A LOOK FORWARD FOR BLOCKCHAIN INTO 2020

Blockchain has been a topic of conversation in virtually every business and policy circle since bitcoin first entered the marketplace in 2009, but that is only the proverbial tip of the iceberg. As implementation continues to accele­rate at commercial levels, including billions of dollars and thousands of people hours continuing to be invested, it is worth analyzing just what the next several years might hold for the blockchain sector.

Cryptocurrencies may have been the way in which blockchain was introduced, but as the sector continues to mature, it is important for professionals and policymakers alike to remain aware of what trends will dominate the marketplace in the future. Not meant to be an all inclusive or exhaustive list, the following developments and themes should form the focus of a more comprehensive debate and conversation going forward.

SMART CONTRACTS WILL BECOME MAINSTREAM
This is an important point for any individual or institution seeking to develop blockchain solutions to understand; blockchains in and of themselves are not capable of interacting or engaging with other technology sys­tems. At the core of the idea, a blockchain platform is a distributed ledger, or record, of transactions that have already occurred. Without a smart contract or some other form of application programming interface (API) to connect the blockchain records to other technology systems and databases, the information stored therein will not be able to be effectively leveraged. Importantly from a control, consumer privacy, or policy perspective, these virtual on-ramps and off-ramps are where hacks, breaches, and leaks have occurred. Especially since many cryp­toassets or blockchain systems are not cov­ered by insurance or other products, losses and damages incurred are not reimbursable. As blockchain implementation continues, with large organizations such as Walmart, JP Morgan, and some governmental entities leading the way, control considerations and policies will move off the back burner to the front burner.

CENTRALIZED BLOCKCHAIN PRODUCTS ARE LEADING THE WAY
The bitcoin blockchain launched the crypto and blockchain landscape, but as the sector develops and becomes more mainstream, there does appear to be a rather substantial shift under way. Commercial enterprises that are seeking to implement and operationalize blockchain technology have increasingly found that developing private or permis­sioned options simply make more sense from a control and custody perspective. Developing a permissioned blockchain allows the member organizations to monitor and manage which entities become members of the network, what rights are granted to said members, and how members are removed if need be. This flexibility and scalability inher­ent to more centralized or permissioned models highlights another underlying theme underway in the sector. As organizations modify and tweak public blockchain source code to assist with implementation, this also creates another potential headwind for continued adoption. By customizing source code for the sake of simplicity and commer­cial usability, management decision makers must ensure that some of the very core func­tionality of blockchain is not inadvertently weakened. There will inevitably be tradeoffs, as with any emerging technology, but profes­sionals must be able to quantify and properly manage the potential downsides.

REGULATIONS ARE EVOLVING
A consistent gripe among individuals and institutions seeking to make better use of blockchain technology has been the contin­ued uncertainty and ambiguity with regards to regulatory treatment. The ongoing con­versations, pushback, and dialogue around how to correctly classify and treat cryptoas­sets is an important conversation, but that is just one aspect of the broader regulatory debate. Blockchain is purported to have the potential to change virtually every aspect of the business and policy landscape. Logistics, transportation, healthcare, food safety, and – of course – accounting and financial services all represent industry sectors that might be permanently altered as a result of blockchain implementation. The treatment of informa­tion, whether or not smart contracts are uni­versally enforceable, how to establish liability among counterparties, and how financial assets linked to blockchains (like tokenized assets) will be reported are just a few of the issues that need to be finalized. As if these considerations were not enough, the lack of coordination and certainty between global regulatory bodies simply adds confusion to the conversation. Keeping an eye on these debates, and understanding the opportunities and challenges associated with further block­chain development, is a fiduciary responsibil­ity of all business professionals.

LOOKING AHEAD
Without a doubt, the blockchain ecosystem and environment will continue to evolve, change, and develop as various internal and external forces continue to exert influence over the space. Cryptoassets, smart contracts, and how to further integrate blockchain appli­cations with existing technology systems will continue to represent substantive debates and areas of policy focus for years to come. In addition to these higher-level conversations and debates, finalizing and drilling down into some of the operational specifics linked to controls, custody, liability, and reporting of blockchain information are rapidly emerging as areas of top priority for commercial enter­prises. Understanding these implications and realizing that alongside the opportunities possible with blockchain there will also be challenges, the future does seem to be bright for motivated and proactive professionals. Progress will, of course, be uneven, but taking a measured and proactive approach seems to make sense and will generate benefits for the private and public sectors alike.

AICPA & CIMA “DEMYSTIFYING BLOCKCHAIN” 2-DAY SEMINAR ON THE DUTCH CARIBBEAN – CURAÇAO
The American Institute of CPAs (AICPA) and Wall Street Blockchain Alliance (WSBA) work together to define the impact of Blockchain technology for the account­ing profession and advance the interests of both the public and profession in this area. With this purpose, Global International Management LLC is organizing a 2-day AICPA & CIMA “Demystifying Blockchain” seminar on Curaçao at the newly renovated Marriott Beach Resort on December 9th and 10th 2019 from 8 AM to 6 PM. This event will be opened by the U.S. Consul General to Curaçao Mr. Allen Greenberg. Participants will be able to receive 16 Continuing Professional Education (CPE) credits. All organizations and professionals who want to get a foun­dational understanding of Blockchain and Cryptoassets should join!

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