Trust & Clearing Corp. expects that the next generation of its Trade Information Warehouse, also based on the same technology but is expected to be in production in 2019.
Approximately half of the audience polled during the DTCC’s recent Fintech Symposium, 48%, responded that the industry would see a production-ready distributed ledger platform in the next two years. The second largest plurality, 28%, said that it would happen in two to three years.
The typical response of “two to three years,” can be troublesome for cynics.
When discussing IT projects, “two to three years” has always been shorthand for “damned if I know.”
Two to three years also tends to be the functional life of many senior technologists who initiate large signature projects and who are gone before the completion of their projects.
It will take the industry at least two years to deliver the benefits of blockchain 1.0. But in the meantime, is the industry preparing to set the necessary foundations for blockchain 2.0? Or in Web-speak, going from static corporate websites to e-commerce-based supply chains?
According to Wynn Davies, managing director, capital markets at Accenture and who participated in the DTCC conference, the answer is “no.”
He noted that many firms are trying to shoehorn in blockchain-based processes within their existing architectures and workflows.
If firms desire to take advantage of future blockchain functionality, such as interoperability, they’ll need to start addressing it now, Davies added.
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The Australian exchange apologised for the disruption experienced in relation to project.