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Blythe Masters
Photograph by Simon Dawson / Bloomberg
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The promise of blockchain technology seemed unlimited a year ago.
Banks were trying to understand their strategy, and big and small businesses were bragging about how blockchain software would transform industries, from shipping to money transfers. In August, a Barron the cover story tried to evaluate the actual blockchain potential that changes the game.
While the year is shrinking, the news has taken on a more sober tone, starting with the decision of the blockchain CEO to resign from his position on Tuesday.
Blythe Masters, a former JPMorgan Chase executive, leaves the CEO of Digital Asset, a blockchain-focused start-up, telling employees last week that he wanted to focus more on his family.
When he became CEO in 2015, the move helped legitimize the blockchain. At the time, the technology was almost entirely associated with the volatile bitcoin cryptocurrency. Under Masters, Digital Asset has signed partnerships with technology giants like Google and was chosen to redo the settlement and settlement system for the Australian Securities Exchange.
Masters is the chairman of the board of directors of Hyperledger, a non-profit consortium that has led the development of some of the most promising projects in the field. He was still in that role since Thursday, and remains on Digital Asset's board. Masters, who were not available to talk Barron, he told his colleagues that the potential of technology "is stronger than ever".
There are other signs, however, that technology has encountered obstacles. "We believe we are in the early stages of a winter blockchain," says Rajesh Kandaswamy, who follows the blockchain for the research firm Gartner. His latest survey of key information officers showed that only 3.3 percent had distributed blockchain software. "I do not know a single large bank that uses blockchain in large-scale production," he adds. "This technology that should revolutionize financial services, we do not see it yet".
Adoption has also been unpredictable in other sectors. In shipping, the blockchain should reduce documents and make it easier for all parties to keep track of packages.
IBM
(ticker: IBM) is working with
Maersk
(Maersk-B.Denmark) on a project called TradeLens that includes more than 100 partners to track shipping documents on a blockchain. Some shipping companies have hesitated to sign on grounds of concern over the governance model, which may worry about giving some participants more power than others. The German giant Hapag-Lloyd (HPGLY), for example, wants to make sure that a blockchain system has a "governance model that guarantees rights and obligations comparable to all the parties joining a network", says spokesman Tim Seifert.
IBM Holli Haswell spokesperson said the value of the TradeLens system has grown as other companies and agencies, such as the Port of Montreal, have signed. Maersk spokesman Thomas Boyd also wrote that "carrier participation is moving forward". He added: "By requiring a joint decision-making process on the development and functionality of TradeLens, TradeLens's collaboration model responds to carrier feedback and concerns about the role of Maersk in the TradeLens platform."
It could be years, however, before the blockchain turns out to be useful.
"Right now, I think it's a lot of smoke and mirrors," says Steve Bowen, CEO of Maine Pointe, a global supply chain and operations consulting firm. "It seems like three to five years have passed".
Write to Avi Salzman at [email protected]
