Blockchain Or No-Chain: Is Blockchain Really the Future Of Fintech?

Former bitcoin champion Stefan Thomas caused a small stir in the blockchain world today when he posted an essay entitled “The Subtle Tyranny of Blockchain,” which, as the title suggests, does not reflect favorably on the technology.

“In any protocol, everyone has to act the same. But in a blockchain like Ethereum, everyone has to think the same,” Thomas fired off in the essay, where he eventually compares blockchain to the Lego movie, which is maybe not any stranger than having Izabella Kaminska compare it to the indie rock scene.

His main problem with the technology appears to be its reliance on groupthink: in order for the bitcoin blockchain to be updated, a majority of the miners on the chain need to approve the changes. This is a reportedly not a reliance the Interledger Protocol, designed by Ripple has, something endorsed at the end of the essay by Thomas, who currently works as Ripple’s CTO.

The creator of the bitcoin site WeUseCoins as well as other early blocks of the bitcoin world, Thomas is equally dismissive of the technology’s potential in the finance world, stating that the embrace of blockchain in finance is “partly because that industry has a relatively high tolerance for arcane and complex systems.”

Thomas’s comments fall somewhat against the grain at the moment, with blockchain more popular than ever even taking into account the latest developments in bitcoin. As far as fintech goes, the most recent CB Insights and KPMG Pulse of Fintech report shows increased interest in blockchain by investors, especially in North America:

InsurTech and blockchain were among the big winners during the quarter, with a number of significant funding rounds coming in these two sub-sectors,” the report reads, “It is expected that these sectors will continue to gain momentum as investors grow more cautious regarding payments and lending opportunities.

As previously stated here by Brian Hughes, Co-Lead Partner, KPMG LLP’s Venture Capital Practice,  blockchain can be used for much more than bitcoin and other cryptocurrencies, and is attractive to fintech startups because of its ability to cut costs and more efficiently organize their financial services.

Whether blockchain is a tyrannical technology that stifles individual thought as Thomas claims, or the instrument of the future as stated by others like Alex Tapscott, co-author of Blockchain Revolution, is still just a matter of opinion at the moment, as it will take actual implementation of the tech in the finance or business sectors for us to see one way or the other.

To learn more about blockchain, join us at Bank Innovation Israel this November 1-3 in Tel Aviv. Learn more and register here.

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