Smith+Crown has been focusing more and more on crowdsales for blockchain-tech projects. These are often at the forefront of creativity and disruption in the cryptocurrency space. Many might fail, but those that don’t can introduce a new paradigm to their respective industries. Early participation can also be very lucrative.
That said, we also track how established industries are discussing, critiquing, and absorbing blockchain technology. Cryptographically secured ledgers that can be distributed among parties that don’t trust each other has myriad applications. How the ‘disrupted’ are responding is just as important as what the disruptors are doing.
On November 22nd, City and Financial Global is hosting a conference “Blockchain Technology: The Future for Financial Services Infrastructure Summit” in London to discuss the future of the blockchain in the financial system.
The Promise of Blockchains
Blockchain technology is a clever marriage of cryptography and system dynamics. It does not have just one killer feature, and companies are taking advantage of different features. An immutable ledger can greatly streamline basic bookkeeping, meaning faster settlement, less reconciliation, and real-time auditing. The technology can help in securing important and sensitive information, from identity to reputation to medical records. If used among multiple parties, it enables the benefits of a single standard without need a trusted custodian of that standard. In its more disruptive applications, it can disintermediate a wide variety of industries and render third parties and platforms obsolete.
The conference will explore the implications of these to the existing financial system. Speakers include thinkers who have written about or worked on different facets of the technology. Eric Van der Kleij co-founded ENTIQ, a UK-based accelerator that, among other things, wrote about the ‘real-time regulation’ blockchain technology makes possible. Michele Curtoni will represent the London Stock Exchange, which helped launch the Post-Trade Distributed Ledger Group in 2015: a group of nearly 40 financial institutions and market infrastructure players exploring the impacts of distributed ledger technology in trade settlement. Simon Taylor of 11FS has written on how central banks can benefit from digital currencies, including better management of the money supply, settlement finality, payment system efficiency, economic benefits from central bank interest rates , and the ability to offer commercial banking services.
Blockchains have downsides
That said, the blockchain is no panacea in the financial system. It comes with downsides that must be managed or properly accounted for in any comparison of distributed ledger technology and the status quo. In some ways, its entrance to the financial industry was an excuse to talk about a number of long-standing issues in the digital revolution of finance–some of which have nothing to do with blockchain technology. Many conference speakers see blockchain tech in the broader context of fintech disruptions. Antony Jenkins, former CEO of Barclays, recently launched a fintech startup 10X Future Technologies and oversaw some digital transformations at Barclays that had nothing to do with blockchain tech. Experts like Adrian Poole, head of financial services for the Google Cloud Platform, also operate across the fintech spectrum.
The conference also includes speakers with a track record of critically evaluating blockchain tech. Steffen Kern will represent ESMA, which recently issued a comprehensive (and neutral) overview of how distributed ledger technology could be applied to securities markets. It acknowledges the benefits AND the known drawbacks, including challenges in scaleability, interoperability, reliance on a central settlement service, lack of recourse in traditional distributed ledgers, and its currently poor support for derivative financial products.
Conference speakers include a number of strategists and researchers with a command of how these technologies fit within company, bank, and government roadmaps. There are also a number of accelerators (L39, ENTIQ) represented, likely bringing a perspective closer to the edge of practice, although it is unclear if actual emerging blockchain tech companies will attend.
New paradigms, business models, and practices
These conversations are important. Investments of money, time, and ideas are growing across the many areas of blockchain technology. Incumbents are trying to repurpose the technology. Investors are banking on new companies to replace existing ones. And the broader market of cryptocurrency investors believes distributed crypto-token systems can replace companies as we know them.
Smith+Crown hopes to attend.