A senior Bank of England official has poured scorn on the outlook of blockchain technology revolutionizing the landscape while seeing sweeping adoption, stating that it won’t happen anytime soon.
Andrew Hauser, executive director for Banking, Payments and Financial Resilience at the Bank of England (BOE) does not believe that blockchain is going big anytime soon, despite the ever-present interest and investment being poured into researching and developing blockchain applications from companies across a variety of industries.
Hauser delivered a speech [PDF] at the Crest Twentieth Anniversary Conference in London yesterday, an occasion that commemorated Crest, the platform that settles U.K. stocks and bonds transactions as a securities depository.
Here, he spoke about increasing calls within the financial industry for a change from the “current cat’s cradle of systems” that works with an array of intermediaries. While he acknowledges that financial technology will prove as a key enabler of this fundamental change, he doesn’t see the innovation of blockchain ushering in that change anytime soon.
Hauser said distributed ledger technology or blockchain tech is “at its most extreme…quite revolutionary,” before adding:
There is no likelihood of such an extreme revolution occurring any time soon: much more work is needed across a whole range of issues, including: speed and scalability; confidentiality protections; developing common protocols; integrating cash and securities movements; and establishing regulatory and legal norms.
In many cases, reform to outmoded business processes will need to precede any application of the technology itself.
Referring earlier to other technologies such as real-time computing, the cloud and messaging standards, Hauser than opined that there is potential for “less ambitious but still potentially transformational applications in specific markets,” particularly those where market infrastructure isn’t well-developed.
Still, Hauser sees financial institutions exploring blockchain technology to choose a path to tread between doing so individually or in a collaborative effort such as the R3 banking blockchain consortium, before implementing it internally between themselves.
But doing neither is a risky approach.
Hauser’s speech comes soon after a recently-released BOE consultation paper that is pondering distributed ledges among other technologies as the bedrock innovation for the next generation of the central bank’s real-time settlement service.
Images from iStock and Bank of England.