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Phillip Hammond, the UK finance minister, said yesterday that blockchain technology could help facilitate trade across the Irish border after the UK left the European Union. However, Hammond is the first to admit he has no idea what he's talking about.
The United Kingdom minister relies on the lack of understanding of technology in the wake of bankruptcy negotiations
There is growing concern over the way the United Kingdom leaving the European Union next year will have an impact on the United Kingdom itself, as well as on its European neighbors. Since it is the only nation to share a border with any of the United States and naturally makes a huge amount of trade with the departing country, it is thought that Ireland is one of the countries more affected by Brexit.
In addressing the growing problem of how Ireland will be able to continue trading with the UK after the departure date, UK Finance Minister Phillip Hammond has cited blockchain as a technology that it could potentially alleviate a large part of the concerns. According to Reuters, he said:
"There is technology that becomes available (…) I do not pretend to be an expert on it, but the most obvious technology is blockchain".
This statement should be of immediate importance to anyone with something to lose from Brexit or those who understand blockchain technology. Evidently, Hammond falls exclusively within the previous category.
The problem is with the Irish border. Years of conflict have raged on both sides of that particular line on the map and the difficult peace established at the end of the 1990s largely relies on the ability that the southern neighbor must trade with the United States to the north.
With so much unknown about the nature of a Brexit agreement, there is no clear indication if such trade will be able to continue.
For Hammond arguing that a distributed database can somehow improve the fate of Irish trade in the wake of a tough Brexit is ridiculous. While a blockchain can be used to monitor supply chains (it remains to be seen the efficiency of using such a system with our current technology on a standard database), there is absolutely nothing about a blockchain which makes them particularly suitable for reducing the necessary border controls on goods in the event that a difficult border between the United Kingdom and Ireland is the result of Brexit.
Bitcoin and other cryptocurrencies work on blockchain because they are purely digital. The traded goods are not.
Rather, it seems that Hammond has been sold snake oil by Reply LTD with their relationship "Blockchain for Brexit" (quoted by the Financial Times), or perhaps it is trying to look as if it had a firmer grip on the situation than clearly.
Public blockchains are great for certain things – security and immutability – but that does not mean they are the solution to every problem at all. They are expensive to execute properly decentralized and, at the end of the day, most applications that advertise technology probably do not need the level of security offered by a real blockchain.
The problem with the Irish border is not of trust, it is political. Blockchain eliminates the need for parties to trust each other and does it very well, but at a high cost. To protect a multimillion-dollar network, like Bitcoin, it's perfect. There is no reason to think that it will speed up the process of trading goods across a border.
It will be interesting to see how Hammond developed his blockchain solution for the Irish border in the months prior to the Brexit date. You probably should start by learning what you are and what is not.
Shutterstock foreground image.
