IBS Journal December 2015


Griffin believes that the payments sys-


tem can revolutionise the way the indus- try works. He adds that payments, by their nature, are ‘slow and expensive’. ‘The fastest payment is only as quick


as the system that handles it,’ he says. Using blockchain and distributed ledger systems, he adds, would mean companies would no longer have to tie up their capi- tal offshore and fulfil their payment needs in near real-time. The world post-crisis has becoming


an interesting one, says Griffin, with non- bank entities beginning to provide liquid- ity for financial institutions as regulation forces banks to pull out of the market. It’s these market makers that Griffin


believes will be able to underpin the suc- cess of a distributed ledger system, which, he says, can lower and even remove liquidity requirements for banks, making payment almost instantaneous. When asked by IBS Journal whether


the reputation of bitcoin might be holding back blockchain from being fully accept- ed, Griffin offered the rather short answer of ‘yes’. A lot more conventional bank- ing players, he continues, are beginning to see blockchain for what it can provide them, rather than viewing it as a bitcoin by-product. To Griffin and the proponents of distributed ledger systems bitcoin is simply a currency which applies to their databases rather than a be-all-end-all industry challenger. The risks and concerns that accom-


pany blockchain, Griffin believes, will disappear with increased adoption and will become ‘legacy worries’. The end goal, he continues, is to create the ‘Inter- net of Value’ – a world where money is exchanged as quickly as a website loads today. What the internet did for the pub- lishing world – vastly reducing curation and publishing costs – it can do for pay- ments as well.


Sceptical outlooks Some disagree on the longevity of the blockchain system. Nick Williamson, CEO of start-up Pythia, reckons that the ‘hype and drama’ surrounding blockchain will be over in a year once large companies get on-board. Williamson adds that once people


and companies become more familiar with blockchain’s capabilities, the bluster about it will disappear. Blockchain could shake up the whole


power structure of financial industry, he believes, and it certainly is getting more attention from banks and the media. Whether the sudden interest of large players will result in blockchain being brushed under the carpet – swallowed up into the existing glut of bolt-on sys- tems banks own – remains to be seen. On the subject of the security of a


blockchain system, Williamson says he built his own consensus algorithm which allows ‘weight of voting’. This means multiple participants can come to agreement and remove other participants from the net- work if they’re using it improperly.


Conclusion


Banks and financial institutions are more likely interested in the technical archi- tecture that underpins blockchain, as opposed to fully integrating the technol- ogy into their systems. Still, the system faces some challenges, not least in how it should be regulated and how companies can own their ledgers. The costs of blockchain, argue pro-


ponents, could be vastly overshadowed by the benefits if banks would just be willing to take the plunge. When that plunge may be taken, and how many big names will risk it, remains to be seen. What is certain, however, is that for the moment blockchain is here to stay.


Alex Hamilton © IBS Intelligence 2015 www.ibsintelligence.com 39


analysis: blockchain


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