Greetings from Palo Alto, where I am attending the Blockchain Global Impact Conference. And escaping the never ending winter of 2015.
- Identity Management
As expected, the topic of identity has been hotly debated at the conference workshops this weekend. Our discussions bogged down when we tried to address the seemingly intractable problem of bridging the gap between digital and real-world identity; namely, can you authenticate one with the other without having to trust a third party? My crude view at the moment is that we can’t, at least for now, and instead should focus on 1. Identifying and improving the trusted “on-ramps” to a digital identity and 2. Leveraging the trusted-party-endorsed digital identities to remove inefficiencies and empower end users. #1 seems straightforward with the plethora of 2fa/biometrics, but as this article shows, there are still many challenges
- (de) Central Governments
The love notes to distributed ledgers continues last week with the UK Treasury’s Digital Currencies response paper, which lays out fairly succinctly the benefits and risks associated with the use of digital currencies:
“…the ‘distributed ledger’ technology that underpins digital currencies has significant future promise as an innovation in payments technology.”
The report was widely lauded as both a win for the blockchain world and for the UK as a ‘bitcoin friendly’ place to do business, as the key next steps include moderate regulation combined with an earmarked budget to study the space further.
“Digital currencies like Bitcoin have captured the imagination of the press,” notes the Intel post. “Related startups are generating a great deal of VC [venture capitalist] interest and investment because of the potential significance of any disruption of the financial payment industry. Its fundamental technical innovation is the decentralized transaction ledger called the ‘block-chain.’ It allows bitcoin to prevent double-spending of currency by recording all transactions in an open ledger without the need for a central authority. Such a distributed, public, secure, peer-to-peer transaction record enables not just the exchange of bitcoins but many secondary uses that the research and startup community are exploring such as digital marketplaces.”
Noted bitcoin skeptic Izabella Kaminska of the FT has a fairly surprising post on the possible benefits of closed-loop ledgers. As many of our readers may know, this is also our focus. I have been thinking a bit recently about the oft-cited analogy of bitcoin as Internet 1995. Companies back then did not rush headlong into public networks but instead spent considerable time and effort on building intranets, as the risks inherent (real or perceived) in the public internet and ‘cloud’ were too great. A case can be made for the same evolution in the blockchain world. Perhaps we are in for 5-8 years of distributed ledgers built within a defined ‘sandbox’ until a truly public blockchain world can safely emerge:
If blockchain is to make an impact in any sphere it must be in a non exploitative and cost transparent way. Call it a raison d’etre participation structure, where nodes are incentivised to fund or work for the system because they themselves benefit from the services being cleared. [snip] The same dynamics, we believe, apply to blockchain. For it to work, a raison d’etre closed structure where participants get repaid in kind not in profit is needed.
- Banking services (86 the bank…)
Business Insider highlights a graphic from the recent GS report on The Future of Finance:
Couple this with Facebook’s announcement of enabling payments via their Messenger app. More and more we see non-banks attempt to unbundle banking services, which should definitely worry banks, as the last battle that banks would want to fight for the attention and business of millennials would be a brand war…