søndag 6. mars 2016

When will banks really leverage on Blockchain?

Most banks today invest in the Blockchain technology. But so far none have launched a “killer app” or any user case that could not be done better with the “old” technology. But I think it is only a question about time before someone present something with real value.


The technology is far too premature to add real value to banks as it is now. Diving into the technology is a about basic discussions like record size, programming language, how to design smart contract script classes, what platform to choose (Chain, Eris, Intel, IBM Open ledger, Ethereum on Microsoft Azure, Ripple, etc.). And I guess there will be more platforms in this competition soon.
Then it is the question on consensus mechanism, what is safe enough and compliant to regulations. And finally the speed & scalability issue. No one have so far managed to set up a Blockchain network in a sufficient size handling 15 000 to 20 000 transactions per second. 
Despite the fact of maturity; bank, tele companies, companies within logistics and other sectors worldwide invest billions of USD in research, piloting and testing this new technology.  Something will change, that is for sure.

I was presenting at BSK Blockchain day on Thursday last week giving 5 reasons for why Blockchain MIGHT revolutionize the financial industry. It is not difficult to find even more reasons. BSK is a union of Norwegian banks.  In the audience were approximate 150 people from many banks, central banks and financial authorities.

So back to the question, when?

My guestimate is 1-2 year before the technology is ready enough for a “killer app”. During this time banks will pilot, get some experience and get their “hands dirty”. Then when the technology is mature enough they are ready to launch real value, in 3 to 5 years from now.  Remember, at one point in time banks need to integrate the new technology into their legacy IT architecture. At larger banks this is often a complicated and a time consuming project.

Experience in technology last few years shows that a “fast follower” strategy is not a good strategy, and I guess same thing this time.


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