I come from the financial services industry. While it has made great strides in exploring blockchain technology and has produced a number of proofs-of-concept, it has been slow to approach production-class projects that feature exposure to public blockchains. (I was fortunate in that my previous employer was forward-thinking in this sense.) On one hand, that makes it similar to many other sectors, which are often risk-averse and reluctant to jettison established norms. We are, after all, talking about people’s money.
When I was at Fidelity, there were a number of developers who wanted to work on blockchain technology. The first question became: “But how do we do this?” Allowing the developers to spin up a permissioned Ethereum instance is one thing, but actually connecting to an open network requires many more complex steps. Plus, even once the network is up and running, the grunt work of setting up and maintaining that node steals precious time that could be better spent on experimentation and, on the best days, lead to actionable insight.
To approach how these new networks-of-value could transform our industry, it was necessary to explore how we might interact with public blockchains. This triggered all manner of operational overhead, such as discussions about firewall permissions. Requesting a pin-hole through a corporate firewall is troublesome since, quite reasonably, no one wants to be the person who opened a port and potentially made it vulnerable. And then, with some networks there is the trick and challenge of keeping everything in sync and operations–no small task.
What has most needed was a reliable system that took the heavy protocol-level lifting off the shoulders of valuable DevOps teams. Removing the painful elements of blockchain management would have freed them up to worry less about the “plumbing” of the operation, allowing greater focus on finding the true potential of blockchain’s application to our industry. Such a managed service is also easier to address from a security perspective in that you know that the system benefits from deep domain expertise and, on the off-chance something went wrong, there’s a “throat to choke.”
So, I can tell you from experience: Managed blockchain services is an important step on the way to a decentralized future and one that can revolutionize the financial industry’s relationship to cryptocurrency and open blockchain networks. Right now there are few blockchain applications – custody and exchange services, primarily – that will generate revenue. Eventually that will change, mostly because it has to. Just as the open source movement came after the technology companies that supplied banks, so too is it now coming after the banks themselves — and so-called “fintech” — thanks to the cryptocurrency revolution. Financial institutions, not too long from now, may only have their storied brands to lean on and will need to work with open blockchain networks to survive and thrive. This means that the time to explore tools that bridge today’s networks and tomorrow’s is now.
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Hadley Stern is Bloq’s chief operations officer