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It may have been bitcoin that brought blockchain technology to mainstream attention, but increasingly, large institutions and start-ups alike are looking beyond digital currencies to other uses for distributed ledger technology. In some instances, they are straying from financial use cases altogether.
At a London breakfast event, Beyond Bitcoin, hosted by BNP Paribas, a panel discussed the various applications of the enigma that is blockchain.
Moderator Scott Riley, blockchain business lead at commodities technology company Kynetix, conceded that some elements of disbelief have to be suspended.
Riley went on to suggest that, actually, the concept of networks and distribution is not a particularly new one, and that the notion first appeared in theory papers as far back as 1962.
He said it is simply that “some components have come together and are being looked at in a slightly different way, which is what gives us a new look on that.”
Disruptive forces
While it’s a common assumption that institutions are approaching blockchain with caution, viewing it as a technology set to change the very fabric of their organisations, the panellists generally disputed this view.
Calogero Scibetta, head of operations and business development at Everledger, argued that his firm uses blockchain not to disintermediate players, but to improve the whole process. Everledger uses blockchain in the diamonds industry, creating a ‘digital thumbprint’ of individual diamonds in order to prevent counterfeit and fraud.
In this environment, Scibetta said, blockchain is “enabling the industry to do something that wasn’t possible before”.
“Instead of disrupting or carving out the middleman, we’re actually empowering every player on the buyer chain, because fraud and counterfeit … hurts the buyer chain itself, and everyone pays a price for it,” Scibetta added.
Despite the differences between the two sectors, a similar approach can be taken to blockchain in financial services.
Philippe Denis, chief digital officer at BNP Paribas Securities Services, drew attention to the bank’s strategic partnership with the direct investment platform SmartAngels. The pairing is intended to allow private companies to issue securities on the SmartAngels private market, allowing them access to a secondary market using blockchain.
According to Denis, BNP Paribas and SmartAngels are identifying niche areas of the industry that, so far, have been relatively untouched by technology, such as unlisted stocks.
“There was an opportunity to bring value to these kinds of activities,” he said.
“People then are going to use the blockchain not to disintermediate or to disrupt the market, but to use new types of technologies … to help the market to be more free and more efficient at the end of the day.”
Sean Murphy, partner and blockchain practice lead at Norton Rose Fulbright, suggested that the law firm is being actively approached by clients looking for blockchain solutions in areas such as post-trade settlements and identity.
Murphy also highlighted his interest in the “concept of central banks potentially issuing their own digital currency”, which he said could be “a pretty profound moment”.
The consensus appears to be that, rather than disintermediating sections of financial services, blockchain should actually be viewed as a solution to previously un-solved issues.
Gavin Wood, founder of blockchain technology provider Ethcore, suggested that one such issue will be that of provenance and supply chain tracking, “mainly because it’s already a latent problem”.
He said: “It’s not something there is a huge amount of regulation around; it’s not something that there is a vast number of incumbents that have offerings that can protect their territory already.”
On the other hand, while the technology is young, the industry should perhaps keep an open mind to the existing challenges blockchain could potentially address.
Scibetta said: “We’re still breaking out in a small market. The landscape of the technology will be changing dramatically in the next months or years. So from an implementation point of view it’s hard to commit on something today.”