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Just When You Think Hype Can’t Get Any Higher, Blockchain Reaches a New Plateau



This guest article in takes hype for the Credits product to a new level.  It is bank ready, performs transactions at the speed of light while maintaining all the attributes of those old slow blockchain and has smart contracts and APIs that make any bank application possible now:

“It is no secret to anyone that the main banking systems around the world are eyeballing blockchain technologies as a potential panacea for many issues that have been plaguing the industry. There are dozens of applications for blockchain, and banking has always seemed to be one of the most promising directions for the technology’s use. And Credits, a blockchain based platform with high TPS speeds, low transaction costs, and an open API bypasses all the current technological limitations that make it challenging to use blockchain in the modern banking sector.”

And nobody else can do it! With this bit of hyperbole out of the way, the author uses data from the large consulting groups to highlight the billions and billions of investment funds that are pouring into blockchain solutions; and who wouldn’t want a piece of that action? It then uses transactional numbers from existing payment networks to prove every other blockchain is inadequate for addressing this fundamental need for speed.

The problem here is that there are several blockchain technologies that claim to solve the speed problem, it’s just none have been proven safe, including Credits. Swirlds, Trusto, Lightning, and others all claim to have solved the speed problem, but I wouldn’t expect any bank to trust these platforms until the limits of their safety and privacy are better understood. Wait, let me re-phrase that. I wouldn’t expect any trustworthy bank to deploy any of these new faster platforms until the limits of their safety and privacy are properly understood.

Yet the craziest aspect of this article is that in discussing the benefits of a blockchain the author conflates the use of a blockchain (for distributing information) with the use of using a cryptocurrency for settlement; suggesting banks are ready to settle vast sums utilizing the underlying cryptocurrencies. In my opinion the international banking system remains very uncertain about that vision, witness the slow adoption for Ripple which arguably has done the most to align itself with the existing international remittance regulatory infrastructure.

In short, while I recognize that blockchain will fundamentally change many industries and processes, including banking, I would suggest that it remains a tad early to pick the winner of the most deployed, safest and fastest performing blockchain network. In fact, there are likely to be multiple winners, such as Sovrin for identity.

But don’t let me stop you from investing in the ICO; I’ll just go plunk my money down on a state run lottery – at least I understand its rules.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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