A Deloitte survey from earlier this year detailed business interest in blockchain technology and showed that despite the slower rates of mainstream acceptance, enterprises are excited about the future of blockchain. That said, according to Deloitte’s blockchain chief, those businesses are hesitant to embrace the tech due to its “wilder side.” For example, the recent crypto market crash showcases just how volatile these assets are. Long-time businesses are used to stability — and crypto’s current state is far from that.
In a statement to CoinDesk, blockchain chief Linda Pawczuk revealed that her clients are worried about ICOs, illegal activity, and other not-so-positive aspects of the decentralized ledger.
Pawczuk assists long-time companies in moving their internal business operations onto the blockchain. While her clients have enjoyed the potential for enterprise, their curiosity about the more negative sides should come as no surprise:
“The boards are asking us about it because it’s in the news for bad actors, and boards are nervous that blockchain is affiliated with bitcoin and altcoins and ICOs,” says Pawczuk. “And what do boards do to protect their investors? So it hasn’t helped us, the association with the bad actors.”
Deloitte’s blockchain team often refer to ICO’s as “the donor market” because investors tend not to see a return on investment. In August, Unhashed reported that ICO scams have cost investors around $100 million. While the SEC may be working on industry regulations, Pawczuk claims that the news is still distracting:
“Unfortunately we got those things that create angst. I’m invited to the meetings all the time, and I have to explain why they shouldn’t be concerned about the security of information [on a blockchain], explain what is the perspective on bitcoin and the 2,000 altcoins — and we’re explaining this, but we’re like, ‘Can we stop talking about my bad brother? Can we start talking about my brother who is the Olympic champion?’”
Pawczuk considers distributed ledger technology (DLT) to be that “Olympic champion.” In an extensive, wide-spread interview the chief discusses what sells businesses on the blockchain, Deloitte’s role in the stablecoin space, and more.
Which Businesses Should Use Blockchain?
Companies that “have been existing for hundred [sic] of years, some of them, but grew up in traditional process models and decided to migrate to more distributed technologies” are Pawczuk’s best clients. She claims the best way to sell these companies on blockchain is with consortiums — ones that have built a reputation as a “neutral” platform rather than one which focuses on a specific technology.
Pawczuk uses The Institutes RiskBlock Alliance as an example. She worked with them in a previous position, and the group has been in the insurance industry for over 100 years. “They are non-profit, and it’s a very trusted entity,” reveals Pawczuk. “You don’t have to create trust, and you have membership already.”
With The Institutes RiskBlock, she signed up over 30 insurance companies. Because of this success, the group is looking to expand worldwide. Pawczuk asserts that these consortia have an advantage over Hyperledger or R3 due to their general focus:
“Hyperledger has a horse in the race‚ it’s a platform. R3 is trying to bring different parties together and get them to agree on something for the sole purpose of blockchain. There are consortium plays where the trusted party already exists, as opposed to manufacturing a trusted party for the sole purpose of transaction.”
She claims that a consortium should have no desire to bring about profit. They should remain neutral, as when a group is looking to monetize. “You can’t be a neutral party and also focus on an economic model that is self-serving. It’s just replacing an intermediary with another intermediary.”
Pay to Play
Pawczuk is also unsure of blockchain vendors who create free proofs of concept. She argues that business model disruption is the most critical factor in blockchain — much more so than the technology. She defends this, saying that “we get a little bit queasy when we hear about all these free proofs of concept that’s being built [sic], because it’s the technology being applied to the solution.”
A free proof of concept tends to miss regulatory factors such as KYC/AML, taxes, and other aspects. You aren’t “serving the client holistically,” says Pawczuk. She also dismisses the idea of stablecoins, stating that it’s too early for firms to be looking at the fiat-tied technology without regulation. “Auditors are going to follow the regulators. Period, and the regulators are moving at a respectable pace,” says Pawczuk. “We now we [sic] have to figure out something we have never dealt with before: the auditability of decentralized systems.”
Deloitte and Its Future In Crypto
In a similar vein, Deloitte is still looking to get involved in other crypto projects. For example, Pawczuk and her team work with permissioned blockchains for the time being. While she stays away from crypto-based blockchains for now, she claims that the world will need a blend of both in the future:
“Let’s look at the insurance model. Let’s say you and I are in a vehicle accident, and you have one carrier, I have another carrier, and carriers can settle, but what about that other guy there that’s called a body shop? He’s not necessarily in the permissioned blockchain, because there are thousands of body shops, but could he be on the public network? So now you have a hybrid structure.”
As long as the two networks can speak with one another, Pawczuk is happy. Deloitte is currently working on a “blockchain interoperability claim” which will combine trade finance blockchain data as revealed at Consensus 2018 back in May.
Finally, Pawczuk ends the interview praising Bitcoin (BTC) and how it introduced the world to blockchain:
“The fact that bitcoin is a real use case landed global appeal, got people to focus on blockchain. We would never be talking about process capabilities like blockchain, and the disruption of blockchain, had it not been for bitcoin.”
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