Remember when bitcoin was hailed as the future of financial services: the killer app for Western Union, Visa and Bank of America?
Well, over the last year, that hype has died down. According to Vox, the dream is officially dead.
But not so fast, says Bushwick’s own blockchain applications studio, ConsenSys. ConsenSys works with another blockchain technology, Ethereum, which lends itself to a broader range of applications than bitcoin, such as “smart contracts.” Even the Vox article singled out Ethereum as the “rising star of the cryptocurrency world” among a group of competitors that has taken away bitcoin’s momentum.
— Joseph Lubin (@ethereumJoseph) November 22, 2016
According to ConsenSys’ chief strategy officer, Sam Cassatt, we may very well see the financial transformations that bitcoin was expected to carry out — just with other blockchain-enabled tokens instead of bitcoin. Recently on Medium, Cassatt wrote about how venture capitalists misjudged the momentum of bitcoin. In his view, it’s a classic case of second-mover advantage: bitcoin created the infrastructure for the financial revolution, but competitors will be the ones to benefit from it.
ConsenSys is aiming to position itself as one of those beneficiaries. Yesterday, it announced a partnership with fintech services company Synechron and enterprise blockchain development company BlockApps to develop custom applications for financial services. According to CEO Joseph Lubin, right now, blockchain technology faces three barriers to adoption: data privacy, ability to scale, and compatibility with other technologies. Those are the areas the three companies seek to address through their collaboration.
Where might we see these new blockchain-enabled applications? Possibilities include syndicated loans, bond issuance and tokenized securities, as mentioned in ConsenSys’ announcement.
What the impact of all this will be on the average consumer remains up in the air, though. According to Vox, the biggest hurdle for blockchain developers is fighting the perception that their technology is a product in search of a compelling use case. Even ConsenSys’ announcement includes a tacit admission that it’s still figuring out what banks actually need.
“Synechron’s specialized financial services knowledge has already been a valuable feedback loop so that we are setting our agenda to prioritize how to evolve the technology to the unique needs of the financial services industry,” Lubin said in the announcement.
But Lubin remains bullish on Ethereum’s potential to transform the internet, as in this guide he recently wrote on the blockchain technology. (It’s a good primer for those still trying to wrap their head around what blockchain is.)
“By providing a user-friendly platform that enables people to harness the power of blockchain technology, Ethereum is speeding up the decentralization of the world economy,” he wrote. “Decentralized applications have the potential to profoundly disrupt hundreds of industries including finance, real estate, academia, insurance, healthcare and the public sector amongst many others.”-30-