Blockchain / Distributed Ledger

Blockchain Tracker: Prizes And Regulations, Do They Mix?

Only in the tech space do we see an unending list of prize challenges hoping to prove that bettering the future can come quicker if we drill down and compete.

And the carrot in the competition is no chump change.

From hackathons promoted by Worldpay with £5,000 at stake, to PayPal’s annual developer challenge holding a prize worth $150,000, to Amazon’s $2.5 million prize focused on artificial intelligence enhancements, there is much to compete for and what seems to be an unlimited amount of award money.

The new thing? Blockchain startup contests.

With €15,000 in prize money ready to be handed out, BlockchainHub Graz and industry partners have announced a Blockchain Startup Contest. That money will be awarded through two categories: software and hardware startups. The requirements include being an idea or startup younger than two years old, and while involving blockchain isn’t mandatory, it does seem that, given the name, competitors probably should do so. Enriching the ecosystem of decentralized technology is key in the fight, however. Those that want in on the competition have until Halloween to apply.

With the expansion of blockchain, this is likely not a one-off competition. Could this be “the new thing” to keep a keen eye on?

Some experts have already gotten their pom-poms ready to cheer on the games.

“The Blockchain Startup Contest is the very thing that the industry needs. The basis for blockchain technology is something that works well in practice, but not in theory,” said Luther Martin at HPE Security-Data Security. “The best way to find good applications for such ideas is to try them and see which ones work even better in practice, and competitions like the BSC are an excellent way to make that happen.”

However, other experts are not sure they’re rooting just yet.

“On the one hand, we think that startup contests can help seed new ideas about how to use the technology, but on the other, financial services is a highly specialized industry, and to find meaningful applications for the technology, you really need to understand business operations and the nuances of the financial services industry,” said Selwyn Halbertsma, U.S. practice lead at Synechron Business Consulting, who adds that he can speak from experience. “We built our six blockchain accelerators with financial services in mind.”

The crux of many concerns relate to regulations that are still to be determined, and it may take awhile before they are truly established. Regulators sure are looking at blockchain carefully, more so now.

Recently, the Federal Reserve’s Lael Brainard said that the U.S. Federal Reserve is paying close attention to blockchain. That close attention means through a working group specifically focused on payments and settlements and on a research-oriented approach related to other market applications. The Fed has plans to publish a blockchain report later this year.

“Everyone wants to look at the possible benefits from using blockchains, but this Fed report could be the first balanced look at both their advantages and disadvantages — particularly the new risks that they can introduce to the financial system,” said Martin.

Separately, the World Federation of Exchanges has called for the creation of regulatory sandbox environments for distributed ledger technology (DLT). Experts say they expect to see many more similar regulations across the globe.

“We’ve seen that regulators are interested in blockchain development being done in a sandbox environment to minimize risk on existing business operations,” said Halbertsma.

But security and blockchain are two words that create an issue that has many people questioning.

Experts like Halbertsma say the industry is working through technology solutions for challenges like interoperability, privacy and others. They also expect regulators will take a stance on specific measures to ensure data security and privacy for blockchain transactions.

Which circles back to this concept of blockchain contests. Do these contests get to take into account regulation in that short time period of creating the platform?

Or, does it depend on the prize that’s at stake?

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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