Blockchain technology has the potential to revolutionize the future — but will it catch on?
Lately we’ve been hearing a lot about blockchain, the distributed ledger technology with the power to instantly transfer financial assets, create permanent transactional records that prevent fraud, and decentralize banking. Despite the technology’s unprecedented potential to disrupt the financial establishment — and the buzz it’s generated across industries — major corporations have been slow to embrace it. Arthur Falls, host of The Ether Review, sat down with Dr. Jock Percy, founder and CEO of Perseus, to discuss the social, regulatory, and economic issues that may hinder blockchain’s growth potential.
What is your vision for blockchain technology?
I guess I’ve got a vision, and then what I think is a more likely reality. My vision is that the blockchain should enable economies and ecosystems to transact quickly and effectively, and without as many intermediary settlements inhibiting that process. That’s the vision statement, and that should happen in our lifetime because blockchain is distributed by public ledger.
The reality is that the technology is still immature, and it’s fallible — because you’re talking about digitizing things that were once private, and digitizing them not in a private setting, not in a bank rolled setting, but publicly. So the fallibility is a problem, the immaturity is a problem, and therefore the reality is that it may not happen in our lifetime. It may take another 100 years.
After all, we’ve gone from scratching marks on cave walls to enumerated roman systems to current modern accounting booking and ledger-keeping and digitized recordkeeping. So it may take 100+ years for this to take effect.
That’s the two-part answer to the question of “What’s my vision?” As an economist, the reason why I think like that is because I’d like us to spend more time, money, and resources on other human endeavors instead of just on private recordkeeping, on clearing times, and on specific financial realities. For example, having money tied up for two days in a settlement and clearing process when you’re trading currency vs. currency is ridiculous. When you’re trading a currency against another currency, there should be instant clearing and settlement. But there isn’t. And that’s a waste of human capital. So that’s why I think the way I think.
So that’s the problem to be solved. Do you not think that the impetus to solve that problem would accelerate the adoption of blockchain?
It’s already doing that, but there’s another large opposing force. I heard a discussion the other day about driverless cars, or self-driving vehicles. The reality is that something like 9% of all adult males in the United States are employed in driving jobs. So there’s an awful lot at stake in protecting the status quo, specifically in finance and capital markets. In other words, there’s a lot of money at stake.
So on the one hand, you’ve got regulation and technology forcing the market players to sniff around and start to adopt the technology. And on the other hand, you’ve got this opposing force that’s more powerful at this point: that there is so much money being made, and there are so many tens of thousands — if not hundreds of thousands of people — whose employment hinges on maintaining the current system. Those are distinct opposing forces. And one of those forces, in this case the legacy force, will break. It’s just a question of when.
Why will it break?
When all’s said and done, it’s human nature. Unless we go through a post-civilization dark ages, with an economic reversion — and that could happen too. But it is human nature to adopt new technology. I don’t think any of us are going to willingly go back to a life before refrigeration or before the internet. It’s human nature to adapt and adopt this new technology, and to become dependent on it. But we need to create alternative jobs for all of these people employed by and for the existing legacy system.
Earlier, you drew a timeline that included scratching marks on walls and recording transactions and account information. Is that the track of technological development that you see blockchain fitting into?
If you look at blockchain’s application in capital markets — we could also look at land registry, recordkeeping, academic records, a whole bunch of things, but let’s take capital markets — we’ve gone from marbles in jars, to storage reporting of different types, to stone tablets to papyrus. That curve in terms of technological advancement is pretty much a hockey stick.
So we’re at the top end of that hockey stick right now, and therefore I’m assuming that economies have recorded transactions, ownership, and assets; and that recording and transactional ledger-keeping mechanisms have advanced to where we are today, and the gaps between each advancement stage have become shorter and shorter. That’s the part of me that hopes that blockchain technology will be adopted quickly in my lifetime. But there’s also part of me that can’t rule out national political, geopolitical, nor the opposing force we discussed earlier. Those things will slow blockchain’s growth, because there’s a lot at stake.
So we’re running up against humanity’s ability to adapt to new technology?
I would augment that statement, which is a good one. I think we’re running up against humanity’s ability to adapt to technology that puts many of us out of work.
Like what you read? Join L&T on September 15 for “Beyond Blockchain: The Future of the Internet,” a panel discussion moderated by Falls and featuring Percy, alongside Jesse Grushack and Rahilla Zafar of ConsenSys, and Eric Piscini of Deloitte Consulting.
(Image Credit: Rafael Matsunaga/Flickr)