While blockchain technology has notoriously been used strictly for businesses in the finance world, there has been talk lately of bringing it into the mainstream. More specifically, one of Russia’s largest financial institutions is hoping to move the ball forward on this endeavor.
It was recently reported that Herman Gref, who serves as CEO of Sberbank, which is Russia’s largest bank, is projecting that commercial applications of blockchain technology will become a reality in the Soviet Union within the next two and half years. Gref is confident this undertaking of transitioning into commercial use will work, as Russia’s Deputy Prime Minister Igor Shuvalov has put together a group that’s working toward further developing blockchain technology across all industries.
While Sberbank is in its infancy in exploring the potential of blockchain technology’s capabilities, its CEO is pushing forward with development via special groups, and the bank itself joined the Linux Foundation’s open-source Hyperledger Blockchain Project.
In an effort to dig a bit deeper on the possibilities of mainstream adoption of blockchain technology, we sat down with Anthem Vault’s CEO Anthem Blanchard and legal expert Andrew Hinkes of the law firm Berger Singerman.
PYMNTS: How do you see blockchain technologies evolving over the next few years?
AB: I think blockchain development is trending towards both a greater demand for asset-backed and niche utility-based tokens as well as closed data management blockchain systems used within a consortium of companies. Increased adoption of asset-backed and utility tokens will result in eliminating credit risk inherent in bank payments due to the legalities of bank accounting as per generally accepted accounting principles. Increased blockchain adoption within organizations or group of organizations will lead to lower corporate administrative costs and accounting errors.
AH: Blockchain technology will continue to be heavily marketed as a solution for a multitude of problems, many of which only need more modern shared databases to solve. Blockchains will probably pivot out from the financial services sector and embrace a multitude of non-financial applications, including technical middleware and logistics platforms. The critical issue of immutability of records versus malleability of records will result in most of the “blockchain” platforms being akin to augmented databases or databases with overlays, as opposed to “true” blockchains that use proof of work to keep functionally immutable records.
PYMNTS: Do you believe there’s a possibility that blockchain technologies will go commercial? If so, how? If not, why not?
AB: We are seeing several blockchain technologies ‘go mega corporate’ most notably with the announcement of the Enterprise Ethereum Alliance with JPMorgan Chase & Co., Microsoft Corp., Intel Corp. and more than two dozen other companies, including several major banks joining the effort. Whether this alliance proves to be sustainable or proves to be just an exploration of effort such as the R3 consortium remains to be seen, but irrespective the fact [that] these Dow 30-traded companies are making such a public announcement shows blockchain is beginning to hit the mainstream.
AH: Hyperledger and other consortia are working hard to build flexible tools for developers to take blockchain technology in a myriad of directions. I expect that DIY blockchains are on the horizon.
To take it a step further, we wanted to know how blockchain technologies would be impacted from a legal standpoint if they were to become commercialized, and asked Hinkes to expound further.
PYMNTS: What are the legal ramifications for blockchain technologies becoming more commercialized?
AH: This is a big topic. Operators of blockchains should be very careful when making representations of what their platforms do and don’t do, as marketing hype may vary significantly from reality. Cybersecurity is a serious problem and potential area of legal vulnerability. Likewise, a custom developed blockchain leaves the users and owners vulnerable to the developer’s unavailability for bug fixing, maintenance and improvements, which may result in undelivered promises to users. Blockchains are being proposed to decentralize many areas that traditionally were the province of government, including land records, which leads to the potential for significant abuses and potentially burdensome litigation.