Weds Jan 9 2019
Blockchain has grabbed the attention of many forward-thinking industry leaders, but how will this ground-breaking technology continue its journey into practical business applications?
This was one of the key topics for discussion at the 2nd Barclays Tech Forum, held in London in October in front of a select audience of high-level professionals.
Much of the consumer hype for blockchain has been around cryptocurrencies, but in some ways these are a distraction. The real prize is the underlying technology behind them.
What emerged from the Tech Forum was a strong sense that, not only is the future for blockchain bright, it is also very much a current technology. Real landmarks are being achieved right now.
While the excitement for blockchain is justifiable, it’s important that it doesn’t cloud important issues still to be resolved. Anthony Macey, Head of Blockchain and DLT at Barclays UK Ventures, says that standardisation across blockchain technologies is crucial for future success.
“There are lots of great use cases for blockchain, and they can all be achieved. But only if they all have the same standards,” he says.
Part of the problem is in how blockchain technology has developed. Unlike the internet, there is no common protocol such as http. Instead, investment – partially driven by excitement over cryptocurrencies – has flowed into a variety of individual, incompatible systems, says Anthony.
Yet as use cases develop for blockchains, they will increasingly need to interact with each other.
“In order for all of this to work, we need the fundamentals to be fixed,” he says. “Then we can scale. Nobody wants to introduce a system that will be legacy in two years.”
R3 developed Corda, an open source blockchain designed for business, with collaboration in mind.
“We didn’t think anything available was suitable, so we built something from the ground up” says Clive Cooke, Managing Director of Business Development and International Relations at R3.
More than 200 separate organisations – including global banks and financial institutions, technology companies and consultancies – participated in its development.
“We have members, we have software vendors, we have delivery partners, and the model for us is that we build the operating system, and other people will build the apps,” says Clive.
He says that apps being developed on Corda – called CorDapps – tend to fall into one of five categories: Digital Identity; Insurance; Cash and Payments; Trade Finance; and Capital Markets.
R3 has recently launched a new marketplace to help navigate what’s available, and the inherent interoperability is key. Corda can interact and give permission to other apps built in the blockchain, with data able to be shared between them.
“There are going to be lots of opportunities that arise in the coming years,” says Clive. “100% for sure, this isn’t theory. It’s not about a robot taking my place. This is real, and it’s rolling out now.”
Many forward-thinking organisations are now looking closely at how new business models and added value can be derived from blockchain technology – and investment is starting to reach a critical mass.
The Japan-based global tech company Fujitsu is aiming to capture a piece of the action. Chris Pilling, Principal Consultant & Lead Architect at Fujitsu’s EMEIA Blockchain Innovation centre, says that new business models represent a major opportunity.
“We’re thinking about the opportunities that this technology brings to do something revolutionary in finance.”
One of these is being explored in Japan, where earlier in 2018 Fujitsu got three of the country’s biggest banks to trial money transfers between customers using its blockchain technology. Consumers benefit from real-time, peer-to-peer transfers.
The system highlights the levels of security and trust that blockchains can provide, and that’s something that Fujitsu has built on in another application – this time to tackle invoice fraud.
Many cases of invoice fraud occur when invoices are intercepted and have details changed, such as the destination bank account. With Invoice-Flow (iFlow), invoices are uploaded onto a blockchain and, as they are then cryptographically secure, the details cannot be altered.
“If anything doesn’t match, then when the system tries to validate it against the blockchain it won’t allow it,” says Chris.
The same technology also has another potential application. For many SMEs, late payment and unpaid invoices represent an existential threat. Chris says this could create a new marketplace that might help them.
“If you subscribe to a system that shows the world you have a genuine debt owed to you, then an auditor, debt collector or factoring company could look at it and say, ‘it’s a sizeable debt for us to act on’,” says Chris.
“It’s something new, and it’s very cost-effective for people supplying the information.”
Blockchain still has some way to go before it hits the mainstream, but it’s clear that exciting, practical applications with real-world benefits are already becoming available.
The next steps in the journey are unclear but are likely to involve a rationalisation of the technology and continued development of imaginative products. Both will propel innovation and help drive new use cases.
But there also needs to be a good deal of education. There’s a lot of confusion about blockchain among the wider community, and being able to translate its benefits to a broader audience will be key to more widespread adoption.
If you’re interested in attending future events, please speak to your Relationship Director.