Amber Baldet, former head of JPMorgan’s blockchain efforts, recently spoke to Business Insider about her views on blockchain technology. She said that the distributed ledger technology (DLT) of today resembles the internet from the late 60s. Her exact words were:
“The internet in 1969 looks like what blockchain is. That's not to say blockchain doesn't have any use cases — we are just far behind the full extent of what those networks can be used for. Right now, there are a lot of companies in distributed storage that are onto something. It'll be fascinating to watch those innovations come to fruition.”
Amber then proceeded to explain how she is planning to contribute to this nascent technology. She stated that there’s currently a “divide” between old-school Wall Street and the cryptocurrency market.
She explained that once the digital currency market and its underlying technology have matured, we will begin to see the real “internet of value”. This will, according to Amber, consist of cryptocurrencies, real-world assets, permissionless and permissioned blockchains, and the traditional financial system as well. She then confidently asserted that “there will be all of this.”
Too Much Hype
There’s a lot of hype, too much in fact, surrounding blockchain right now. Just like companies such as Kodak and Long Island Iced Tea jumped on the cryptocurrency and blockchain bandwagon to boost their share prices, plenty of other traditional businesses have also attempted to leech off this trend.
The fact of the matter is, blockchain is not meant to be a solution for everything. Samson Williams, a blockchain and initial coin offering (ICO) advising consultant at Axes and Eggs, told me that DLT isn’t needed and can even make a data processing system slow and inefficient. Samson further stated that oftentimes a simple Excel spreadsheet will suffice.
This view is actually in line with what many other blockchain experts believe. Notably, Sheila Warren, blockchain head at the World Economic Forum (WEF), is working on educating people about what this distributed ledger actually is. Sheila and her colleagues have created a type of “decision tree” which allows individuals and organizations to determine whether blockchain is an appropriate solution for their business model. The extensive WEF guideline says:
“Blockchain hype is damaging to the overall development work required to reap the benefits of this new technology.”
Blockchain Technology's Current State
The blockchains that now exist have been plagued with scalability issues. The Bitcoin and Ethereum blockchains, for example, have not been able to scale effectively. While there is development work going like Ethereum’s Casper, Sharding protocols and the Lightning network, which promises up to billions of transactions per second, scalability issues are still a serious concern at the moment. Furthermore, many have criticized current proof-of-work networks for consuming more electricity than entire countries, which is not environmentally friendly.
While these concerns are valid and must be addressed, there are also some solid blockchain projects being developed. One of them being the Factom protocol. This crypto platform serves to provide the proof of authenticity of documents. These documents can be legal documents or even research papers.
It does not store the actual documents. Instead, it holds the evidence or proof that can be used to verify whether someone is or isn’t a document’s author. The project is currently keeping a low profile.
Based on what most blockchain and crypto experts believe, and also according to what we’ve discussed here, Amber Baldet does have a realistic assessment on the current state of blockchain technology today.
While Amber’s belief that permissionless blockchains will be a part of the future fintech world is not shared by many others, her overall view is actually quite common among experts such as Cornell computer science professor Emin Gun Sirer.