Blockchain technology has been making its way through the financial sector and pouring into mainstream industries for the last few years.
With the news over the last six months, including companies like AIG and IBM adding blockchain-based smart contracts to the insurance industry along with Accenture and Microsoft's work toward digital IDs using blockchain, it seems like the technology has some far-reaching capabilities as far as what it is capable of achieving.
It’s gaining so much traction that even higher education institutions like the University of Edinburgh are adding blockchain technology classes to their curriculums.
To gain a deeper insight into blockchain technology and what it is truly capable of, the World Economic Forum and its Center for the Fourth Industrial Revolution paired up on a new whitepaper titled Realizing the Potential of Blockchain: A Multistakeholder Approach to the Stewardship of Blockchain and Cryptocurrencies.
The authors compared the growth of blockchain to that of the Internet's path to widespread success:
“Where the Internet democratized information, the blockchain democratizes value and cuts to the core of legacy industries like banking. It also pertains to the management of money, wealth, intellectual property and other forms of value for which many societies expect government to protect the public interest. So we all need to acknowledge that, while governments and regulators alone lack the knowledge, resources and mandate to govern this technology effectively, government participation and even regulation will likely have a greater influence over blockchain technologies to ensure that we preserve both the rights and powers of consumers and citizens.”
While blockchain technology serves to provide a decentralized third-party venue for businesses to openly collaborate, research from this white paper clarifies the hesitation for most in moving its use forward. Given the fact that there is not one central place for the distributed ledgers of blockchain, there has been some trepidation among many in the governing arena.
According to the researchers, Don Tapscott and Alex Tapscott, there are three areas that should be explored when it comes to blockchain technology governance: Platform Ecosystems, Application Ecosystems and the Overall Blockchain Ecosystem.
Of the issues that arise for these areas, the research shows that for the Platform Ecosystem there is currently no constructive way to scale blockchain technology without weakening the overall network, there’s a lack of standards and there are too many people involved in the regulation process.
Within the Application Ecosystem, the researchers saw three overall governance challenges which include: oversight of applications whose off-chain equivalents are regulated; the lack of skilled developers; and the lack of user-friendly interfaces.
The Overall Blockchain Ecosystem runs into issues in terms of the lack of a legal structure around the technology and the fact that the rate of new businesses using it are currently outpacing scientific research.
To help address all of these challenges, Tapscott and Tapscott recommend the development and implementation of networked institutions, standard networks, advocacy networks, policy and watchdog networks, delivery networks. Pending forward movement in these areas, it may be difficult to build out the blockchain technology system that will allow for true third-party transparency for all industries looking to use it.
In blockchain technology news this week, the University of Sydney dips its toes into the blockchain arena as it announces its development of a new blockchain model that is able to process 400,000 financial transactions per second. Dubbed Red Belly Blockchain, the university researchers are claiming that this has the potential to revolutionize the technology.
Later this month, the United States will be holding its US Federal Blockchain Forum. As the states have expressed concerns of the lack of regulation of the technology in the past, this is a solid step forward. The purpose of this forum is to build out a six-month plan to help discover how government agencies can work together on creating blockchain technology projects.
On America's birthday this week, Deloitte announced its partnership with blockchain solution developer Waves. Through this pairing, Deloitte’s customers will have access to both initial coin offering (ICO) services and tailored blockchain solutions for business tasks.
While the use of blockchain technology as a third-party system for transparency across industries isn’t a reality yet, the above research and mentioned partnerships are probably a good start.