The fifth Money 20/20 event, held at the Sands Expo in Las Vegas, was a four-day long experience that covered the newest innovations in the financial and payments industry. With thousands of attendees and hundreds of speakers, the event covered new solutions and explored the hottest breakthroughs in the financial industry.
The blockchain was one of the main focuses discussed at the event. Money 20/20 dedicated a number of panels and keynotes to the coverage of the blockchain ecosystem and why top names in the industry are experimenting with it to provide solutions to the encumbered traditional methods of payment, trade, and finances of today.
All the sessions that examined blockchain technology revolved around regulation without stifling innovation, how to solve cross-border payment systems, how to leverage the blockchain to create identity management systems in developing countries that lack identity policies, how it can solve the future of banking, health care systems, law enforcement, and more.
As each session explored blockchain technology and its potential to revolutionize payment systems, it became clear, that Money 20/20 was meant to educate fellow entrepreneurs, CEOs, and leaders in the industry about the burgeoning technology of blockchain. Some noted that if companies haven’t already started implementing or, at the very least, exploring blockchain technology, they were already too late.
A session titled Blockchain Applications in Capital Markets and Global Trade Finance, was led by a panel of financial industry experts who discussed the potential of the blockchain and its implications across the trading platforms. Leaders from Credit Suisse, Nasdaq, Plug and Play, R3CEV, and Overstock gathered to examine the global consortia evaluating and implementing shared ledgers, blockchains, and smart contracts for the back-office, issuance, trade and settlement solutions.
Jacob Farber of R3CEV stated that there are 75 global financial institutions already working with blockchain technology- either creating their own blockchains, permissioned ledgers, or working with the existing blockchain platforms (including Ethereum) already in use. Judd Badgley of Overstock and tO noted that blockchain use is based upon percentage points, to which Emmanuel Aidoo of Credit Suisse agreed by pointing out how much capital is stifled when it’s frozen in the slow traditional trading systems. Trades enabled by the blockchain would only take ten minutes. Yolanda Goettsch of Nasdaq was less enthusiastic and noted that just because the blockchain could enable a ten minute transaction time between settlements, doesn’t mean it would be beneficial to upend traditional methods. Aidoo challenged Goettsch by stating that the blockchain can definitely solve the issues of trading. “It shouldn’t take three days in this day and age.”
Addressing the conjecture that the blockchain is permeating the banking industry, Goettsch stated that while she thinks most people believe blockchain banking will happen by 2019, she feels it won’t for another five to eight years. Aidoo countered by stating, “2015 was the year of hype, 2016 was the year of Proof of Concept, and 2017 will be the year of delivery.”
This timeline for growth has been implemented by many in the Fintech sector including those businesses involved in cross-border payment systems to address an unmet global need. An entire track was dedicated to various aspects of cross-border payments addressing the technology, uses, and regulatory considerations necessary to build an innovative yet substantive cross-border payment system. This panel, Leveraging Distributed Ledgers to Enable Real-Time X-Border Payment Networks, included conversation around new solutions emerging “in the market to clear and settle cross-border payments for consumers and corporations in real-time. Market adoption is heavily influenced by the breadth and size of the network – the number of banks, corridors and currency pairs available to send and receive payments.”
Each member of the panel was asked whether they agree with the idea that the key to adoption of new cross-border payment systems is to focus on the network itself. Citi Bank’s representative readily agreed that too much focus was being spent on the technology rather than the underlying network on which the technology operates. National Australia Bank emphasized the Bank’s support of developing the network on which cross-border payments can be completed on. Merrill Lynch highlighted the “beauty of blockchain” and that collaboration between several industries across the financial sector working together to build and strengthen the network will ultimately be a catalyst for widespread adoption of cross-border payment systems. Ripple, a distributed financial technology company, emphasized the importance of having governance and dispute resolution as a backbone for any successful network to withstand changes in technology, and the importance of blockchain-based companies to work with banks and regulators to ultimately create the best possible network on which cross-border payments can be conducted.
The P2P X-Border Payments: New Approaches & Emerging Markets panel focused on new use cases for P2P cross-border transfers, such as tuition payments. The panelists each acknowledged the shifting trend towards globalized money movement and the high volume need to send money across country boundaries that cannot be met by traditional, current methods. Digital currencies would, in fact, solve this issue.
Flywire, a payment process company for large sum cross-border payments, pointed out that people are becoming global citizens who move money around for so many different uses, both for personal and business. John Kunze of PayPal agreed, and while there are so many different platforms and applications for cross-border payments, ultimately, convenience will drive innovation and customer experience. He believes blockchain technology will greatly assist in this payment model as a new type of database on which the payment systems can be built.
When discussing regulation of cross-border payment systems, the balance of ensuring consumer protection and innovation was highlighted by the panelists. Earthport stated that they believe in the need to allow for innovation without stifling regulations and that if “you build good companies you will find a bank [to support your financial needs].” PayPal agreed and added that the ultimate consideration should be about following the spirit of the regulations and ensuring customers are being protected and treated fairly. Ultimately, there was a general consensus that regulators have a specific, important role, but they should not stifle technological innovation and growth.
A few companies took advantage of the gathering of investors and innovators at Money 20/20 to announce and unveil their blockchain-based projects. Chain, a technology company that partners with financial firms to build blockchain networks, announced their partnership with Visa to deploy a live pilot in early 2017 called Visa B2B Connect. This project aims to enable businesses and corporate clients to more efficiently transfer cross-border B2B transactions.
Patrick Byrne, CEO of Overstock made an announcement that they plan to enable trading some of its stock on the tO blockchain-based platform, which will be available December 2016. Individuals who purchase Overstock shares by November 7th will qualify to purchase shares of their preferred stock. Byrne even assessed, “I think the blockchain is going to be a more significant and disruptive force for society and the internet.”
CEO of Civic, Vinny Lingham, announced their new project, which is an identity verification platform that will likely utilize blockchain technology to facilitate information exchanges between users and websites that use Civic as a login. Similar to how people today use their Facebook identity to log into accounts, Civic aims to play this role, yet in a decentralized manner.
Fluent, winner of 2015 Money 20/20’s People’s Choice Award announced their partnership with Allianz to create their own blockchain technology and B2B marketplace for trade finance called the Fluent Trade Asset Marketplace.
Blockchain solutions company Gem, partnered with Capital One to create a blockchain-based health care claim management system. With GemOS, an abstraction layer that’s designed to make blockchains useful for enterprise clients by connecting their existing software to shared ledgers, creates identities for the payer, provider, and their respective banks, using hierarchical deterministic (HD) identity keychains.
Aside from the new projects unveiling their blockchain-based solutions and technology, there was still a lot of apprehension from those who are not involved in the technical industry. Concerns about whether or not the blockchain will actually be a viable and scalable solution were high. Sessions discussing regulation within the blockchain industry and if it really can be used in a consumer-based manner were held to address those concerns. Jerry Cuomo of IBM made a joking statement about the future of blockchain regulation, “I would tell Hillary, that it’s time to innovate and not to regulate.”
Alan Cohn, counsel of the Blockchain Alliance, stated in regard to blockchain awareness and adoption, “The best ally I think that companies can have in this type of a regulatory enforcement environment is to be able to say, [Government] Agency X is actually experimenting with this technology, they’re actually using it.”
“Making government users of this technology will make others advocates of it.”
Cuomo also stated, “I would love to see the US administration really look at showcasing applications that leverage blockchain from everything from food quality to self-sovereign ID.”
To clarify, the blockchain isn’t one system but rather, many different technologies within a growing ecosystem. With so many tech companies creating their own blockchains or utilizing the existing decentralized blockchain-based applications out there, it was pertinent to make that distinction to the crowd.
When it comes to banking, the blockchain technology has been garnering a lot of interest with several bank consortiums popping up to test the technology for their own use-cases. A few of these consortiums are leveraging existing platforms, such as Ethereum, but others are creating their own hybrid infrastructures that utilize an open, decentralized ledger and a permissioned ledger. In one session, leaders in the banking and blockchain sector who work with consortia were asked if they saw all these existing platforms and consortia as a threat, or if “one was better than the other.”
David Watson of Deutsche Bank stated. “I like having several consortia. I also trust that the enemy of my enemy is my friend, and my enemy isn’t other banks or other consortia. The enemy is the cost the processes take, the complexity of the processes, and the time it takes to move money from place A to place B. That’s the enemy. It’s the same enemy we’re all looking at.”
Chris Church of Digital Asset Holdings agreed with this and stated:
“We embrace that.”
“The enemy is not the consortium- the enemy is all the bad stuff we’re trying to get rid of.”
“At this point, it’s just far too early to not take advantage of the power of open source; the value that other consortiums bring, ones that we are in or ones that we’re not.”
The biggest highlight out of all the discussions about blockchain technology revolutionizing the payments, transfer, and trade industries, was a panel where Vitalik Buterin, creator of Ethereum, explained the Ethereum platform to a very green audience. He described how he became involved in the crypto space when he discovered Bitcoin. Then why he decided to create a platform that had a more sophisticated programming language than Bitcoin, (also known as Ethereum). Despite Ethereum’s advance within the blockchain ecosystem and how much it has accomplished, Buterin still maintained his typical modest approach to describing Ethereum and that it “should be viewed as a living ecosystem and not a completed work of art.”
Don Tapscott of the Tapscott group, and author of “The Blockchain Revolution,” who led the panel with Buterin, pointed out that the media misleads the public about Ethereum, by reporting “sexy” stories such as community divides and attacks. Because of the hype the media created surrounding the notorious DAO attack, he addressed the audience members’ concerns and confusion by admonishing that Ethereum itself has never been hacked, but the applications that use it have.
During a session dedicated to Coinbase, a digital asset exchange company, Brian Armstrong, the CEO made a poignant explanation of the DAO attack and Ethereum as a whole.
“The DAO was not a flaw in the Ethereum protocol, it was actually a flaw in one particular smart contract that someone wrote. So just like any software out there, it’s going have bugs. For example, if you find a bug in a piece of software that’s written in Java [programming language], it doesn’t really call into question the entire Java language. It just means that there’s a burgeoning industry of people learning how to write smart contracts on the Ethereum blockchain. I think a lot of lawyers and software engineers need to come together to build these. If you look at contracts today, like going to buy a house- there’s a ton of clauses in there. “Subject to the following conditions…” and you wonder where they came up with them. It’s because there are hundreds of years of case law built up around these exceptions that people have found. This entire smart contract- and when I say smart contracts, they’re essentially software written on the Ethereum blockchain- the whole industry is only about ten months old. So there’s maybe only 40 people in the world who are really knowledgeable about how to write these contracts, so what you’re seeing is early experimentation and bugs being found. It’s good, it means there’s progress happening.”
When Armstrong was asked about the difference between Bitcoin and Ethereum, he stated,
“Ethereum is focused on scaling, so right now it can do about 25 transactions per second and Bitcoin can do seven, but they [Ethereum] have active development going on to get it up into the thousands of transactions per second, which I think it’s going to need. There’s also a difference in the communities of Bitcoin and Ethereum. In the Bitcoin community, I’d say there’s a number of people there who are ideologically motivated, some crypto-anarchists, some of the gold bug contingent. With Ethereum, it seems to be attracting people who are really just technologists and they’re interested in building applications that will be used. It’s really hard to say what the future will look like. Bitcoin is still the market cap leader at 10 billion with Ethereum at 1 billion, and there’s a number of others that are smaller. So, it’s unclear what the predominant one will be in the future. I think there will be many, but there will be one big one and that’s still up in the air.”
When asked what cryptocurrency to invest in, Armstrong stated, “I’m excited about Bitcoin and I’m excited about Ethereum. And I’ll just leave it at that.”
Overall Money 20/20 was an event where top people in the financial industry joined together to present their projects, evaluations, and solutions to figure out the best answers, contingencies, and roadmaps to enhance the financial industry as a whole. While the major focus may have been on traditional payment methods with the hot new tech of biometrics peppered in, blockchain technology held center stage in the Fintech sector of the payments industry. With over 11,000 attendees, it’s certainly safe to say that the blockchain has resonated with everyone at the event, and will most likely remain the emerging exploratory tech that will disrupt the entire ecosystem as we know it.