“Blockchain´s adoption will be inevitable and the impact will be far bigger than what we may imagine today.” - Andrea Bianconi, Blockchain Lawyer

The highly anticipated Blockchain Summit Series will arrive in Frankfurt on the 26th April at Kap Europa. The first of the 2018 series will see over 700 attendees, 60 speakers and 40 exhibitors networking with other industry leaders, business decision makers and innovators.

Andrea Bianconi, a Blockchain Summit Frankfurt speaker, is an international business Lawyer with two decades experience turned consultant and investor to Fintech, Blockchain businesses and ICO´s.

Andrea, who will be discussing the future of ICOs alongside Patrick Lowry, CEO & Managing Partner of Iconiqlab, Kerstin Eichmann, Operative Lighthouse Lead Machine Economy at Innogy Innovation and Christina Gudat, an independent Blockchain expert, took some time to answer our speaker Q&A:

1. What benefits do you think Blockchain will bring to your industry?

First of all I have to clarify which are the sectors in which I am currently active: I am a real estate investor, a lawyer and a trader in financial markets.  Therefore the sectors I am mainly interested in are: real estate, legal services and financial services. Thanks to the possibility of transacting values in a secured and trusted form through DLT´s, the Blockchain will be likely more disruptive than the internet has been for the exchange of information.  The impact and the benefits can be beyond what we can imagine today. Of the three sectors mentioned above, the financial services sector is where today the most investment and moneys are flowing into.  The main benefits for the financial industry are a reduction of transaction costs, a reduction of compliance costs - think about the massive paper shuffling internally and externally within finance operators - and an increase in transaction speed. But of course there are always two faces to a coin: the financial industry on one side and the consumers on the other side.  Not necessarily the benefits for the one will translate into benefits also for the other. Financial services are a highly regulated industry and the financial lobby is extremely powerful. The risk is that the financial industry will promote only the Blockchain innovation that suits their agenda and their pockets.  This is normal, it is a matter of incentives. The issue then becomes political: will the politicians let the innovation take its course to benefit everyone and restraint the lobbies from controlling innovation or they will side with the lobbies?  A few examples will clarify this point: ICO´s are democratizing fund raising at the expense of the traditional Venture Capital industry; Cryptocurrencies are enabling trusted and secure peer to peer payments at the expenses of traditional banking intermediaries; if Bitcoin, which has - at least potentially - all the features of money, becomes more universally adopted, it may well threat the "monopoly of money creation" of the banking industry and governments; a boundless decentralized Blockchain market to list and trade all sort of assets is the future of financial markets but it will also very much threat and disrupt the current status quo.  So you see, it is difficult for me to imagine that the most disruptive innovations will come from the financial industry itself.  IBM did not create Apple, Hilton did not create Airbnb, and the banks did not create Bitcoin. So this will become very much a political question. Will in the future the full potential and the benefits of the Blockchain be unleashed to favour all consumers or will they be limited and restrained by the relevant industry lobby and by their paid up politicians?

Also the other two sectors, real estate and legal services, will be strongly impacted and benefited by the Blockchain. But one has yet to see any disruptive innovation in those two sectors. In real estate for instance, the potential disintermediation of the real asset transfer is a big economical benefit, but the transaction loop should be closed with a Smart Contract that automatically transfers the property title to the buyer and the consideration/price to the seller.  But until land property registries are not fully digitalized and cannot be electronically updated the benefits of the Blockchain will be not be fully felt.

In the legal sector I see also benefits for the clients as well as for the lawyers themselves.  Maybe a trusted and secure way to offer legal services through the Blockchain, with guaranteed performance via Smart Contracts and built in reputation mechanisms will be the way forward for the sector with more benefits for single practitioners rather than for large law firms.  On this regard I am working around an idea and I am currently looking for tech partners to develop it...

2. What impact do you expect Blockchain to have on your business?

On the real estate sector, the intermediaries may be adversely affected to some extent, not only real estate agents but also notaries and lawyers, if and when fully digital land registries will be available.  But even if the impact will be felt, you will still need someone - a notary or a lawyer - to check the details of a transaction, it cannot be done in a fully automated way. This unless there is a regulatory framework which takes the discretionary elements of the buy-sell transaction - like for instance the due-diligence and the seller's guarantees and covenants,  out of the equation like in a standardized buy-sell transaction.  That is for instance the case of real estate auctions where properties are sold with very limited or no guarantees at all and buy-sell contracts are very much standardized.  In this case I can see great potential for a fully automated transaction.  But I think these will still be marginal cases. 

The same goes with Banks and their mortgage lending. Think of a property owner or a developer who can leverage its reputation - trusted on the Blockchain - to get a peer to peer loan and pledge its real estate asset via a smart contract. You can already see some players moving today in that direction using simple internet platforms, but the real impact will be felt only when the operation of land registries is fully digital and therefore the potential of the Blockchain for trust, reputation and automated asset transfer via smart contracts can be fully unleashed. Until then we are just in the "warm up phase".

2. What will it take for Blockchain to go mainstream?

Really, nothing. I mean, the technology cannot be stopped. As I said above there are political issues, there are special interest groups which may push in one direction rather than another, but ultimately this may only delay the inevitable process of widespread adoption of a new technology.  Despite all the roadblocks and delays, either wanted or unwanted, Blockchain´s adoption will be inevitable and the impact will be far bigger than what we may imagine today.

3. How important do you consider collaboration on Blockchain to be within industries?

Very, provided it is open and true collaboration aimed at creating and promoting innovation and not instead to create a cartel to profit from it. Again, industries have incentives to maximise profits and market dominance and this is clearly not for collective benefit. That's why we have Antitrust regulators.  When you see that the financial industry is the single largest owner of Blockchain patent applications you have to wonder if this will contribute to the development of Blockchain based technologies or create a cartel who will benefit from it more than the others.  I am pretty confident that the real disruption will not come from any established industry, but rather from start-ups.  That's why I maintain the view that the ICO´s are key to the future development of the Blockchain technologies and therefore they have to remain as little regulated and as flexible as possible in order not to hinder real innovation.

4. How should Blockchain be regulated?

Blockchain is the technology, you cannot regulate the technology.  Technology is created to perform a function. Blockchain is a decentralized digital ledger which enables the secure and trusted transfer of values, and cannot be regulated. In itself the technology is not good or bad, it is the use or the application of that technology which can be good or bad and therefore may need to be regulated. For instance, security, trust and privacy are some of the key characteristics of Blockchain. For some uses - such as Identity Authentication or protecting your Digital Identity - the above characteristics are essentials and therefore are to be considered positive. There is no need for regulation.  Conversely, the same privacy which is a net positive in protecting your Digital Identity, may become a net negative in the case of Bitcoins´use in money laundering operations or for the KYC compliance for the financial sector.

5. How can DLTs be used to better serve customers?

Well you can write a whole book only to answer this question. Don Tapscott did just that and the book's title is "Blockchain Revolution".  I advise everyone to read it to get at least an idea of how DLTs will impact us in the future. The impact for all of us as consumers will be massive. Leaving aside innovations in the financial sector, just think of our relationship with governments and the public administrations, the voting processes, the IOT (internet of things) and the possibility to re-sell the electricity generated with your solar panels to other users or rent out your home e-auto charging station to someone who passes by and needs it to re-charge its own e-auto, or renting out your unused PC storage capacity or your Netflix membership, or running yourself a taxi business with a fleet of driverless e-cars performing with Smart Contracts to pick up customers, getting paid and recharging themselves at peer to peer stations around town.  Is this a dream of the future, a science fiction movie?  Not really, the technology is already here for all of that, it will all come faster than we think.

6. What will be the impact of smart contracts across enterprise?

Of course the impact will be felt, but it is difficult to say how strong it will be. Currently, I think that one tends to emphasize too much the impact of smart contracts across industrial sectors.  In reality, the automated execution of a smart contract may only suit a handful of situations where the parties´ discretion is taken out of the equation.  There must be almost no variables to be taken into account and no contingent issues to be solved directly between the parties. And this is certainly not the majority of cases. Then there is the issue of disputes which will inevitably arise out of the automatic implementation of smart contracts and will need to be resolved. The industries which may want to implement smart contract execution will have to balance the advantages of an automated execution and possibly the cost savings, with the loss of flexibility in handling transactions, the loss of relationship with the client and the likely increase in alternative dispute resolutions. What I mean is that all pros and cons will have to be carefully weighted, it is not advisable to embrace blindly smart contract execution at all costs.

As far as the legal profession is concerned, they may not lose that much work with a wider adoption of smart contracts. It might as well balance out fairly even: there will be more advisory work to be done in order to set the legal terms and conditions of the smart contract before they are translated into a numerical code for automated execution and then there may be more need for arbitration and dispute resolution as opposed to lesser court litigation.  

 

About Blockchain Summit

Blockchain Summit Frankfurt is a 1-day conference and exhibition connecting over 700 industry leaders, business decision makers, tech innovators and investors.

Based on unrivalled content and exceptional networking opportunities, Blockchain Summit is the largest dedicated Blockchain Event in Europe. No co-located side events. A purely Blockchain focused audience. 

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