BLOCKCHAIN IS A DELICATE MATTER
The Future magazine has been a media partner of Blockchain Conference Abu Dhabi. The conference has become a consolidation of visionary and strategic views on prospects for the segment development, expert presentations in the context of the infrastructural management of the blockchain ecosystem (regulation, legislation) and practical experience using real international cases.
Strategic View
If you google ‘blockchain’, you will get about 21 million hits in total, while IoT (Internet of Things) gives you about 90 million hits, VR (Virtual Reality) – 115 million hits, and a search query for ‘Donald Trump’ – over 400 million hits. A blockchain evangelist and IBM | Middle East representative Saqr Ereiqat has begun his presentation with this short demonstration of the blockchain penetration into the real world. During the introduction of the emerging industry, he has however noted that the modest statistics is not surprising, because the increased public interest in the topic of blockchain appeared only at the end of last year and at the beginning of this one. So, the awareness of this technology has not been significant yet even in the professional financial world.
According to various sources, however, today 80% of banks are exploring possibilities of the blockchain technology, and 78% of them believe that blockchain will acquire widespread use in five or six years. The greatest transformations in the next five or six years will occur in such segments as the consumer banking, payments & fund investments, wealth management, according to the PwC Global FinTech Survey 2016. As Gianfrancesco Martinico from PwC | Middle East has noted, 219 fintech companies related to blockchain have been registered as of today; 30 industries have become aware of valuable benefits from financial services based on blockchain; an amount of investments in the blockchain-fintech sector has been about $ 900 million.
Thus, even today we can observe an increased interest of leading financial players in the blockchain technology. For example, the French AXA Group has invested $ 55 million in the Canadian startup Blockstream located in Montreal. A Goldman Sachs has received the license for its own cryptocurrency SETLcoin. In parallel with the private investment projects, there is a trend of creating consortiums and associations like R3, Hyperledger and others.
“Companies are going to achieve more being together,” the speaker from PwC has noted.
Nuances of Government Regulation
At a time when a lot of hype surrounding the blockchain technology enters into a real business, a theme of the emerging industry regulation is becoming more actualized as well as the theme of fintech in general. One of the most interesting panels at Blockchain Conference Abu Dhabi has been devoted to this issue, which is cared deeply about by the most developed fintech markets of the world and their financial regulators. Two presentations have been given within this panel – PwC | Middle East and Zayed University Abu Dhabi (please follow the link to watch a video about the university).
The first presentation delivered by Madhukar Shenoy from PwC | Middle East has demonstrated real cases from the experience of the UK, Singapore, Australia and Switzerland being systematized in a framework format. The key idea of the performance is as follows: a successful supervision involves an availability of a responsible regulatory institution with a clear strategy aimed at establishing transparent rules for business and security for the consumer; a creation of the regulatory practices on the basis of a mutual dialogue between the regulator and business (‘sandbox’ formats, etc., which provide an opportunity to test business processes and find appropriate regulatory solutions); as well as technologically neutral position of the regulator, which is essential for building an effective regulatory practice.
The second presentation delivered by Christian Chamorro-Courtland from Zayed University Abu Dhabi has focused on what should be a subject of regulation and how to enhance the effectiveness of regulation. His presentation has featured the regulatory practices of the Crown Dependencies of the Isle of Man, the European Union and the American city of Ontario (CA). He has announced an idea of creating a regulatory field in the format of ‘bottom-up’ based on the business practice. This effectively means the establishment of rules of the game by the business itself (including being represented in the different jurisdictions and able to bring advanced ideas) and the development of self-regulatory approaches. The creation of a transnational regulatory field (joining efforts of regulators from different countries) becomes very important. The speaker has predicted a growing demand for the regulation in the field of the Internet, DLT organizations working with the blockchain technology and the market of crypto assets in the near future. In general, the presented international experience can be called universal milestones for the creation of a successful regulatory practice in any emerging fintech market.
Blockchain in Practice
The section of practical cases has several reports that are worth mentioning. Thus, Marina Reznik from Ubitquity LLC (Canada) has spoken about the practical application of the blockchain technology in the real estate sector.
The benefits include an equal and transparent access by all the parties to the whole variety of information (this is an impressive list of transactions and procedures related to the real estate), which greatly facilitates interaction and speed of execution of all business procedures.
Dominik Schiener from IOTA (Germany) has spoken about the prospects of integration of the Internet of things (IOT) and the blockchain technology.
For a start, there is a global data: in 2020, there will be 50 billion of interconnected devices worldwide. This concerns the issue of how to create scalable data clusters on the principles of smart decentralization (on the basis of blockchain technologies and smart contracts) by combining online and offline ecosystems, which will lead to the formation of the Economy of Things and make a variety of resources more accessible and improve the quality of life.
This panel has also featured a case of the digital bank based on blockchain (Hashcoins) and a case related to the increased transparency of green investments in the solar energy (SunExchange, South Africa & SolcryptoJV, Japan).
For example, SunExchange project represents a p2p micro finance platform based on blockchain. This crowdfunding platform allows investing the minimum capital subject to high transparency of assets, enabling companies and natural persons to invest sums of $ 10 in the distributed solar energy projects around the world, according to Cambridge Abe from SunExchange. The project has been launched in South Africa, where there is a lot of solar potential and growing demand for the electric power.
Conclusion
Summarizing the results of the conference, we would like to share several conclusions. The first one is that the scope of blockchain technology application can be found everywhere; we just need to proceed from the specificity of a given geographical area and needs of the economy and consumers. The second conclusion follows from an exclusive interview with the blockchain evangelist from IBM | Middle East for the Future magazine (to be published in full in the December issue), which has grown from Q&A format into an interesting discussion. Thus, in five or six years our world will be a global public blockchain ecosystem consisting of a number of private blockchain ecosystems (with sectoral or functional specificity). This global ecosystem will be completely digital; however, it will be largely connected with the offline world through the Internet of Things. And if you as a business unit or an individual are not there, it will mean that you are absent on a new ‘world map’, which will be entirely digital by that time. And the key aspect in the creation of a global ‘world map’ and a global blockchain space is an issue of cross-border and cross-sectoral cooperation.
The Future magazine would like to thank the organizers of Blockchain Conference Abu Dhabi for the opportunity to give coverage to the exclusive content.
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