Now That The Crypto Hype Is Over We Can Focus On The Real Benefits Of This Technology
SNP MP Martin Docherty-Hughes says 'it has not been an easy time to be chair of the Blockchain APPG' (Alamy)
It has not been an easy time to be chair of the Blockchain APPG, given the crypto crash and stories about the collapse of FTX, one of the leading exchanges, which appeared to bring the bright future painted by crypto-optimists into perspective, containing examples of the type of fraud and dodgy dealings that we have come to expect from legacy financial institutions.
This was followed by the inevitable backlash from crypto-sceptics who seized on these various examples of wrongdoing to declare the technology and movement to be forever tainted and beyond saving. Not only had it seen countless investors – many of them young or non-traditional – lose savings through the bubble, the inherent value of even the more robust crypto currencies was uncertain to dubious, with an unacceptable environmental cost.
For people like myself, though, while this may have been something of an overdue reckoning for the worst of the crypto bros, who had come to represent so much about blockchain in the public imagination, it was not an extinction event. Instead, as a crypto-realist, I hope what we can do now is to use the bursting of this bubble to escape the hype and focus on the real value of this technology.
It is something that I think the Blockchain All-Party Parliamentary Group has been very good at doing, focusing on the idea of blockchain for good in the regular meetings we have. While it is often presented as something of a novel idea, as I have often said, considering many point to its origins in the aftermath of the 2008 financial crash, blockchain is now in its mid-teens and approaching a time when it should be able to discover a new sense of maturity.
A good example was found in the Financial Services and Markets Bill, for which I sat on the committee. For the first time, we should see legislation in place that would allow the Bank of England to create its own central bank digital currency. This has long been seen as an important development in crypto assets, combining as they do many of the aspects of transparency and accountability offered by traditional cryptocurrencies, with the added benefit of the institutional frameworks and restraints provided by a central bank; the hope is that this will create a cryptocurrency consumers can trust.
Perhaps unsurprisingly, for a technology that emerged in reaction to dishonest and opaque practices in financial services, many of the most promising applications of blockchain technology involve ensuring that companies and institutions can make good on their commitments – be it to environmental standards, or ethical business models.
Distributed ledgers are excellent ways to ensure that businesses with large, complex and poorly understood, supply chains can take control of the process – raising the possibility of ethically sourced products that consumers can really rely on. While specialist commodities traders are already experimenting with this, there is still scope for more complex brokers – like supermarkets – to do so.
In a cost of living crisis, consumers necessarily become more discerning and want to ensure they get value for money on products. Any opportunity for companies to reassure consumers that they are making the right choices is surely a welcome one. Take carbon credits, that allow energy companies to offer consumers green tariffs – blockchain technology is ideally placed to offer consumers the ability to track promises made by providers, giving them confidence to continue with what is ultimately a more expensive option.
Now I can understand that these are not applications that will necessarily allow investors to make a killing, or allow journalists to write breathless commentary, but they are a hint at the second order applications of a disruptive technology that has a bright future ahead of it. I look forward to the Blockchain APPG being there to continue providing the platform for these applications over the coming years.
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