The World Economic Forum (WEF) has argued that blockchain can make a breakthrough in 2020 and achieve social impact – but only once the ‘resignation’ around governance turns into recognition.
The economic body noted a change over the past 12 months as the move from ‘hype’ to ‘quality’ began. Yet the launch of Facebook Libra in 2019 – which contained more than a few missteps – as well as interventions from other central banks give grounds for only the most cautious optimism.
Sheila Warren, WEF head of blockchain and distributed ledger technology, said acknowledgement from the largest names in finance, including Libra, were ‘truly exciting innovations that just need a bit more experimentation to stick.’
Governance remained a sticking point, and one which will continue to be untangled in 2020. “2019 saw laypeople diving deep into the specifics of operations, business models, and legal structures in an effort to assess risk,” wrote Warren. “As Facebook learned, the promise or potential for good governance is not enough.”
One area which Libra foresaw was around bringing wider communities together. While not everyone who immediately signed up has stuck around – payment providers Mastercard, Stripe and Visa all jumped ship in October as the official membership deadline loomed – the WEF noted the importance of collaboration, particularly in the public sector. The forum’s Central Banks Digital Currency project has brought together more than 45 central banks, for instance.
“Last year, we saw either totally internal initiatives or creative attempts at consortium building,” wrote Warren, using Lubra, alongside Food Trust and Tradelens as examples. “Companies are waking up to the idea that to go far, they ought to go together.”
The public sector was an area where Warren expected to see the most impact in 2020, with regards to smart contracts, as well as finance.
Yet there is a caveat. The wider application of blockchain technologies is something of a catch-22 in that its best applications are invariably the most complex. This was noted in a WEF report published in July, which put together a ‘value framework’ with key focus areas around improving profitability and quality, increasing transparency, and reinventing products and processes. As enterprises have especially complex mechanisms, Warren proposes a compromise.
“This year, we expect to see increased experimentation with hybrid blockchain models,” added Warren. “These are a great way to increase comfort with the technology.
“We are not close to realising the promise of truly decentralised systems, but the space continues to evolve in exciting new ways, and it’s just a matter of time before something huge gains traction.”
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