There’s a lot of buzz about blockchain and its potential to disrupt many industries, but if you’re like many business people, it’s one of those confusing future tech developments that you haven’t given a lot of thought to yet. It’s an important development that should be on your radar – so we’re offering some introductory thoughts to get you up to speed.
Those of you who who fall in the early adapter camp are probably aware that it is some part of the certification system around the bitcoin mania. Blockchain is one form of what is coming to be known as “distributed ledger technology” (DLT), a technology that holds great potential for change in a variety of financial and data-driven industries. Here’s what the World Bank has to say about blockchain:
“DLT applications will likely be incremental, and will likely first replace processes and activities that are still manual and inefficient. These include reference data maintenance in payment and settlement systems, trade finance, syndicated loans, and tracking provenance of agricultural products and commodities, their subsequent sale or use as financing collateral. “
James Harrington attended panel presentations at last Spring’s Global Insurance Symposium, and he wrote his observations in an article for Insurance Journal: The Present Use and Promise of Blockchain in Insurance. He quotes one panelist, Caitlyn Long, chairman and president of Symbiont:
According to Long, DLT is already helping insurers and other financial institutions “clean up the fluff in securities settlements” by identifying and resolving the multiple and sometimes conflicting ownership interests in securities.
On the liability side, Long said DLT facilitates automatic execution of parametric insurance contracts. As soon as a ledger indicates that a contractual parameter has been reached (say, a hurricane landfall of a certain intensity), a “smart contract” will automatically authorize and execute the required payments.”
It’s still very early in this emerging technology – some tech observers liken this to the early era of the internet, perhaps the early- to mid-1990s. Another quote from Harrington’s article talks about this early stage:
Along that line, another panelist, Angus Champion de Crespigny, blockchain strategy leader for EY (formerly Ernst & Young), said that DLT is mature enough to be used to optimize existing operations, such as customer acquisition, transaction management, and process re-engineering.
Still to come, he said, are new and innovative applications being developed to provide value and services not envisioned before DLT was developed. That will necessarily involve a learning curve, he said.
“A lot of the concerns we hear now are what we heard about the Internet in the 1990s,” he said. “That didn’t mean the Internet was worthless, it just wasn’t ready for certain functions.
“The really big bang comes later.”
It’s definitely worth having on your radar because technology evolves rapidly. If you are still a little vague on what blockchain / DLT looks like, this explainer video on blockchain is simple and interesting.
This video talks about various industries that Blockchain will disrupt, offering brief examples of how:
This is a topic we’ll be revisiting, so stay tuned. In future posts, we’ll talk about current and potential future uses for blockchain.