Gartner: the potential far-reaching implications of blockchain
In the past, governments were the only issuers of currency. Now, anyone can create their own value and exchange with representation of value using a blockchain or distributed ledger system – that is a huge disruption of the norm and the implications for society are beyond our imagination.
This is not about the technology, it’s about trust. We now have a digital capability to represent any form of value that is privately issued – you can become your own banker, insurance agent or foreign exchange teller. What does that mean for how society operates today? What are the implications for governance, our tax system and our legal framework?
A blockchain or distributed ledger is a mechanism for adding trust in an untrusted environment, originally designed for entities to transact when they didn’t know or care who the other entity was. It creates an irrevocable record of significant data and events, such as monetary transactions, property records or other valued assets.
Designed to disintermediate and disrupt
While Gartner advises caution today, we see massive opportunity for distributed ledgers tomorrow. CIOs need to start thinking about the use cases in their own industry, build a list and discuss it the CEO. That may sound premature, but we are already seeing a number of proof of concepts and trials in industries outside technology, including:
A credentialing system between universities to provide proof of course completion and grades
A registry for identification of diamonds where each stone’s cut, colour, clarity and carat is loaded into a ledger to prevent fraud
Tracking the origin of fresh produce like beef or milk in China
A land title system providing proof of ownership in emerging markets
In March 2017, analysts documented 130 different use cases for blockchain across different industries, and the number is growing rapidly. Whilst today, Bitcoin is still the only working, proven blockchain, we predict that by 2022, an innovative business built on a blockchain will be worth $10 billion.
A fashionable word
Whilst we are already seeing some great applications of blockchain technology, it is important CIOs don’t let themselves get tricked by misuse of the term, and seeing blockchain as a silver-bullet solution to their technical challenges.
We are seeing many more applications that claim to be blockchain, that could be created using well-proven existing systems and technologies such as relational databases hosted in a cloud – sometimes blockchain is being used as a square peg forced into a round hole. To put that in context, Gartner predicts that across 2018 we will see 85% of blockchain-named projects start to deliver business value, without using a blockchain in their implementation.
A slow evolution of business models
The application of blockchain technology is slowly becoming a reality, and business models will evolve to gain the best value from it. As with all disruptive technologies there will be a period of trial and error, but personally, I am not convinced that wider society is ready for self-regulation and the potential for criminal misuse of the technology.
We may all jump on board with cryptocurrencies and other blockchain enabled services, or we could have a backlash. Governments could step in and try to exercise some control. More likely, there will be a kind of ‘arctic slide’ where people will become used to one application of the technology and become increasingly comfortable with it.
Over time, we will see true blockchains become more prevalent but society has many legal and societal problems to address to make that a reality. Wide adoption of blockchains will also fundamentally change economic models and monetary policy for governments, central banks and other financial institutions. It is not just the person on the street, who’s acceptance of the technology will be needed, although as we have seen in recent decades this has driven the adoption of technology by business more than anything else.
Despite these issues, I do believe that blockchain is going to fundamentally change the society in which we live. Not tomorrow but within our lifetime.
David Furlonger, Research Vice President and Gartner Fellow
Start-ups receive $60 billion investment, smash 2020 record
Start-ups on the continent have raised a massive 43.8 billion euros ($60.9 billion) in just the first six months of 2021, according to figures from Dealroom, surpassing the record 38.5 billion euros invested last year..
This is despite the fact that the number of venture deals signed so far is around half the amount agreed in 2020. Only about 2,700 funding rounds have been raised so far this year, compared to 5,200 last year.
Prime examples in times of change
Examples are Swedish buy-now-pay-later firm Klarna which has raised more than $1.6 billion in two financing rounds, the German stock trading app Trade Republic received $900 million in May and British payments provider Checkout.com snapped up $450 million at the start of the year.
The figures suggest that European tech firms are pulling in far larger sums of money per investment than in previous years, which defies the economic uncertainty of the pandemic and boosted online services enormously.
The CEO of Checkout.com, Guillaume Pousaz, said start-ups have often been created in times of crisis, citing the emergence of several new financial technology companies in the wake of the 2008 global financial crisis.
He added that big transformational change was often the time when there is the emergence of a lot of new start-ups, sometimes when people are losing their jobs for associated reasons.
UK leading the charge
Scale-Up Europe, a group that includes the founders of UiPath and Wise, proposed 21 recommendations to help the region build “the next generation of tech giants.” Among the suggestions are tax credits to corporates for investing in start-ups and regulatory changes that adapt to new innovations.
Sebastian Siemiatkowski, CEO of Klarna, said the U.K. leads Europe when it comes to tech policy, and that there were a number of regulatory issues needing to be addressed before the European Union can produce tech giants of its own.
Siemiatkowski highlighted EU regulation of web cookies as an example of “poor regulation.” Yet, as the number of $1 billion start-ups in Europe continues to grow, the number of exits in the continent is also increasing.
This year has already seen some notable acquisitions, including Etsy’s $1.6 billion purchase of U.K. fashion resale app Depop and JPMorgan’s takeover of London robo-advisor Nutmeg.
As for stock market listings, a number of notable debuts have taken place in London in particular, including food delivery app Deliveroo, cybersecurity firm Darktrace and reviews site Trustpilot. Money transfer giant Wise, formerly known as TransferWise, plans to go public in the U.K. capital soon.