05 Apr3 things I have learned this week about what the Blockchain Ecosystem Look Like.
Fundamentals. How often we use that term in our industry. My thoughts for this post were headed in the direction of how trading, settlement and payment would need to be structured in a Blockchain world. Those ideas were derailed as I realised how important three recent communications on matters Blockchain were.
There is a lot of experimenting going on
This is a very good thing, as Blyth Masters pointed out last week: “I would say, as someone said earlier, ignoring or trivializing what other people are up to is a very dangerous trade. It makes you feel better when you dismiss your competitors. It feels good when you’re talking to yourself, but the risk of ignoring the opportunity is gigantic.” The Financial Services industry is searching hard for ways to make its infrastructure less expensive. So, rather like with the Olympics, taking part in the Blockchain is important. Of course there has been a small outbreak of FOMO, fear of missing out. It is worth pointing out though that you do not have to be directly involved in order to understand and have a view on what is happening.
The three tiered ecosystem
There are some very wise heads helping to lead the industry. I am indebted to Colin Platt at DPactum for articulating a view on the three key components of a Blockchain world: Protocol, or the rules & language of communication, Network, the connections between different parties and Applications, the programmes that allow us to perform services or functions on the Network, using the Protocol. I hope I have done justice to his very structured explanation.
A protocol is here
Richard Brown is the CTO of R3Cev, an industry consortium and FinTech startup. He really has thought about this as a design challenge and one where his team wants to build a really solid foundation that enables useful networks to evolve and applications to sit on them.
His latest Blog Post explains the qualities and characteristics of that Protocol part in terms that are pretty non-technical: “Introducing R3 Corda™: A Distributed Ledger Designed for Financial Services”. I commend it to you all as reading for the commute to work.
Richard is sharing widely with good reason; Metcalfe’s Law. The value of the network is directly to the number of users. Metcalfe’s Law Version R3 would allow for an adjustment that says the value of the network is a function of the number of users on an easy to use platform that is built on solid foundations for scale.
So please, if it feels a struggle, give his post a second chance. Having a sense of the properties of such a Distributed Ledger is a vital ingredient in beginning to imagine what happens next.
Lessons Learned: Now we need to imagine how the Network and Applications might work together. That was going to be this week’s theme until I realised how important the trinity of observations I have just described are.
There are very wise heads helping to guide the evolution of the Blockchain in financial services. Something to be grateful for. Next week more on the applications we might want to see.
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