CIO Forum debate: Blockchain is the most overrated technology in 2017

CIO Forum debate: Blockchain is the most overrated technology in 2017Blockchain is more than just a buzzword. Aside from the financial sector, more industries have started to make a foray into the blockchain space. At the CIO Leadership Forum 2017 organized by Questex Asia in Hong Kong in March, an executive debate was held to discuss this disruptive technology.

At its 7th consecutive year, the Forum invited six C-suite and senior executives from the regulatory, banking, legal and commercial sectors to debate under the motion of “Blockchain is the most overrated technology in 2017”. They were split into the affirmative and negative sides to express their opinions on the motion.

Blockchain is part of DLT

Although the term blockchain is used more frequently than DLT (distributed ledger technology), it is indeed one type of DLT.

DLT supports networks of databases that enable participants to create, disseminate, store and trace information such as transaction records. These networks of databases can operate smoothly and securely without necessarily being controlled and administered by a central party that is known and trusted by every participant. A full audit trail of information history is available for the participants. Not all distributed ledgers necessarily have blocks or chain transactions.

Limitations on blockchain

In supporting the motion, Peter Bullock (pictured, third from left), partner of King & Wood Mallesons, pointed out there are limitations on blockchain, such as the constraint of smart contracts and blockchain’s recognition from the regulatory authority.

“Contracts are usually unique to a transaction. Some parts of blockchain-enabled contracts may be capable of expressing legal contracts but most parts may not,” he said. He believes smart contracts will be supplementary to lawyers’ work instead of replacing the need for lawyers.

Furthermore, at present many regulatory authorities around the world do not regulate blockchain.

He made reference to the rejection of a bitcoin ETF (exchange traded fund) application for listing on the US stock exchange. The Securities and Exchange Commission (SEC) in the US did not approve the Winklevoss bitcoin ETF in early March mainly because of the lack of regulation currently surrounding bitcoin. He sees that such kind of funds may not gain acceptance in US at least for a long time.

Back to Hong Kong, Hong Kong Monetary Authority commissioned ASTRI to release a white paper on DLT last November. Bullock noted the local regulator is still cautious about blockchain.

Also on the affirmative side, Lionel Louie (pictured, far left), chief commercial officer of transport logistics company CargoSmart Limited has doubts on blockchain in the areas of technology scalability and stakeholder alignment.

The shipping industry still relies heavily on paper documentation. Louie is concerned about the scalability of blockchain technology and its ability to address the priorities of all the stakeholders in the industry.

“In terms of technology scalability, we have a concern whether blockchain can handle large volumes of trade documents such as bills of lading,” he said.