The World Economic Forum (WEF) has argued that blockchaincan 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 asthe move from ‘hype’ to ‘quality’ began. Yet the launch of Facebook Libra in2019 – which contained more than a few missteps – as well as interventions fromother central banks give grounds for only the most cautious optimism.
Sheila Warren, WEF head of blockchain and distributed ledgertechnology, said acknowledgement from the largest names in finance, includingLibra, were ‘truly exciting innovations that just need a bit moreexperimentation to stick.’
Governance remained a sticking point, and one which willcontinue to be untangled in 2020. “2019 saw laypeople diving deep into thespecifics of operations, business models, and legal structures in an effort toassess risk,” wrote Warren. “As Facebook learned, the promise or potential forgood governance is not enough.”
One area which Libra foresaw was around bringing widercommunities together. While not everyone who immediately signed up has stuckaround – payment providers Mastercard, Stripe and Visa alljumped ship in October as the official membership deadline loomed – the WEFnoted the importance of collaboration, particularly in the public sector. Theforum’s Central Banks Digital Currency project has brought together more than45 central banks, for instance.
“Last year, we saw either totally internal initiatives orcreative attempts at consortium building,” wrote Warren, using Lubra, alongsideFood Trust and Tradelens as examples. “Companies are waking up to the idea thatto go far, they ought to go together.”
The public sector was an area where Warren expected to see themost impact in 2020, with regards to smart contracts, as well as finance.
Yet there is a caveat. The wider application of blockchain technologiesis something of a catch-22 in that its best applications are invariably themost complex. This was noted in a WEF report publishedin July, which put together a ‘value framework’ with key focus areas aroundimproving profitability and quality, increasing transparency, and reinventingproducts and processes. As enterprises have especially complex mechanisms, Warrenproposes a compromise.
“This year, we expect to see increased experimentation withhybrid blockchain models,” added Warren. “These are a great way to increasecomfort with the technology.
“We are not close to realising the promise of trulydecentralised 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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