It's time to take a stand against all the blockchain crap out there

With the blockchain hype machine at full throttle, David Birch of Consult Hyperion pleads for some rationality in the reporting and discussions of the shared ledger concept and its associated technologies.

  38 29 comments

It's time to take a stand against all the blockchain crap out there

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

Exciting news arrives from a friend. “Check this out” he tells me, “they’re using the block chain to replace the Pound Sterling / create a land registry in Ruritania / cure cancer” (*delete where applicable) and there’s a URL attached. I click on it. It says that a company has signed a memorandum of understanding to create a working group to examine the possibility of a pilot to use a database that has the "potential seamless integration with blockchain technologies”. I emailed him back, pointing out that my backside has potential seamless integration with blockchain technologies but that doesn’t make it a blockchain.

How many times has this happened over the last few weeks? It’s getting out of control. A client tells me that one of their competitors is using bitcoin to manage some asset or other. I look at the website that she points me to. What it actually says is that the competitor is looking at a “bitcoin-inspired” system (what you or I might term a “database"). Then I go to another meeting where someone says that the blockchain could be a potential solution to a particular problem, but says it in such a way as to drive suspicion that they don’t know what a blockchain is. But of course, because I’m English, I say “that’s an interesting idea”.

It seems to me that in a relatively short time the word blockchain has become detached from its technological roots and from its location in the spectrum of shared ledger implementation options to become one of those almost generic chromewash terms, like “big data” or “cloud” (there is no cloud, remember, it’s just somebody else’s computer) to deliver a superficial veneer of futurism.

I happened to be at a seminar on financial services recently and there was a presentation about the use of the blockchain to deliver lower costs, or something or other, in a particular area. The guy who was sitting next to me, who I think was from a bank, wrote “magic beans” on his notepad. What an accurate description.

There’s always hype around new technologies, we all understand that. But in the case of the blockchain, the hype seems particularly merciless and quantitatively different. Why? I honestly don’t know, but it must somehow be related to its association with bitcoin and the creation myth associated with it. Why else would otherwise sensible people tell me that they read that a bank is using the blockchain on the basis that they saw someone from that bank talking at a conference about exploring “blockchain compatible” (a meaningless phrase) options?

Personally, I think the shared ledger concept and the associated technologies for establishing communications, consensus, content and contracts between multiple organisations (and, more importantly for financial services, regulators) is one of the most interesting new developments in the sector in my career. My old friend Ian Grigg, who really does know what he is talking about, hypothesises that the blockchain is not the right solution for technical reasons but because everyone has agreed it is (a Reed’s Law spiral), but I think it’s too early to call that.

There is no doubt that the blockchain is a particularly interesting way to implement one particular kind of shared ledger, and there is no doubt that there is tremendous creativity unleashed from the permissionless innovation environment, but it’s a big step from that to ending world hunger.

Please can we have some rationality in the reporting and discussion of the technology? A “Bitcoin-like platform” is not “bitcoin”. “The blockchain” is not “a blockchain”. A “blockchain-secured trusted third party” is a “trusted third party” and a “blockchain-inspired shared ledger” is, well… I have no idea.

David G.W Birch is director of Consult Hyperion, the secure electronic transactions consultancy.

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Comments: (29)

A Finextra member 

It's not that hard to find live cases of Blockchain technology that are working and live and not tied to Bitcoin in Fintech. 

Tunisia is relaunching its digital currency the eDinar on Blockchain technology without need for Bitcoin. Go google it.

And Billon in Poland, compliant with both EU and Polish regulators, is also pushing cryptocash to the unbanked outside the banking system. Also with no need for Bitcoin. www.bit.ly/billoncash 

I wrote articles about both at Blockchain News

A Finextra member 

Very well put David. There is indeed time to bring some sanity to the hype. Blockchain's crypto method (as implemented by Bitcoin) may not actually be the most efficient way to establish trust in a trusted ecosystem. Also the concept of shared ledger is great, but if you strip out all the stuff that Bitcoin had to do to make it workable in a public environment (miners, problem solving etc.), we may end up looking at plain old client server technology. 

Nick Ogden

Nick Ogden Chairman at Ogden Research

Spot on David and I also get asked avery day about this. Whilst some aspects are interesting just "talking" a new technology does not create a platform that consumers trust and Banks and Central banks will universally adopt to replace say SWIFT etc?

A Finextra member 

Fantastic article and very much to the point - just after the finextra e-mail about this I got a mail inviting me to yet another blockchain conference/training event...

David Birch

David Birch Grand Poo-Bah at Tomorrow's Transactions

"Tunisia is relaunching its digital currency the eDinar on Blockchain"

No, it isn't. 

http://bitcoinist.net/monetas-unifies-edinar-and-blockchain-technology-in-tunisia/

The article clearly says "similar to Bitcoin" (ie, not Bitcoin).

The article clearly says "acts as a blockchain platform" (ie, not blockchain).

The Monetas website clearty says "seamless integration with Distributed Ledger and Blockchain Technologies" (ie, not a distributed ledger or a blockchain).

A Finextra member 

The Tunisian initiative is interesting. It reminds me of Gaddafi's plans for an African Central Bank, i.e. if it works it could be very influential.

The claims for secure government control seem optimistic to me.

A Finextra member 

I wrote the first article on Tunisia and I spoke to them. Like Billon they are using private blockchain. Acts as a Blockchain was in reference to acting like Bitcoin Blockchain. I interviewed Billon in Warsaw and from what o saw and reported on was in fact using blockchain technology ad a consortium blockchain with three banks. www.bit.ly/billoncash 

 

If you want to provide very ke wrong 

A Finextra member 

If you want to prove me wrong I will put you in touch with their CEOs and you can interview them yourself. 

David Birch

David Birch Grand Poo-Bah at Tomorrow's Transactions

"If you want to prove me wrong I will put you in touch with their CEOs and you can interview them yourself"

Yes thanks that would be great. Please e-mail dave.birch@chyp.com

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

Great post. Apart from paperless transaction and real time settlement - two benefits that are already available in some existing systems - I haven't been able to figure out the true value proposition of Blockchain.

On a side note, can only Finextra "insiders" like @DirkKinvig post an image in the comment?:) I've never seen a picture icon in the comments toolbar. I still can't see one.

Gerard Hergenroeder

Gerard Hergenroeder Retired IBMer and Banking Executive at Payments Shark

I enjoyed your article. It was refreshingly funny, definitely not boring. Bring us more comedy in the future!

Enrico Camerinelli

Enrico Camerinelli Supply Chain Blockchain Personal Coach at Aite Group

I consider the blockchain space as an echosystem that will follow- as any other- the Darwinian rule that only the fittest will survive.

Now it is like a primordial broth with many species living in it and doing their best to keep the role of leaders. Then you have other ones living in niche areas under tougher conditions and with little space. Which of the two categories will survive?

We know what happened with dinosaurs and rats.

I guess we need a sort of "asteroid" to hit the surface and then see which of these "blockchain species" will die and which instead will be more agile and adapt to take the lead in a changed ecosystem.

For now, the more, the better. You need competing species to perfection each one's characteristics in a tough environment.

Nigel Walsh

Nigel Walsh Partner at Deloitte

Blockchain is the new.. Blockchain!

Nigel Walsh

Nigel Walsh Partner at Deloitte

and in tomorrows news, Blockchain 2.0 debuts...

Great piece, thanks for sharing

Sriram Natarajan

Sriram Natarajan Risk Dog at Credit Risk Fraud Cards Professional

Well, we need to separate the hype from reality. But there is no doubt that Blockchain can be the railroad of the future for P2P contracts, payments and other such digital interactions. Take a look at the IMF report that came out yesterday -  http://www.imf.org/external/pubs/ft/sdn/2016/sdn1603.pdf

Olaf Ransome

Olaf Ransome Director at 3C Advisory LLC

Too much hype indeed. The potential may be there, but nothing much will come of it in FS without a lot of cooperation between institutions. This needs some unselfish industry cooperation and imho a lot of central bank cooperation. Potential will remain untapped unless and until a simple mechanism is found to convert fiat money to emoney.

Ross Lampard

Ross Lampard Head of Cash & Bank Management at Zurich Insurance

Great post David as the hype is over estimating the likely mass adoption in the near term. A lot of collaboration will be required to bring this technology to the main stream which I'm not yet convinced institutions are ready for.

Please post your findings from dicussion with the two CEO's if you have the opportunity...I'm gripped with intrigue now!!

Kishen Gajjar

Kishen Gajjar Management Consultant at Infosys Consulting

Thank you very much for writing this David. About time someone did.

A Finextra member 

Avoiding the pointless blockchain project - How to determine if you’ve found a real blockchain use case

http://www.multichain.com/blog/2015/11/avoiding-pointless-blockchain-project/

Therese Torris

Therese Torris Director at Afferto

Blockchain, like crowdfunding, is such a promissing concept that many companies want to claim it, even though they don't have much too show for themselves but a very watered down (hence quite worthless) shared ledger (not really securely decentralized) technology. I tried to point out in this article that one should learn from the hype that surrounded bitcoin in the first place  http://www.crowdfuninsider.com/2015/12/78702-busting-7-blockchain-bitcoin-myths/

would be keen to have your opinion on it. Thanks. TT

James Bennett

James Bennett FS Consultant at Deloitte

Agree to some extent on the hype - people use the phrase flippantly without understanding it and if enough people do it the meaning gets diluted. But we discourage the hype at our peril. Even if you watch a room full of VCs, startups, bitcoin experts, regulators etc talk about it, all have different ideas / levels of understanding: https://youtu.be/R0iArSIU0Z8

"But in the case of the blockchain, the hype seems particularly merciless and quantitatively different." Yes but perhaps a result of social networking which wasn't as apparent (or in existence) when say, the internet took off.

Since Tulip Mania in 1600s, there will always be people who try to monetize hype!

 

A Finextra member 

 Very good article - well written.

Given all that, perhaps I'm "old school", but I have yet to understand the compelling value prop of any form of block chain, for the consumer.

Perhaps something will stand out as it evolves.

 

A Finextra member 

Always a refreshing read.  Cheers David!

A Finextra member 

Therese it would be interesting to get your take on my thesis on combining crowdfinancing and blockchain at ChainCrowd. I am holding back on the actual blockchain tech details but in principle... I think the idea is interesting. 

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

For some reason, I saw a link to this article on my Twitter Timeline today. I clicked thru' and discovered that it's dated 20 Jan 2016. I don't remember the article although I see my comment on it. A BTC was worth ~USD 800 when this article was published (Source: BI) versus USD 4110 USD today.

Enough proof that hype works.

Arjeh Van Oijen

Arjeh Van Oijen Head of Product Management at Icon Solutions

I agree with your old friend Ian. The extent to which a new technology is accepted and adopted drives the success of it, not whether it is the best or not.

Shaju Nair

Shaju Nair Payments SME, Product Manager at Temenos

Amazing that you wrote this as early as Jan 2016. Nothing concrete has come out yet, which someway goes to show there was/is more hype going around.

One thing that I noticed is - many who are riding the block chain wave neither actually have technical understanding nor the domain expertise to figure out its application in the industry. So its more like a 'buzz word'

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

@ShajuNair:

So what if it's all hype / buzzword? Many innovations are fueled by hype and sustained by buzzwords until they can stand on their legs. If you'd ignored this article and invested $100 in BTC when it was published, you'd be sitting on top of $500 today. Is that such a bad thing?

Not sure how much research you've done before making a sweeping statement about people lacking technical knowledge or domain expertise about Blockchain. Should you look around, you'll find some stunning examples of dApps out there e.g. AXA Fizzy Flight Delay Insurance. This article (https://medium.com/yope-chain/30-things-you-can-do-with-a-blockchain-b23b2ab39664) provides a list of 30 innovative and potentially-disruptive Blockchain dApps. While the jury's out on why these apps had to wait for Blockchain, fact is many of them didn't happen on traditional centralized artchitectures.

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