“The important thing to remember here is this is a brand-new, very complicated space,” warned John Oliver on last weekend’s episode of “Last Week Tonight.” “Literally nobody knows how it’s going to develop, so you need to be careful.”
Oliver was discussing cryptocurrencies and blockchain on his show, highlighting the massive potential the world of FinTech has touted for the last year or so. But the segment also warned to temper the hype with healthy skepticism.
This balance of optimism and realism is taking over the blockchain space as of late.
Earlier this week, the head of the International Monetary Fund (IMF) described this dichotomy as the “peril that comes along with the promise” of cryptocurrencies.
Cryptocurrencies expose the markets to financial instability and crime, like money laundering. Blockchain, on the other hand, has a potential to facilitate data exchange between regulators and relevant parties to combat this threat.
“Distributed ledger technology can be used to speed up information-sharing between market participants and regulators,” she wrote. “Those who have a shared interest in maintaining safe online transactions need to be able to communicate seamlessly. The technology that enables instant global transactions could be used to create registries of standard, verified customer information along with digital signatures. Better use of data by governments can also help free up resources for priority needs and reduce tax evasion, including evasion related to cross-border transactions.”
Already, some technology companies are hoping to wield blockchain technology to target bad actors in a variety of scenarios.
Last year, Accenture filed a patent for an “editable blockchain,” enabling companies “to resolve human errors, accommodate legal and regulatory requirements, and address mischief and other issues, while preserving key cryptographic features.”
Reports in CoinTelegraph this week said that Accenture recently announced a partnership with DHL to develop a blockchain-based supply chain solution for the pharmaceuticals industry. The solution aims to heighten transparency and tracking capabilities with a particular focus on “highlighting tampering [and] reducing the risk of counterfeits and actually saving lives,” according to DHL supply chain CIO Keith Turner.
Also this week, Evident Proof announced the rollout of its blockchain- and token-powered compliance solution. The company’s Ethereum tool offers a platform on which data cannot be altered, falsified or destroyed, and “which can be used to identify counterfeit products and to inform lawsuits,” the company said in a press release.
Orderbook similarly revealed its own regulatory-focused blockchain tool, a “regulation-aware protocol” to ensure initial coin offerings (ICOs) and other cryptocurrency-related transactions are complaint and legal.
It’s another example of how cryptocurrency and blockchain technology – which led to the legal challenges over ICOs – are now working to address some of the very problems they created.
An unnamed source recently spoke with The Korea Times, announcing that Korean officials are considering easing their ICO ban.
“The financial authorities have been talking to the country’s tax agency, justice ministry, and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met,” the source said.
In the U.S., meanwhile, the Securities and Exchange Commission is in its own process of exploring exactly how to regulate ICOs.
And while blockchain is often championed as an impenetrable technology that could transform data security, Columbia Ventures Corp. CTO Stan Hanks recently wrote for Quora, as published in Forbes, that blockchain may actually be used to fight data security.
“Let’s say you have a part of your life that’s, well, let’s just say not completely public, things that you might buy that you really don’t want other people knowing about,” he wrote. “Today, if you do that on a credit card, that you did it is not obvious, and if you paid your credit card bill on the blockchain, that purchase is obscured into the aggregate amount of your monthly bill, along with trips to Starbucks, buying groceries, and whatnot.”
But if all purchases are made on blockchain, a hacker could potentially be able to identify all purchases made. It’s much the case today, Hanks noted, if a stalker wants to steal one’s mail or hack into their computer. Blockchain and cryptocurrencies emerged as a way to make purchases untraceable, but analysts are beginning to warn that the technology could be used to do the hacking itself.
On the flip side, as the IMF’s Lagarde noted, regulators and innovators can “fight fire with fire,” and use blockchain to address the security and legal issues arising from blockchain and cryptocurrencies, too.