Blockchain is a ‘pixie dust’ fad, British parliamentarians told
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The director of a leading management think tank has dismissed blockchain technology as a distracting fad without much to offer financial services.
Martin Walker, a director of London’s Center for Evidence-Based Management, a nonprofit that aims to improve the quality of executives’ decision-making, gave evidence about digital currencies and blockchain to members of Britain’s Parliament on Tuesday.
Mr Walker, who spent much of his career in banking and IT, told the Treasury Committee that “in terms of demonstrable benefits” of blockchain, there’s “little to nothing”.
“There’s a big problem in the blockchain world with confusing ‘could’ for ‘is,’” he said.
“All that it takes to make a credible idea into a fad is people just switch off their brains and stop thinking. Over 20 years in and around the banking industry – blockchain is a fad, but I have seen many fads in my career.”
He compared past fads to “magic wands” and “pixie dust.”
“If 10 per cent of what I’ve heard in my career had come true, we would have these amazing banks that run for £1 a week,” Mr Walker said.
It was unhelpful to talk about blockchain technology as if it was a singular thing, arguing that most developers have strayed far from the original blockchain principles developed to underpin cryptocurrencies, he said.
Much of the technology embedded in blockchain was not necessarily new, Mr Walker said, though he acknowledged that the hype around it had provided a “catalyst” to get banks to update unsexy parts of their business, such as trade finance.
Still, he cautioned the committee that the excitement around blockchain risked becoming “a distraction from looking at getting some of the basics rights”, adding that many executives saw blockchain as a “universal panacea”.
“Genuine innovation is hard,” he said. “We’ve created what one of my colleagues calls ‘innovation theatre.’ If you want to be seen to be innovative, all you have to do is a proof of concept using blockchain. It doesn’t matter if it doesn’t go anywhere.”
Mr Walker appeared alongside representatives from blockchain companies Everledger and Ripple and a researcher from King’s College London — all of whom extolled what they see as the potential benefits of the technology.
Blockchain is a kind of next-generation database technology first developed to underpin bitcoin and other cryptocurrencies. It allows data to be stored, validated, and synchronised by a group and is cryptographically sealed, preventing it from further editing after a data agreement.
While it was initially designed to facilitate cryptocurrency transactions, blockchain has the potential to be applied to everything from securing home ownership and health records to voting and marriage certificates.
Financial services companies have become particularly excited about blockchain’s potential to cut costs while eradicating intermediaries. Santander estimated in 2015 that the technology could save the banking industry $US20 billion a year.