LONDON — The director of a leading management think tank has dismissed blockchain technology as simply a distracting fad with “little to nothing” to offer financial services.
Martin Walker gave evidence about digital currencies and blockchain to MPs in Britain’s Parliament on Tuesday. Walker is director of the Centre for Evidence Based Management, a non-profit aimed at improving the quality of decisions made by CEOs and managers around the world by pushing them to be empirical.
Walker, who spent much of his career in banking and IT, told MPs: “In terms of demonstrable benefits, [there’s] little to nothing. There’s a big problem in the blockchain world with confusing ‘could’ for ‘is.’
“All that it takes to make a credible idea into a fad is people just switch off their brains and stop thinking. Over 20 years in and around the banking industry — blockchain is a fad but I have seen many fads in my career.”
He compared past fads to “magic wands, pixie dust” and said: “If 10% of what I’ve heard in my career had come true we would have these amazing banks that run for £1 a week.”
If 10% of what I’ve heard in my career had come true we would have these amazing banks that run for £1 a week
Walker said it was also unhelpful to talk about blockchain technology as if it was one thing, as most developers had strayed very far for the original blockchain principles which were first developed to underpin bitcoin.
Many of the technologies embedded in blockchain are not necessarily new, Walker said, but he admitted that the hype around blockchain had provided a “catalyst” to get banks to reform and update un-sexy parts of their business such as trade finance.
Still, Walker cautioned the excitement around blockchain risked becoming “a distraction from looking at getting some of the basics rights,” as many executives see blockchain as a “universal panacea.”
“Genuine innovation is hard,” he told MPs. “We’ve created what one of my colleagues call Innovation Theatre. If you want to be seen to be innovative all you have to do is a proof of concept using blockchain. It doesn’t matter if it doesn’t go anywhere.”
Walker appeared alongside representatives from blockchain companies Everledger and Ripple and a researcher from King’s College London, all of whom extolled what they see as the potential benefits of the technology.
Blockchain is a kind of next-generation database technology first developed to underpin bitcoin and other cryptocurrencies. It allows data to be stored, validated, and synchronized by a group and is cryptographically sealed, preventing it from being edited once the data is agreed.
While it was initially meant to allow bitcoin transactions, it has the potential to be applied to everything from home ownership and health records to voting and marriage certificates. Financial services companies have become particularly excited about its potential to cut costs while eradicating middlemen. Santander estimated in 2015 that the technology could save the banking industry $20 billion a year.