Opinion article

Blockchain: How to approach a proof of concept

There's a lot of hype around Blockchain technology and its potential impact on business and society. In this blog, Ian Renwood examines the impact of Blockchain and what organisations should bear in mind when looking to apply Blockchain technology to their industry. 

Blockchain will have the most dramatic impact on society since the Internet. Over the past few years, we have seen the hype around Blockchain reach a crescendo with large corporations concerned that it will completely change the landscapes of their industries.

But how and when along with real use cases are yet to be proven. We saw a big jump in Venture Capital (VC) funding from 2016 to 2017 as the total amount invested nearly doubled. VC investment within the first two months of 2018 has already reached 40 per cent of last year’s total.1

In a 2016 interview2 Matt Harris, a managing director at Bain Capital said, “The issue for VCs investing in blockchain startups is that, as yet, no one really knows what it means”. This is starting to change as US$1.2 billion raised by start-ups via initial coin offerings surpassed early stage VC funding in 20173, a key indicator of the market, and economic, disruption to come.
However, there are still areas of uncertainty in the market and with that comes the opportunity for innovation.

What is the impact of blockchain?

Many are still looking to understand what Blockchain is. This analogy sums it up: If you think of the Internet as a way to exchange information you should view blockchain as a way to exchange value. This value could be currency, bills of sale or anything with a value attached.

While all the hype has been around the financial services industry, particularly trading and payments systems, I believe of the societal benefits of Blockchain, less than one-third will be from the financial services sector. It’s likely to be the catalyst that integrates many industries, such as finance, retail, healthcare and government.
When it comes to the application of blockchain there is much more spin than substance. One compelling application of Blockchain technology, was the proof of concept (PoCs) for a Remittance Application demonstrated at the SIBOS conference in Singapore in October 2015 - a joint collaboration between Westpac, Ripple and IBM. 
For those looking for potential PoCs for their industries. The top three things to bear in mind are: 
  1. Collaborate – don’t go it alone – collaboration can be divided into two subcategories:
    • Ecosystem – leverage the market, customers and partners. Blockchain technology - more than any other - enables collaboration between companies, their customers and suppliers. The startup market is particularly rife with great ideas for your industry, educate yourself about it and engage with them. Stone & Chalk in Sydney and Level 39 in London are just two examples of successful incubators with numerous residents leveraging blockchain technology.
    • Infrastructure – too many companies are talking about Blockchain as though they will build their own. This defeats its purpose. Competitive advantage from Blockchain will come from innovations that leverage it, not reinvent it. Whatever the suitable flavour of Blockchain for your industry, there are a number of established players that you should be leveraging. For private (aka permissioned) Blockchain; Ripple, Blockstream and potentially R3 and Digital Asset Holdings leveraging the IBM led Linux Foundation blockchain fabric. While public (aka open) Blockchain; Ethereum, Bitcoin etc.
  2. Research – follow closely what the developments are in the market. While there’s a great deal of spin in the market, there are those with original thought around Blockchain who should be listened to. Individuals include; Blythe Masters, Marc Andreesen, Richard Gendal Brown, Chris Skinner and Oliver Bussman. Companies include: IBM, Coindesk, R3, Ripple, Earthport and Digital Asset Holdings.
  3. Believe – suspend your disbelief. Just as the Internet has turned out to encompass more services and benefits than dreamed of in its early days, the limits of Blockchain are yet to be understood. Even the most theoretical uses such as Distributed Autonomous Organisations (DAO) are now within the realm of the possible. A recent fundraising for DAO via Etherium received $50 million in subscriptions. 

Where are we in adoption and how can it impact the economy going forward?

Blockchain will aid productivity and ensure greater security. In turn, if used mindfully it can reap efficiency gains that will have a positive impact on the Australian economy. Calastone research showed that switching to Blockchain infrastructure can save the mutual funds industry US$2.6 billion in back office costs with 71 per cent of respondents seeing the costs of processing orders decline since moving to Blockchain, leading to a 32 per cent average reduction in costs4. Its use in wider industries is still to reach its full potential.

The key to success will be ensuring regulators keep up to effectively protect the digital economy, there needs to be a real understanding of how it operates to ensure all facets are covered with speed at the core of the drafting.


1. Crunchbase News, 2018 VC Investment Into Crypto Startups Set To Surpass 2017 Tally
2. "VC Funds Stay Out of Blockchain Loop", The Wall Street Journal, 29th March 2016
3. Nicolas Cole, "Why 2018 will be the year of the Blockchain," Huffington Post, 2 January 2018. 
4. Calastone. The total economic impact of Calastone on the global mutual funds market. A Forrester total economic impact study commissioned by Calastone. January 2018. 
About the authors

Ian Renwood

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Ian Renwood is Head of Digital, Azurium and Partner, Ferrier Hodgson. Ian is passionate about emerging technologies and their application to transform traditional operating models. He builds on 20 years as a management consultant at the forefront of the application of emerging technologies and processes to transform business models. At IBM, Ian was responsible for digital banking for Australia and New Zealand and the alignment of emerging technologies, e.g., cloud, analytics, cognitive, social and distributed ledger technology. Ian led global firsts for IBM including the application of blockchain technology for a global payments remittance platform, the application of cognitive, robotic process automation and social listening for a new mobile retail banking solution and the development of a collaborative operating model to drive innovation between IBM and their strategic clients.

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