Blockchain Blues

FinTech Articles of the Week 8/7/15

The Blockchain, the technology base of the distributed public ledgers that distinguish cryptofinance applications, powered the week’s FinTech news. Industry thought leaders process the problems as more major banks endorsed the technology’s potential, while noting that it’s too immature to provide much scale. Meanwhile, basic articles targeted to a consumer technology audience ran, and some serious mass publicity in the UK, where they seem more positive about FinTech than here.

Using distributed ledgers as a payment system

Phil Kenworthy gives serious consideration of the “opportunities that “Distributed Ledgers could create; not in the crypto-currency world but in the existing world of “real” payments.” The former director of the UK’s High Value Payment System and founder and director at Payment Systems Consultancy Ltd. notes that real payment systems “mirror closely the underlying aspirational attributes of a distributed ledger system” and suggests that “it would be a pity” if these systems were not given serious consideration in the future of payment. Thanks to Glenbrook Partners’ essential daily email for the link to this LinkedIn Pulse post.

Call for evidence – Investment using virtual currency or distributed ledger technology

The European Securities and Markets Authority (ESMA) is asking major financial institutions about their plans for cryptofinance technologies, and they are responding positively, sort of. ABN AMRO Clearing Bank N.V. (AACB) “believes that this technology could potentially benefit market efficiency, investors, market integrity and ultimately financial stability” though “the current state of the technology is still too immature to facilitate large-scale adoption.” In its response to ESMA, Deutsche Bank becomes “the latest major financial institution to laud the potential of the blockchain,” reports Finextra.

Distributed Ledgers Part I: Bitcoin is dead

Pascal Bouvier, general partner at Route 66 Ventures, provides in a LinkedIn post a long list of the problems with blockchain technology in Distributed Ledgers Part I: Bitcoin is dead, along with a long list of potential uses that might make sense. “We have yet to see any meaningful adoption in the retail world, and the institutional world seems quite lukewarm,” he writes with a thoughtful “neutral/negative stance.”

Will banks matter in a bitcoin age?

University of Chicago Booth School of Business Professor for former Fed governor Randall Kroszner provides a “call to arms for banks to rethink how they operate” in “Bitcoin v. Banks,” a video presentation. Banks won’t be singing the bitcoin blues for some time, but they may want to consider that they have a greater advantage in data and analytics rather than moving cash. The “banks better innovate or get left behind” narrative reaches more of a mass consumer technology audience in a sponsored article in The Guardian.The Financial Times ran a similar piece, “Banks must ‘adapt or die,’ study warns.”

PM backs Innovate Finance’s fintech manifesto 2020

With the white number 10 visible on his black Downing Street door, British Prime Minister David Camron last week made a public call to action—for investment and jobs—on behalf of FinTech. “The manifesto sets out ambitious goals for the UK to be the undisputed centre for financial services technology and innovation,” writes Ryan Fowler in London’s Tech City News.

FOLLOW UP: My interest in the rise of the Chinese currency, the renminbi (RMB), though not strictly a FinTech story, gets a follow-up in this week’s “The World If” section of The Economist. “Clash of the currencies” shows the history of three reserve currencies, the British pound, the U.S. dollar, and the Chinese yuan, noting that “the yuan’s rise will challenge America, but not before China changes. Read last week’s post here.