Blockchain, the technology behind bitcoin, is coming of age. It’s being applied in a lot of new realms. To explore its potential to cut costs, Deepa Seetharaman, a reporter with The Wall Street Journal, spoke with
senior adviser at the MIT Media Lab’s Digital Currency Initiative, and
the former president and chairman of Symbiont, a platform for institutional uses of blockchain technology. Edited excerpts follow.
MS. SEETHARAMAN: What could be some new uses for blockchain?
MR. CASEY: When companies think about it, they need to think about their industry or their partners, and how do they come together. Certainly logistics. And the financial sector, just because of all of this reconciliation, all of this multiple back-checking and everything else. The back office processes we have are incredibly cumbersome.
MS. LONG: Think about all of the places in business where you share information with counterparties and then you go and reconcile. The financial industry, the health-care industry, the supply-chain industry and government are the obvious places where there’s tremendous duplication of information. We could pull efficiencies out by allowing everyone to share infrastructure.
MS. SEETHARAMAN: How much money could be saved doing that?
MS. LONG: Well, it’s interesting, because when I was at Morgan Stanley, as a side interest, I got into bitcoin very early. And I remember when Accenture first came out with an estimate of potential cost savings in the financial industry from using blockchain. Everyone around me laughed and said, “Oh my gosh. There’s no way there’s that much cost in the industry.” I was thinking that number was way, way, way, way too low. There is so much duplication.
This is about radical business-process re-engineering, which is going to take 20 years to completely work its way through the system. And I think whole institutions will end up significantly changing the role that they play. We have central intermediaries that were created for historical reasons that don’t need to exist anymore and they just add cost. And they add risk.
MS. SEETHARAMAN: Are the accountants at risk here? When blockchain adoption increases, who gets disintermediated?
MS. LONG: I think it’s a lot of the back office. It’s going to take 20 years and a huge technology upgrade cycle and major business-process re-engineering to achieve that. But it’s coming.
MR. CASEY: I think accounting is the right place to think about it. And I do think there will be job losses, significantly. How those jobs get retooled, it’s the same old debate we see all the time about where it goes. I think accountants actually will play, hopefully constructively, a role in the design of all the new systems that emerge. Then there will be auditing of systems themselves.
The absence of a common record is a very costly problem, precisely because we end up with the kinds of results that Caitlin’s talking about. And that creates a lack of trust. Whether this is fraud or accident or whatever, we don’t trust each other. So we build massive systems of reconciliation, which cost a lot of money.
If blockchain does resolve that challenge, I’m going to say it’s worth quite a bit, right now. There’s a lot of work that needs to go into making these things scalable. But it’s not a static technology. There’s thousands and thousands of open-source developers who are working around the world collectively in a kind of a wisdom-of-the-crowd way to develop this stuff.
Appeared in the March 14, 2018, print edition as ‘The Benefits of Blockchain.’