- Negativity surrounding Bitcoin and other cryptocurrencies could be obstructing blockchain's full potential
- More collaboration in the financial services industry is needed to allow businesses to fully reap the benefits of blockchain
- Banking and finance experts claim that blockchain should not be regulated in order to thrive
- 24% of businesses believe their company is on top of the developments that blockchain can bring
The impact of blockchain within the financial services industry could be significantly delayed by the damaging PR currently associated with cryptocurrencies, new research suggests.
Insight gathered in a report by international law firm Gowling WLG reveals that financial services experts are fearful that if the negative headlines surrounding the likes of Bitcoin impact industry opinion about blockchain software, it will perpetuate the common confusion between the two.
The report, entitled 'The ultimate disruptor - how blockchain is transforming financial services', states that an estimated US$2.1 billion will be spent on blockchain solutions during 2018 and, by 2021, levels are expected to reach US$9.2 billion. In order for the system to reach these levels of growth and its benefits to be realised, it's essential for businesses to understand the capabilities of blockchain and other distributed ledger technology (DLT) beyond Bitcoin.
Dean Elwood, CEO of blockchain company Umony and contributor to the report, said: 'Bitcoin is creating so much noise, much of it negative, that the genuinely useful and practical side of blockchain is getting buried. I think there is a real pressure on the industry and people like me, to make sure that everyone really understands the difference between blockchain and cryptocurrencies like Bitcoin."
The report features insight from specialists including NEX Exchange, Blockchain Hub, BTL Group and AgriLedger.
Many of the contributors believe that the development of blockchain technology will happen much faster if the industry collaborates and regulators are involved in the development process. This is because the very nature of DLT revolves around sharing information, not only internally, but also with customers and, in many cases, with competitors.
David Brennan, partner and co-chair of Gowling WLG's global tech team, said: "The business community has been quick to grasp the numerous opportunities blockchain solutions afford, but the key challenge will be communicating its significance to both the public and policymakers. Collaboration between governments and the private sector is key in order to facilitate widespread acceptance and adoption of the technology."
The firm's research also suggests that the appropriate industry regulators need to catch-up with the technological developments within blockchain and DLT, yet the majority of those interviewed do not believe that the technology itself requires regulation.
Andrew Gardiner, founder and CEO of Property Moose, said: "Cryptocurrencies need regulating, absolutely, 100%. But you can't regulate blockchain itself. It's just a piece of tech. For example, do you regulate Microsoft Word or Google for emails? They all have to be ISO compliant, so you'll have industry standards, but these are not regulation."
For a full overview of the research conducted with financial services experts, including insight on who will be affected by blockchain, the opportunities and threats facing the technology and the level of investment now going into blockchain development, see Gowling WLG's white paper 'The ultimate disruptor - how blockchain is transforming financial services'.
Footnote
[] Worldwide Semiannual Blockchain Spending Guide, International Data Corporation, 2018.