It is now a decade since the publication of the infamous bitcoin white paper (Bitcoin: A Peer-to-Peer Electronic Cash System) and the launch of the bitcoin blockchain. Ten years on and with the imminent launch on Friday 24th May of Blockchain Week in Ireland, how have things changed? Is the early promise from crypto evangelists that blockchain technology will “change the world” getting closer or is it still a far-fetched dream? That is the question posed by Ireland’s leading legal expert in the sector, Andrew Tzialli, partner at law firm Philip Lee and head of the firm’s Cryptocurrency and Blockchain Group.
The last 3 years in particular, have been a rollercoaster ride for the world of world sector. 2016 and early 2017 saw crypto currencies become much more mainstream, which then lead to hysteria and relentless “FOMO” (fear of missing out) being the rationale for many investors who entered the market during Q3 2017 to Q1 2018. This was followed by a monumental crash.
Some of the most prominent cryptocurrencies saw values decrease by 90% from December 2017 peak prices. Around half of blockchain companies that ran ICOs during mid-2017 to mid-2018, are estimated to have now failed all together. However, fast-forward to now in 2019…
According to Andrew Tzialli, “Blockchain can already improve businesses efficiency and processing times in a secure manner. As adoption and innovation grows, the technology will be hugely disruptive to several industries – not least, Banking and Real Estate. Everything from cybersecurity, healthcare, car leasing and sales, energy, IoT, cloud storage, Government and Governance, Supply Chain, Music and IP ownership are all rife for change and all from blockchain technology that has only just had its 10th birthday.”
Whilst early predictions that the existence of cryptocurrencies would bring financial institutions to their knees was wildly overstated, blockchain technology still stands to significantly impact the banking sector in the same manner that the internet affected publishing. The ability to transfer huge sums of money, quicker, cheaper and more securely than currently on offer will be made possible. Whilst this may impact the profits of certain banks and clearing houses, customers will inevitably favour those institutions offering the transparency of these improved services. For this reason, it is estimated that 25% of banks will adopt or plan to adopt some form of blockchain technology during 2019.
By its very nature, the processes in place to rent or own property is fraught with bureaucracy (and therefore slow).
It requires the involvement of multiple intermediaries and large capital outlay, with the end result being the ownership of an illiquid investment.
Over decades, very little has changed in transactional methods. Given its somewhat archaic processes, blockchain stands to transform the sector.
Smart contracts (written on a blockchain protocol), can simplify the rental and purchase process, removing several intermediaries. Since use of a blockchain can create an immutable record that is public, storage of title deeds also represents a good use for the technology.
Perhaps the most important change will be the ability to create fractional ownership of property through digital tokenisation of assets. This will bring property ownership to an even bigger audience and allow individuals from all over the world to easily own a small piece of some of the most exciting construction projects or lucrative developments. The biggest difference will be that owners of these digital tokens won’t need to wait for sale of the property to realise their investment, with secondary markets being available for trading of those tokens, via exchanges.
Next steps for blockchain?
Endless names from the banking and financial services world recognise the potential. Now that Microsoft, Intel and IBM have announced the development of their own blockchain solutions, JP Morgan has developed its own digital currency, eBay announced plans to do the same and Whole Foods will start accepting digital currency with the underlying technology being based on an ethereum based payments network.
Andrew Tzialli concluded: “For those involved in the sector a little longer, the volatility of markets is nothing new, though the highs and lows have of course never been quite so drastic. Rather than faith being placed purely in cryptocurrencies as a means of replacing traditional fiat currencies and becoming the primary use of the technology, many of those same people knew the real promise is in blockchain technology – an important distinction frequently overlooked.”