The blockchain backlash has begun – but will in its turn be supplanted, allowing the technology’s immense potential as a vehicle for trust to flourish, says Peter Williams
This article was first published in the June 2019 UK edition of Accounting and Business magazine.
Since the late 1950s the technology deployment lifecycle has been an accepted model of new product adoption. The stages of 21st-century innovations go something like this: invention, emergence, enthusiastic adoption, criticism/resistance, acceptance and integration.
So many digital technology products have quickly impacted our lives. Societies are changing because of smartphones and the apps they facilitate. But even so, apps do not change human nature, rather they reinforce who we are. And even the best educated and most rational of people – such as finance professionals – can fall victim to irrationality and groupthink.
Blockchain is an example of the digital fever that can sweep across communities prompting irrational exuberance. Blockchain, cry the evangelists, is going to change our lives, with the work of the finance director or the practitioner transformed in ways that are barely imaginable.
Hard on the heels of the fervour comes the fear and then the backlash. That’s where we are now with blockchain, as it is pointed out how the distributed ledger technology is fast becoming the tool of choice for every type of villain (see page 62). We worry that if blockchain is exploited in a clandestine fashion by the unscrupulous, then regulators, tax collectors and law enforcers will be left helpless in the face of Bond-type villains running rings round the guardians of society.
Once the fever of fear breaks, the realisation will emerge that the technology does not herald the end of civilisation as we know it, and will not take us captive – either because it does not have such intrinsic power or because government and society are able to intervene to maintain some semblance of order.
At the same time, we worry about the downside of blockchain and are disappointed that its progress has not been as speedy as expected.
Aside from the world of bitcoin/ currency, the practical applications of blockchain so far have been tentative. We’re in the midst of a world of small-scale projects, demos, pilots and potential-use cases, including payments, supply chains, digital IDs, data sharing, voting, land titles, tax regulation and even food safety.
In his book The Blockchain and the New Architecture of Trust, Kevin Werbach argues that rather than constituting a radical technology, blockchain relies on social cohesion and stability. For Werbach, a professor at the University of Pennsylvania’s Wharton School of Business, it is all about ‘translucent collaboration’ – sharing data but without giving up control. Bitcoin is an example – a currency that has an acceptable form of governance even if no individual is in charge.
Once blockchain is seen as a new form of trust, it may really come into its own. The uses of blockchain so far do not play to this strength. When we find what the killer app is for this distributed trust, this translucent collaboration, then blockchain will truly flourish.
Peter Williams is an accountant and journalist.
"The worry is that Bond-type villains exploiting blockchain will run rings round regulators, tax collectors and law enforcers"