That’s something we have been wondering in our research group at the University of Cambridge. I think there is some inertia in the financial sector, just because Bitcoin was the first to use a decentralised system, and it targeted finance, so people continued in that direction. Secondly, there are very clear incentives when you have something like a cryptocurrency. You can rationalise about the actions of a possible adversary: when you are designing a system that needs to be secure, you would often think about the kind of adversary you are trying to resist. In cryptocurrency, it’s very easy for me to see that an adversary is someone who wants to get richer. But what is my adversary if I am talking about a voting system? There is a whole range of real-world attacks that I would consider in that case. In the financial system, it’s easy to abstract away all the realities, and just think of incentives and design a system around that.
"There is no real reason why we should be limited in our thinking about blockchain. There is a very nice project called “Follow my vote”, where they are trying to build a voting system based on blockchain technology."
You can see a new trend in some of the new cryptocurrencies, such as Solidus. It’s all about trying to incentivise good behaviour. Those kinds of things are really difficult to pull off if there is no money involved, where there are no clear tokens or something you can gain from a system. So it’s a very natural application of the incentivising technique of designing systems.
But there is no real reason why we should be limited in our thinking about blockchain. There is a very nice project called “Follow my vote”, where they are trying to build a voting system based on blockchain technology. If I’m not wrong, there was a community project in Belgium or the Netherlands where they were trying to issue social credits using a blockchain, so that people could buy their basic necessities, and at the same time the government could monitor whether they have been used for actual social good or not.
So to me, the application scenarios that haven’t been explored yet are the most exciting ones. But soon enough, we will see the rise of those.
There are three major reasons for blockchain got a head start in finance and that blockchain companies are targeting the financial sector:
1) Because Bitcoin is a financial instrument it was more obvious for financial services to first examine ways to use blockchain technology than, for example, for healthcare or other areas outside of finance to imagine how to leverage blockchain.
2) The prize is great. Financial services is an absolutely massive sector and any disruptive technology introduced into finance creates significant opportunities.
3) Financial services arguably has not been as heavily impacted by the internet and other recent technologies as, say, the media or other sectors that have been transformed by the internet revolution. Blockchain has also served as a ‘focal point’ for the much needed modernization of financial services, which has been protected a bit behind a regulatory layer that prevents certain technologies or companies from changing the status quo.
Garrick Hileman and Michel Rauchs released the 2017 Global Blockchain Benchmarking Study, which can be downloaded as a PDF here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3040224.
You can read the brief summary of their study here: https://insight.jbs.cam.ac.uk/2017/central-banks-are-trialling-blockchain/
The above interview was conducted on 12 December, 2017.