The world has been captivated by the sudden rise – and recent fall – of Bitcoin. But while the cryptocurrency has been grabbing all the headlines, the long-term global financial implications of the technology behind it, known as blockchain, are what really have industry experts excited.
Brian Beveridge, a partner in technology consulting for MNP, says the first step in understanding this phenomenon is distinguishing between the cryptocurrencies themselves and the technology that supports them. Beveridge told an audience at Business in Vancouver’s sold-out Business Excellence Series event, called Understanding Blockchain, that the general public will likely have a clear understanding of the difference within the next six months to a year, given all the attention Bitcoin is generating in the press as of late.
“I’m actually hoping that pretty soon we won’t have to explain it,” Beveridge said at the event, held January 18 at the Vancity Theatre. “It’s becoming a mainstream topic today, and I think one of the confusing factors is the confusion between the cryptocurrencies and blockchain because one doesn’t exist without the other.
“The broad term that people use [to explain blockchain] is distributed ledger technologies, which really describes what blockchain is. It’s a network that supports a copy of information that is stored in a ledger-like format that people can easily view. The records in the blockchain are there forever, and they’re posted, and once they’re there they can’t be changed, and they’re copied around the world or within a group of companies multiple times so that it’s easy to check versions and check that you have the right copy of the blockchain.”
Panellist Christine Duhaime, founder and CEO of financial technology think tank the Digital Finance Institute, said one of the leading benefits of blockchain is its speed.
“It’s really, really efficient, it’s clean, it’s transparent,” Duhaime said. “I always go to the example, in terms of financial transactions, if you can think of all your bank accounts online right now, but online and viewable in a private ledger where you can see who moved money to where, and when, how much. So it’s incredibly powerful from a financial transaction perspective.”
While the price of Bitcoin recently took a tumble, the panellists said its overall value will likely even out over time as the cryptocurrency becomes more commonplace and more people start to understand its actual use and applications. Beveridge noted that blockchain could be used by a wide variety of industries including the health-care and legal sectors.
Panellist Kelly Samuels, a partner in business law for EKB, a Vancouver-based law firm, was asked whether she felt governments such as Canada’s are laggards in understanding and regulating Bitcoin and blockchain technologies. She acknowledged states usually aren’t early adopters of new technology, but added there has been progress in this country.
“I think there is certainly, without sounding too cynical, money to be made for the government,” Samuels said. “They’re going to want to do that, so of course, taxation is one area that they will be more than happy to look into.”
“I have been comforted by the approach of the securities regulators in Canada,” she said, explaining they have taken “a tailor-made approach,” recognizing that existing securities regulations do not adequately address transactions such as initial coin offerings and the issuance of tokens – units of value issued by a private entity in the cryptocurrency world.
“It’s sort of a little bit of a square peg, round hole situation.”
Panellist Greg Johnston, president, CEO and director of Carl Data Solutions, said although Bitcoin looks volatile (its price tumbled drastically on January 17), it is here for the long term.
“What happened yesterday is not going to bring it down,” Johnston said. “I think there’s going to be fluctuations back and forth, and we’ve seen them maybe not as drastic as we saw yesterday. I think this is just to be expected with the new technology.”