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Firms should start experimenting now if they hope to quickly adopt the distributed ledger technology blockchain, according to Peter Kirby, CEO of blockchain service provider Factom.
At the 2016 Innovate Finance summit, Kirby claimed firms should “start playing” if they want to implement blockchain technologies in the near future.
Kirby said standards for blockchain do not need to be set in stone before the distributed ledger technology is implemented in firms and – just like the internet standards – could take a “decade of play and experimentation” before standards are established from best practice.
“That is what’s going to teach us what the standards should be,” he added.
Kirby predicted many systems will be “pieced together” with blockchain technology, as different applications using distributed ledger technology will serve different functions. “In the blockchain world, I don’t ever see a time where we’ve got one blockchain,” he said.
According to Kirby, the technology can be trialled “without a lot of technical knowledge”. He said individuals should experiment with using blockchain to enhance the things they enjoy and care about, which then demonstrates how the technology can add value. Until businesses and individuals experiment with Blockchain, he added, it will remain in its infancy.
He also highlighted that using bitcoin is currently the easiest way to understand how to use blockchain technology.
“You’ve got to figure out how to make money and come up with a business case that saves a lot of money,” said Kirby.
Use cases for distributed ledgers
However, Kirby said standards should not be implemented straight away, and that firms should work on finding internal use cases at financial institutions to find what works.
He said official bodies in the financial services industry are keen for the adoption of blockchain technology because it provides 100% auditing and accountability as records are instantaneous and cannot be tampered with.
John McLean, vice-president of global blockchain labs engagement at IBM, said regulators want to be involved because distributed ledger technology can be a tool for “de-risking” the financial services industry.
But financial services is not the only sector interested in blockchain. McLean said use cases outside of finance are surfacing where large volumes of data are being recorded – and not necessarily for monetary value.
“The next use case we see is reference data. We’re starting to see a ton of other industries looking at it,” he said. “This is not just your technology from a blockchain perspective, it’s going to be very pervasive.”
This could apply to industries such as supply chain or initial public offering (IPO) markets and, in some cases, the registration of diamonds is done via distributed ledgers.
But McLean pointed out that distributed ledger technology is “moving quicker than expected”, and he suggested running experiments in the technology as quickly as possible to speed up adoption.
“As human beings, we learn best by doing. You don’t learn how to ride a bike by reading a book,” he said.
Blockchain is here to stay
To begin looking at the adoption of distributed ledger technology, McLean suggested asking the question: “What’s the intrinsic value and business proposition?” This should be done to pinpoint the use of the technology.
But many are waiting before implementing to see where the industry goes. Clive Cooke, securities executive at R3, said playing the waiting game is dangerous as the industry is moving a lot faster than previous technology adoptions.
“Don’t think just because we’re at the early stage that this isn’t going to deliver,” said Cooke. “It’s really important that people have a little bit of patience. Things are moving fast – they’re moving in months, not years.”
He said there is hype around the topic, but there is “no doubt” that blockchain technology is going to be utilised in business and have a “profound effect on daily life”.
“There will be false starts, and the implementation will start occurring in a successful way when financial institutions are confident,” he said. “This isn’t an experiment, this is coming and it’s going to happen.”
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