You can add R Jesse McWaters, financial innovation lead at the World Economic Forum (WEF), to the growing chorus of industry voices warning that we’ve reached a “peak” when it comes to the hype surrounding blockchain technology.
“I’m trepidatious about inflated expectations re: the blockchain,” McWaters said in a new interview, the comments coming as he described the ongoing “awakening” he’s seen among major financial institutions in regards to the technology.
While even the WEF itself has lauded blockchain as a global “mega-trend”, McWaters worries that such language may encourage institutions to overlook the serious challenges facing the further development of the technology.
McWaters told CoinDesk:
“There can be a tendency to assume that the technology not only enables a distributed financial architecture, but makes the transition to it easy. I think that nothing could be further from the case.”
McWaters said that through his work with the Swiss non-profit, he’s drawing the conclusion that process will need to be realigned, stakeholders will need to standardize data policies and regulators will need to understand blockchain systems should the ecosystem want to achieve stable growth.
“It’s wonderful to see the awakening, but we need to see that this excitement is tempered by patience and that taking the tech from pilots to full-scale implementation will be measured not in months and not in years, but maybe decades,” he continued.
McWaters also took aim at comparisons between the blockchain and Internet industries, cautioning that what is often lost in this comparison is the amount of time this transition took.
“Many of those discussion points,” he added, “weren’t fully realized until the 2010s.”
Still, the WEF is on the verge of conducting trials of its own.
Launched in 2014, the WEF has been increasing its focus in understanding disruptive innovations as part of a larger look at the future of financial services.
Phase one of the project, which culminated in its June 2015 ‘mega-trends’ report, has now given way to a second chapter in the project, one in which the organization will seek to understand the impact of the technologies it has identified.
As detailed in a February release, the WEF now intends to conduct a project that will deepen its understanding of use cases for blockchain tech “with and between financial institutions”.
The blockchain trial is one of two described, alongside a similar exploration of how technology could transform the area of digital identity.
As part of this research, the WEF said it will perform secondary consultation, develop and stress test use cases and build business cases to support implementations of the tech, though McWaters said it is best to think of the organization as a “convener” of conversations.
“We play the role in being a neutral party that convenes discussions,” he said, later adding:
“We have really wanted to maintain an awareness of these protocols, but we don’t feel we have the expertise to pick a winner or make recommendations.”
The WEF will hold two distributed ledger workshops, the first in Australia in April and the second to be held in New York in May.
Following the event, the WEF aims to publish a report summarizing its findings.
Still, McWaters said the role of the WEF is to think about how the tech will impact business, not necessarily to weigh in on what he called the “technology arms races” in the industry.
This means that when it comes to the industry, the WEF does not have an official position on protocols available from developers working on bitcoin, Ethereum, Ripple, Hyperledger or other alternatives.
“Where we conduct secondary research and convene groups of people from the FinTech space, we’re bringing them together to have conversations on use cases,” McWaters said. “We’re equally interested in observing where there is broad agreement on the necessary conditions to unlocking that value, as well as if there’s disagreement.”
Further, McWaters said that he has engaged a wide variety of stakeholders, including BitPay, Chain and Digital Asset Holdings as part of its research and investigations into the technology.
The WEF had previously named Ripple as one of its “Technology Pioneers”, alongside 49 companies including Google, Mozilla and Twitter. As a result, Ripple was invited to the WEF’s annual meeting in Davos, Switzerland, this January.
To underscore the WEF’s cautionary approach, McWaters explained that his organization has seen its views on blockchain technology shift over time.
For example, he said that initial mentions of blockchain in its reports may have been overly focused on its impact in the payment industry.
“Obviously there are applications in that space, but at the time, we were wrapping up phase one, we were beginning to recognize that, in fact, implications of blockchains were much more broadly transformative,” he recalled.
He said the WEF’s thinking has now expanded beyond this formerly limited line of thinking, but that he remains open-minded in his thinking on the technology.
Still, he said that the ecosystem benefits from an organization like the WEF given its reach and ability to serve as a neutral venue for governments, small companies, big banks and other stakeholders. The WEF is funded by membership fees, partner fees and from the proceeds of annual events. Strategic partners, for example, include companies like Barclays, Cisco, Facebook and General Motors.
“If you look at the world of finance, this is a topic that is emerging, and there’s a role for WEF because it goes beyond just the financial players,” WEF senior media manager Peter Vanham told CoinDesk.
McWaters said that the WEF’s work with blockchain tech so far could be best described as an “interesting journey”, one that he is excited to continue given its potential implications and the need institutions have for quality information on the technology.
“We’re aware there are unanswered questions.”
R Jesse McWaters is speaking at Consensus 2016 in New York. Join him at the Marriott Marquis from 2nd to 4th May. A list of the event speakers can be found here.
WEF image via Facebook
BankingWorld Economic Forum