Paul Brody, speaking at the BiTA Symposium, has been in the blockchain practice for about five years now. He was part of building the first blockchain with IBM. "We’re not just in the early days anymore," he says. Brody is currently responsible for driving Ernst and Young’s (EY's) initiatives and investments in blockchain technology acrossconsulting, audit, and tax business lines.
Brody says there’s an industrialization, but no revolution just yet. There’s a lot happening and EY shows several ways that they’re already gaining major traction in various industries.
Consumers don’t care what’s on the back end of these situations, says Brody. He believes that blockchain is probably more of a B2B solution, not a B2C.
Currently, in terms of major limitations, it’s not at scale and there are not complex transactions.
What’s the test of a blockchain? These are the five point test questions for viability in terms of using blockchain:
(1) Are there multiple parties in this ecosystem? (2) Is it establishing trust between all the parties and issue? (3) Are we securing the ownership or management of a finite resource? (4) Do all the parties need to work with shared, complex business logic? (5) Does the process depend on an extended business network?
If you have yes to at least three of these questions, you could probably use a blockchain solution.
Don’t fix something that’s not broken. Blockchains aren’t always that useful. Blockchain won’t replace Visa and Mastercard, for instance, because that’s not a problem.
Blockchains will do for networks of enterprises and business ecosystems what ERP did for the single company. Let’s all have the same set of facts and work from the same information.
So where to next? Brody see four majors transitions on the horizon. A shift from private blockchains to public ones. The current web of private blockchains is unsustainable as large companies seek to build overlapping, parallel networks. The current model of siloed and parallel private networks is unsustainable. Instead, a future of large, regional or sector-specific networks that are public is more likely.
The future of blockchain kind of looks like the future of email. Open system for all users. No central parties control. No walled gardens preventing interoperability. Long term prototocol stability. An ecosystem of providers have emerged to address issues: spam filtering, cloud data, and storage.
Brody sees the evolution moving from notarization to synchronization to tokenization. Many blockchain implementations are still about time stamping and synchronizing information. It’s a dead end. Tokenization is more demanding than notarization. It forces reconciliation across the network, preventing the disappearance or double counting of assets. It means that inventory moves between locations and are handled with the same precision as bank transfers.
It is possible to represent entire complex business and operational networks in a blockchain. You can have accuracy and reconciliation across the entire process.
The shift from cryptocurrencies to tokenized fiat currency is coming. The future of business fiat across blockchain platforms is crypto. Tokens of all kinds will be used. Multiple companies are already in the process of tokenizing fiat currencies onto public blockchains. The most enduring new coins being issued are the ones that can be used to move value on public networks. But they will be asset-backed liquid coins. We believe fiat currencies will come to dominate these transactions.
Finally, shifting from a parallel separate system toward integration with existing laws and regulations. All of this can happen through sophisticated smart contracts, convertibility, and audit controls. Central banks and government authorities are starting to develop regulatory framework that will enable these transactions legally.
"We don’t see any real regulatory barriers that will stop this from happening in the next year or two," says Brody. "The future is already here. It’s just not evenly distributed."
It tends to take about a decade for full transitions to occur in an industrialized space, Brody says. "Just think of 2006 when Amazon Web Services launched. It wasn’t until 2017 that the majority of ERP installs shifted to the cloud. The future may be longer in coming than we realize. Part of it has to do with 'Who is willing to be first?'"
Today there are private blockchains and solutions, tactical ROI, driven by industry leaders and evolving ecosystems. Tomorrow is going to be public networks, general purpose transactions, open to all with dynamic ecosystems.
Finally, cue the skeptics, says Brody. "Right on schedule. There’s a group of people, I call them the cryptocrazies. They’re not right. But on the other hand there are the skeptics that just don’t see it happening in their lifetime. Look, we are ten years into the blockchain cycle. It’s not early days. Today it’s about scalability."
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