For the last 7 years, I have been involved with blockchain technology in one way or another. As a member of the Dell Technologies Blockchain Steering Committee, it brought me great pleasure to be able to share the announcement about Dell joining the Hedera Council. Years of work finally coming to fruition, I was absolutely delighted, especially considering the already impressive list of organizations belonging to the Hedera Council.
Today, I attended one of the committees and I was shocked to hear that, we are still trying to get regulatory bodies and law makers to understand that blockchain isn’t the same as cryptocurrencies or NFTs, but is the technology on top of which applications, such as cryptocurrencies and NFTs are built. The technology can be used to build other applications that have nothing to do with cryptocurrencies or NFTs. Below is a screenshot of the first slide of the first deck on blockchain that I presented to a customer 7 years ago:
My question is: Why are we still here? Why have we made so little progress over the last 7 years?
Based on comments that were made today, I think the answer is: chicken and egg.
Let me explain what I mean by that: Regulatory bodies and law makers say “show me the other use cases for blockchain outside of cryptocurrencies so I can understand how it is different”, but a lot of use cases for blockchain outside of cryptocurrencies would require a change in the regulatory landscape in order to emerge. This basically says that regulations aren’t evolving because there are no use cases, but there can’t be use cases because the regulation aren’t evolving. See, chicken and egg.
First let’s establish that a lot of the use cases for blockchain are consortium-based, meaning that they involved multiple parties. Why is that the case? Because blockchain, thanks to its immutability and tamper-proof, creates trusted between parties that are not trusting each-other. If a use case only involves a single party, chances are that there is a better way of addressing that use case than blockchain. Today, those consortium-based or multi-parties use cases are addressed using intermediaries, such as lawyers or trusted third parties like clearing houses in the financial system. As such, they operate within a specific regulatory framework and unless those frameworks evolve, no blockchain-based application can emerge.
Let me take an example of an industry, that everybody understands, where this is happening: real estate. In my mind, real estate is an industry primed to be disrupted by blockchain-based applications. Why? Lots of intermediaries: lawyers, mortgage brokers, real estate agents, etc… Today, paper contracts are used to manage the communication between those parties and the various stages of the process. All those communications are done through faxes and emails, with lots of potential delays should any party be unavailable. For anybody, who has gone through a real estate transaction, it is a painful and stressful process. And yet, all of those could potentially be automated using blockchain and smart contracts. Why isn’t this happening? Because the legal framework governing a real estate transaction hasn’t evolved to account for blockchain technology and smart contracts and recognize them as a valid means of conducting a real estate transaction. Because of this, no blockchain-based applications can emerge to disrupt this industry. See, chicken and egg.
I am beyond excited to by part of the Regulatory and Policies committee within Hedera. I hope that, in 7 years, when I write a follow-up blog to this one, we will have made some progress.
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