The (Heart)Beat Has Sounded: The World Economic Forum Places Blockchain Front And Center

It's official - Blockchain is ready for its close-up. Blockchain and smart contracts have moved out of the wings and are the new stars of the finance industry, according to the World Economic Forum's report released on Friday, "The Future of Infrastructure: An Ambitious Look at How Blockchain Can Reshape Financial Services."1

For those of us who have been beating the blockchain and smart contracts drums for months or years, the report was an acknowledgement of what we long have been predicting. Numerous recent studies and reports, including those by major global financial institutions and consulting firms, have been advocating, with increasingly greater confidence, the myriad use cases for blockchain and smart contracts, and certain bulge bracket investment banks, accounting firms and other high-profile organizations have incubators and research arms in full swing.2 Venture capital firms, including Andreessen Horowitz, have invested millions of dollars and time in blockchain startups, and credit agency Moody's Investor Services reported in July that, worldwide, approximately 120 ongoing blockchain projects were active, ranging from internal organizational initiatives to intra-industry and start-up collaborations and investments.3

But perhaps no statement has been as powerful as that from Giancarlo Bruno, the World Economic Forum's Head of Financial Services Industries on Friday, when he said, "Rather than to stay at the margins of the finance industry, blockchain will become the beating heart of it."4

According to the World Economic Forum's report, in the past three years, over US$1.4 billion has been invested in distributed ledger technology (also known as blockchain), and over 2,500 patents have been filed.5 By 2017, it is expected that over 80% of banks will have launched blockchain projects.6 In the few days since the report's release, we have been fielding messages from many individuals who previously showed little to no interest in smart contracts and blockchain but who now, awoken by the World Economic Forum's pronouncements, have a lot of catching up to do.

In our next article, we will take an in-depth look at some of the most critical points raised in the World Economic Forum's report. For those of you who are just getting started in blockchain, this article is for you. We will answer two important questions:

What are Blockchain and Smart Contracts? Are Blockchain and Smart Contracts Just About FinTech? BLOCKCHAIN IS NOT JUST ABOUT FINTECH.

We'll start with the second question, which we get all the time. The answer is a definitive no. Blockchain and smart contracts are not just subsets of FinTech. As we will explain in this article, blockchain is much broader than FinTech or finance in general; blockchain and smart contracts are not merely FinTech verticals. Arguably, FinTech is a use case of blockchain and smart contracts, not the other way around.

BLOCKCHAIN AND SMART CONTRACTS CAN BE UNDERSTOOD WITHOUT HAVING COMPUTER PROGRAMMING SAVVY.

To understand why this is the case, and to provide some examples, we need to describe blockchain and smart contracts in a way that non-programmers can understand:

Blockchain is a disruptive technology that provides a secure, global platform that allows both individuals and enterprises to make and verify - almost instantaneously - a wide variety of transactions.7 Blockchain eliminates dependency on a central governmental authority or costly intermediaries, while eliminating the likelihood of manual error and ensuing delays.8

Think of a global spreadsheet that is saved and runs on billions of computers around the world, where the data is universally verifiable and trackable. Imagine a series of blocks of information, all interlocking and lined up in chronological order, with security features that prevent the ability to tamper with past information. Blockchain can be seen as the second generation of the Internet, i.e., a new peer-to-peer protocol, or as many experts have described it: a "digital distributed ledger" or "the trust machine."9

Blockchain has the potential to disrupt today's big disrupters and transform nearly all industries...