Since Bitcoin came on the scene in 2008 it has been causing a stir in the payments community and raised the profile of its underlying blockchain technology. In September 2015 the World Economic Forum released a survey report entitled “Deep Shift: Technology Tipping Points and Societal Impact”. The study proposes that 2023 could see a tipping point with regards to government adoption of blockchain technology, and predicted more widespread adoption by the general public by 2027. I believe this timeline could be significantly shorter that that.
Bank and credit union leaders are working to understand the impact that cryptocurrencies will have. Meanwhile, the potential for the blockchain distributed ledger model is being explored in almost every segment of cyber business. Banks, in particular, are digging deep into the technology. Recently, technology innovation firm R3, announced that its blockchain consortium has grown to 30 banks. Their consortium is moving with due speed to explore and develop a blockchain-based shared ledger that would act as a fabric connecting these significant institutions.
In addition to consortiums like R3, there are companies and research organizations around the world developing blockchain solutions for everything from smart contracts and identity verification, to electronic ‘cyrpto’ voting platforms and government land record systems. Implementation of many of these ideas are not as far off as they seem. Honduras is currently building a blockchain land registry. Isle of Man is running a blockchain pilot project through its Department of Economic Development. The project is creating a blockchain based database to track, of all things, cryptocurrency companies on the island.
The Isle of Man project is particularly interesting as it is both a government application of blockchain and a move into regulating crypto/blockchain technology. Government involvement in the use and regulation of blockchain and blockchain based solutions is in its infancy, but it is not being taken lightly. National central banks are bolstering their blockchain expertise, and state reserve banks in the U.S. are taking due notice as well. In June of 2015 New York launched one of the first comprehensive frameworks for regulating digital currencies.
Following credit union, payments and regulatory trends, also considering the increasing rate of technology adoption, it seems that the path to adoption of blockchain-based solutions could be shorter than some may think. Banks are motivated to explore the develop blockchain strategies, and are putting their money where their mouth is. The DMA Group believes that credit unions may be in a position to adopt blockchain quite rapidly, the only thing that may be lacking is the will to do so. If nothing else it is critical to maintain an ear to the ground and take seriously the potential sea-change that blockchain could represent. In some ways it may be the catalyst to unprecedented cooperation among financial services providers and among providers and regulators as everyone learns together.