Panel, Conference Presentation
The Blockchain: A Revolution You Need to Understand
Milken InstituteMarc Hochstein, Brian Forde, Jalak Jobanputra, Leanne Kemp, Margaret Liu, Steve Wager
- Industry adoption is projected to shift into a "year of the proof of concept" by 2016 featuring formal commitments, paper trades, and detailed planning, with specific use cases expected to enter production in 2017 or early 2017.
- A five-year horizon is predicted to facilitate a significant scale and ramp-up of blockchain adoption, transitioning the technology into daily life usage alongside exponential growth in the number of transactions.
- Infrastructure and application development are anticipated to converge within the next one to two years, leading to a hybrid model combining public and permissioned blockchains to address security and privacy requirements.
- The blockchain ecosystem is forecast to evolve toward standardization and potential consolidation into three or four dominant chains per asset class, with interoperability standards enabling token transfers across chains.
- Energy consumption for the Bitcoin network could theoretically reach levels comparable to Ireland's national total or exceed current figures by an order of magnitude if scaled, prompting financial incentives for miners to utilize renewable energy and efficient cooling.
- Central banks, including the Bank of England, are exploring the creation of state-backed digital currencies utilizing Bitcoin or private blockchain infrastructure.
- In the diamond sector, affordable sensor and nanotechnology for photographing and identifying diamonds is expected to mature within the next two years.
- The Internet of Things is anticipated to connect over 25 billion sensors, driving demand for instant KYC verification and data sharing, with Estonia already experimenting with biometrically authenticated health records on permissioned blockchains.
- Banking settlement models face challenges due to legacy COBOL back-office systems that cannot handle bilateral gross settlement, representing a cultural shift where risk is returned to individual counterparties rather than netted.
- Tokenizing Fed dollars on a blockchain is expected to provide 100% transaction certainty prior to execution, though moving to bilateral settlement requires market participants to assume full responsibility for counterparty failure.
- Public and private ledger stacks are not expected to change significantly in the near future despite the convergence of infrastructure and applications.