Tech for Tech’s Sake Hinders Blockchain Growth

Greater focus on practical business uses – instead of researching and developing technology for technology’s sake – will be key for the success of blockchain’s next wave of adoption, according to multiple industry leaders.

Despite countless headlines about the emergence of blockchain technology – especially the rise of cryptocurrencies – industry leaders believe more focus on business practicality and real-world nuance is required to drive adoption.

«It all starts with the client. Once the client sees the business opportunity […] the entire post-trade flow gets aligned,» said Simona Catanescu, director of securities strategy at SWIFT, at a virtual panel during the ASIFMA Tech & Ops Week. 

«When it comes to tokenization and distribute ledger technology (DLT) we need to look into functionality, into value and much less into technology.»

Active Deployment

Even when the appropriate technology is developed, adoption cannot be achieved automatically.

According to Victor Alexiev, APAC head of Programs and strategic partnerships at Citi Ventures, it is the responsibility of tech advocates to drive deeper inclusion and develop solutions that encompass the end-to-end life cycle to better understand the cost and benefits of adopting blockchain technology. 

«A lot of the enthusiasm in the ecosystem was driven by technopreneurs and enthusiasts like myself,» Alexiev said. «But all of a sudden you hit reality and you understand that there are 300-plus trillion dollars of assets that won’t move onto the chain just because it is a new technology.»

Selective Tokenization

Panelists also spoke about challenges from legacy-related issues and the need to be selective when seeking to tokenize assets despite well-known benefits like enhanced liquidity or efficient reconciliation. 

Ben El-Baz, head of ecosystem at digital asset and tech firm Hashkey, highlighted greater potential from tokenizing future assets rather than attempting to convert existing securities.

«The possibilities are a little bit constrained because assets that are already issued [have their] own legacy footprint,» he explained. «The opportunities are more interesting for assets issued on a blockchain ledger and don’t have to deal with legacy issues from paper-based assets.»

Second Wave

In the next wave, panellists see blockchain adoption and asset tokenization further accelerating as the fundamental advantages of the technology are better understood by the broader industry. 

Expected developments include more open source practices, greater mix of technologies and more collaboration between all industry participants including regulators and central banks.

But there are also challenges to be addressed such as lacking regulatory harmonization and talent shortage.

finews.asia is an official media partner of the ASIFMA Tech & Ops Week.

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