“95 percent of coin offerings are scams,” opens Olinga Ta’eed, the only non-Chinese member of the ministry of commerce China e-commerce blockchain committee. Not the best start to a debate on technology that has long been heralded as the next step for the funds industry at this year’s Fund Forum in Copenhagen.
He added around 20 percent of cryptomoney around the world has been hacked so institutions should be very cautious. However, China is the leader in blockchain technology, with more assets using the distributed ledger technology then the rest of the world put together. Mr Ta’eed says this is out of necessity for a country with such a large population and mentioned it was not an attack on the dollar’s position as the top currency in the world with his tongue in cheek.
“Blockchain is still in it’s infancy,” says Mr Ta’eed, it can only handle a few transactions per second which put its way behind existing payment systems. He seems hopeful for the long heralded next step in currency transaction technology by saying that blockchain in five years will be unrecognisable from where it is today.
Neil Ward CEO of Kneip, a leading fund data processing company, brought a degree of scepticism which appeared well founded. He said that he was at a Blockchain conference in Berlin three years ago about what fund managers need to do. “In reality the technology has great upside potential in theory but relies on scale and take-up at a mass market level,”.
He went on to outline that his company has first of all to provide their clients with certainty, security and transparency. Therefore blockchain is not the main priority for the business, it’s to provide unity of data. He said that the main priority is that technological advances have to be at the pace their clients can take it and which will benefit their business. He added that blockchain technology seems quite ‘a bit far off’ at the current time. A point perhaps underlined by the degree of manual processes still involved in fund data processing.
The discussion than took a slight tangent with Mr Ta’eed saying that Blockchain can be used for non-financial assets including hope and love. Amazingly there is actually a programme in China where people are rewarded for good behaviour using the technology and punished for infringements. This may sound like a script from Black Mirror, Charlie Brooker’s menacing insight into human behaviour but is actually in practice today.
For the funds industry, one participant in the debate viewed the technology as more of a business decision. Until as Mr Ward said, clients are willing to trust what is still a nascent technology despite having been around for a number of years, the funds industry seems a way off embracing it to transact and report.
