After a long day which included hot discussions, various expert panels, the future of banking and other Fintech industries, meetings through breakfast/lunch and various coffee breaks, and the final reception with a nice selection of wines accompanied by bursts of laughter, four of us sought refuge in an Asian restaurant close to 3rd Avenue, round the corner from the Convene Conference Center. The choice of a Chinese restaurant, though a coincidence, was rather symbolic. It was suggested by Mark Hochstein, American Banker’s editor in chief and the organizer of the conference. Mark represents the collective voice of the most conservative industry of one of the most “conservative” jurisdictions concerning ICOs and the definition and acceptance of Bitcoin so far. He was seconded by Jonathan Mohan, founder of the BitcoinNYC Meetup who is an early evangelist of the bitcoin and blockchain “religion”, an highly advanced and brilliant thinker helping many build feasible blockchain solutions, while the “host”, China, being the largest holder and player of Bitcoins.
“This came as surprise even for me: banks are willing to review possibility of employing public blockchain implementations along with private solutions they are building” - started Mark, I assumed also as a sum up of the conference. Thereafter cold sake and food shifted our attention to more pleasant endeavors for a short time. While discussing numerous aspects of the current blockchain/bitcoin world, and joking on some of the current “nuances” of different projects, in particular the recent ICOs, I began to slowly recover and shaping-up my take away from the conference. Most of the presentations of the conference are available on its official website (here, or following great articles here), and/or could be read from the “blockchain” profiles of participating entities and experts. One must acknowledge that organizers did their best to make sure all aspects of the blockchain and cryptocurrency trends are covered in full, by inviting some of the best experts from industries and practicing enthusiasts of the US and international domains. Nevertheless, the key reading was that blockchain undertakings are still pretty limited to concepts. POCs (proof of concept) in most cases, are being listed in full as white-yellow and other papers, blogs, studies and other form of presentations, and/or may be discovered in claims most players are still making to stay on float in the turmoiled blockchain lake (compared to the wide traditional financial ocean). Reading between the lines was most enlightening, at least for me, while watching different panelists take and leave the main stage. The most frank discussions and commenting, though, were happening beyond the main conference room, in different corners, around a cup of coffee or a glass of wine. Considering my rather poor fast-note taking skills, as well as listening limitations, I was capturing the main thoughts with various factors of success. Here are some flashes with commentaries I humbly leave to your judgement:
“There is much concern that we are experiencing yet another bubble: however bubbles are fine, bubbles created railways, then the Internet, now it is the Blockchain/bitcoin’s turn”. No comments here, rather an interesting observation to share! One may imply that with the current presumed bubble, we may be left with a much advanced and “better” world at one point in the future.
“The current ICO market is already bigger than funding received by blockchain projects/startups through VCs, $400 vs $300 mln: now VCs buy crypto to participate in ICOs”. This, to me, is a more interesting and intriguing statement: with ICO being a taboo abbreviation and legally not so correct one to be used at least from the stand point of the US regulator, the hot discussion on the topic was quite a surprise. Outside the main room one could also hear fresh stories of underlying causes of “huge” amounts attracted through recent ICOs: as some major participants of the market profiting from the current hype by employing different schemes and capturing arbitrage opportunities of booming market.
Presumably one of the main expert on ICOs calling the countries to start regulating ICOs, to achieve whatever protection of whatever interests, came as a surprise. To my knowledge, ICOs are the main backing vehicle for most global blockchain initiatives exercised by thousands of mostly anonymous supporters and way different from IPO, VC, and crowdfunding! I hence thought that the speaker did not fully understand the issue and was making a rather populistic statement to please the ears of the crowd which at large represented the highly regulated banking industry. Nevertheless, I realized myself nodding when the expert called for the need of introducing an escrow solution linked to particular milestones to mitigate some of thel risks “investors” are currently facing.
“It could be better to buy ETH (Ethereum) and hold rather than invest in ICOs” was another potential solution shared nowadays by majority of current investors fascinated with the performance of the Ether and Bitcoin. The following comment “Bitcoin is rather frictionless", along with some of the participants trying to find on-the-spot sellers or brokers with access to the markets, has cooled down the building anxiety of those feeling left aside from the main pie. Suggesting that there is a huge shortage of supply of desired trophies and access to the market for alternative financial players is rather limited. Most of the exchanges stopped selling bitcoin. Furthermore, two third of the trade is in ETH. The reason articulated by participants being in that the latter, compared to Bitcoin, has a clearly defined leadership able to execute set goals and thus is less risky from an investment perspective.
The panelists noted that market capitalization is exploding and raised some hopes that it soon will reach to the point when banks could start accepting and trading digital currencies. The counter-argument suggesting that the rise of digital currencies is rather a disruptive force, and banks though not willing, are forced to take action, as more and more investors are getting in. So banks have no other choice but to react. I recalled that the more proactive initiatives with banks trying to lead the processes of introducing digital tradable currencies had so far failed.
Along these lines came up the opening statement that Mark uttered during our dinner discussion: the Banks, which a few months ago were not even thinking of opening up to exploring the potential of using public blockchain solutions, are now starting to understand that they may rather be forced to consider one. The speaker was quick to set a disclaimer, though, by suggesting that the banks would of course start from the safe place using their own private networks.
Identity was another hot topic discussed with current blockchain concepts addressing the most pressing issue yet to be solved. Part of the panel addressed single vs. basket identity solutions, as well as real vs. virtual being the right form to hold one’s identity on blockchain. Then of course the concept of leaving a definite trail in some of the chains (Amazon and FB were named for reference) and rather being totally anonymous on the others (Apple being the champion of keeping those gates close) were tossed by the panelists.
A shocking discovery awaited me when the panelist addressing Smart Contracts revealed that the US banking industry is still processing over 25 mln physical faxes per day, in large up to 6 times redundant! And blockchain was named as a pressing solution to this archaic inherent inefficiency… As a panacea, a blockchain solution with successful POC already being implemented, was suggested to soon automate all banking processes. Here I put a raw of question marks (in my notes): do banks need blockchain to solve this issue? Perhaps no, though blockchain may not harm and may provide further efficiency.
As I was also much interested in the discussions happening backstage, I have missed some of the interesting developments taking place on the main stage. However I believe the reader already got a feeling of the event, and shall be given some rest to digest and do her own reading.
It was after midnight when we finally exhausted all topics and energy to call it a day: certainly an interesting one.
Gate D22: time to board the plane!
Gagik Yeghiazarian, Contributor, CEO, Co-Founder of Blockchain R&D Hub.