Wednesday 1 May 2019 10:08 am

Blockchain technology promises to change the world, but so far it has delivered very little

Last month, I attended a debate in the Houses of Parliament, not on the legalities of the ever so tedious withdrawal agreement, but on cryptocurrency and blockchain.

At first, I was surprised that a discussion on these topics only lasted an hour and a half considering that, although blockchain technology powers cryptocurrencies such as bitcoin, the terms are not synonymous. It seems that there is still much to learn about the technology that is set to “change the world”.

For instance, while listening to a panel of leading figures in the industry, I couldn’t help but notice that really no one could confirm or deny anything that they said. It’s clear that blockchain has the potential to dramatically change industries, and I don’t deny that it could have a potentially huge impact, but it is still nascent, and industries are struggling to understand the technology.

Read more: Crypto AM industry voices: Regulating blockchain and crypto

Think about it: the first application of blockchain technology is a digital currency in the form of bitcoin. But governments and industries alike are still failing to regulate it and are struggling to move fast enough to catch up with the speed of development. Bearing in mind that bitcoin was launched 10 years ago, it’s clear that education needs to be a priority.

Last month, the EU made a step in the right direction — it launched the International Association of Trusted Blockchain Applications. The 100-plus member list includes the likes of IBM and Accenture, and its overall goal is to create a framework for the development and implementation of blockchain technology. This is wholly a positive step towards regulation, and will provide greater clarity for organisations in this industry.

However, the overriding feeling I get from reading or listening to anything on the topic of blockchain is that it’s some kind of magical fairy dust, and that if you sprinkle it over a problem, it will supernaturally fix it. Economic crises, climate change and poverty have all been challenges that this technology can supposedly overcome. It has even been cited as a solution to Brexit.

Unfortunately, for most of these issues, you need to cross borders and even continents in order to implement solutions that could potentially tackle them.

In an article on Brexit, Pindar Wong wrote that blockchain’s “cryptographic certainty” could be used to check goods and apply tariffs without the need for a border, and thus alleviate the issues surrounding the Irish backstop. What Wong fails to consider is that an unapproved technology with barely any regulation would be impossible to implement.

On the topic of the Irish border issue, Matthew Hughes wrote: “This, simply, isn’t something that blockchain can fix. The problem isn’t the technology or the implementation, but the fact that the fundamentals of the problem are simply too complicated. The issue isn’t technology, but a bubbling cauldron of society, history, heritage, and geography.”

It is clear that we cannot apply blockchain to every problem that we face — social, economic, or political problems (like Brexit) cannot be solved purely with the flick of a technological wand.

Blockchain needs more thorough, well-developed regulations, and both industries and government bodies need more education on the benefits of this technology.

Read more: Let's be clear – Blockchain is not the same as Bitcoin

Many people associate blockchain with cryptocurrency, which in turn represents market volatility and risk. Therefore, businesses are reluctant to implement blockchain applications due to the unstable regulatory environment and an overall lack of trust.

Blockchain promises a lot, but delivers very little at this stage in its evolution. There is real potential for this technology to revolutionise industries, but until our understanding gets better, blockchain won’t be able to solve any problems at all.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.