In a paper recently published by techUK, the organisation seeks answers to two questions: 1. Why is it that blockchain is taking longer to take off than the hype had promised? 2. What should be done to unleash its full potential?
Over the last few years, blockchain has been one of the most hyped technologies, generating vast sums of venture capital and many pages of overblown newspaper headlines. We were told that blockchain and distributed ledger technology (DLT) would change the world, as we know it, within a very short time. Yet this has not occurred and so we have seen the hype sink away. Instead, commentators are now asking: ‘If blockchain is so good, why are we not seeing more of it?’
The first answer is clearly that hype is hype and not realistic. Most new technologies take time to evolve to a useable stage, to be understood and to be deployed by companies and organisations which are averse to business changes. This is the stage at which we see DLT.
But the second answer is that there are some truly revolutionary examples out there of blockchain in action. Part one of this paper demonstrates this through summaries of solutions designed by techUK members in a number of different market segments. techUK members describe in their own words how they are using blockchain to solve fundamental problems.
Part two of this paper shows that entrepreneurs are also wrestling with a diverse set of barriers and roadblocks which stand in their way.
Some of these relate to a lack of understanding of the technology and a conflation in the minds of companies of blockchain and bitcoin, leading to fears around fraud, the ‘dark web’ and the scandals which have surrounded cryptocurrency trading. Other problems relate to current legal frameworks, which were not designed with blockchain or digital assets in mind. It is not that we need a ‘regulatory system’ for blockchain, but that there is a need to update a number of key laws to allow DLT solutions to operate.
Part three contains techUK’s conclusion and key recommendations. Blockchain has huge benefits to offer but many key changes need to occur to make this happen.
Crucial in this respect will be a commitment by the UK Government to deliver on the recommendations of the two reports on blockchain technology by Walport in 2015 and Lord Holmes in 2017. The Government needs to make the required legislative changes; provide clarity on the application of current legislation where there are industry concerns over using DLT and to actively promote the development of distributed ledger technology in this country.
The Government is alert to the impact of this technology, although there has been a lack of ministerial cohesion, with responsibility scattered across Cabinet, Government Digital Service, and the Department of Digital, Culture, Media and Sport (DCMS).
In last year’s budget, Chancellor Philip Hammond announced a £500 million investment in tech to drive innovation in the UK through infrastructure, skills and R&D funding. He wants Britain to be a world leader in new technologies – including blockchain – and realise the benefits of the digital economy. This will take time, but the time to start is now. It is not that blockchain has had its day – far from it – it may have fallen out of favour with the headline writers, but the technology is growing, use-cases are being explored and, as is demonstrated in this paper, its value, now and for the future, is indisputable.