(Repeats Tuesday item)
* Blockchain technology backers looking at uses beyond
* Italy's 5-Star group planning local law on using
* Establishment banks, corporations jump on the bandwagon
* British government examining use for welfare payments
* But technology needs more time, some projects will fail
By Jemima Kelly and Anna Irrera
LONDON/NEW YORK, Jan 10 A wave of
anti-establishment sentiment sweeping the Western world is
likely to help push blockchain - the technology that gave birth
to the renegade digital currency bitcoin - out of cyberspace and
into the real world in 2017.
Blockchain, which allows the web-based currency to function,
has attracted some big backers who have risen to prominence
partly because of their rejection of traditional power
structures - like bitcoin itself.
Now they are looking at a wide range of new uses for the
technology, with those outside the realm of finance expected to
For example, Italy's biggest opposition group, the 5-Star
Movement, wants blockchain to be used in streamlining public
services. In the United States, President-elect Donald Trump has
a number of enthusiasts for the technology in his inner circle.
Experts caution that blockchain still needs several years of
experimentation and development, much like the early days of the
internet, and say some projects will never work.
Nevertheless, in an ironic departure from blockchain's
libertarian origins, the very establishment that early
supporters hoped it would displace is also jumping on the
Many of the world's biggest banks and corporations are
trying to harness the technology to make the likes of
transacting cross-border payments, issuing debt and recording
health data more efficient. Even Britain's Conservative
government is keen to get in on the act.
Blockchain allows for transactions and data transfers to be
completed in seconds through a peer-to-peer computer network,
with no need for a third party. It has therefore attracted those
who distrust established authority, such as the central banks
that issue traditional currencies.
This is particularly the case in its first implementation,
bitcoin, which outperformed all conventional currencies in 2016.
Iceland's Pirate Party, the country's joint second-biggest
party, wants bitcoin accepted as legal tender.
GRAPHIC - Banking on blockchain tmsnrt.rs/2ekG6wf
GRAPHIC - The bitcoin economy tmsnrt.rs/1W1E8mw
SPIRIT OF 2016
Notwithstanding the corporate interest, blockchain reflects
the spirit of the past year when disgruntled Britons rejected
the European Union, Italians brought down their prime minister
and Americans elected Trump.
"A global and open blockchain ... lends itself very well to
current anti-establishment sentiment," said Jon Matonis, an
economist and founding director of the Bitcoin Foundation. "The
general theme is removing the role of a third-party auditor or
Still, it was the financial services industry that moved
fastest on blockchain development in 2016, seeking ways to
reduce costs and cut the time it takes to settle transactions.
Some of these applications are expected to move from the
laboratory and into operation this year. But 2017 also looks
likely to be the year when other sectors, both public and
private, find new "use-cases" via which they can adopt the
"You're still going to see more and more use-cases and
resources being put into financial services, so that pie will
still grow. But a larger percentage of use-cases ... will be
non-financial," said Nick Williamson, CEO of Credits, a
London-based blockchain infrastructure provider.
Williamson said countries were looking at using blockchain
for improving transparency and accountability in public
services. The British government, for example, is examining
whether it could help to track and distribute welfare and
In Italy, the 5-Star Movement - which presents itself as a
clean alternative to mainstream parties dogged by corruption
probes - has called blockchain a "fundamental topic" that could
bring about more trust in the public sector.
5-Star plans to propose a law in the Lazio region this month
forcing the local government to use blockchain in streamlining
and bringing greater transparency to some of its activities,
according to a draft seen by Reuters.
If successful, this would be the first law in Italy to
incorporate the use of blockchain in government. The group also
wants to introduce the technology in a regional healthcare
reform, 5-star councillor Davide Barillari told Reuters.
In the United States, the blockchain sector hopes projects
will gain momentum thanks to support from the incoming Trump
administration. They say the technology could help run
public-sector processes more efficiently, through better
tracking of government agencies' spending or reducing welfare
As a property billionaire, Trump's anti-establishment
credentials are open to question but he has presented himself as
a political outsider, and has appointed blockchain and bitcoin
champion Congressman Mick Mulvaney as budget director.
Mulvaney, who co-founded the Blockchain Caucus in Congress
in September to allow lawmakers to coordinate policies on using
blockchain, calls the technology a "tremendous revolution".
Trump has also chosen Goldman Sachs president Gary Cohn,
whose bank has invested in blockchain, as director of the
National Economic Council. Billionaire tech investor and bitcoin
enthusiast Peter Thiel is a member of the transition team.
For all this support, some feel blockchain has been
over-hyped. "It took on quite mystical capabilities this (past)
year. I kept reading things on the internet about how it would
solve poverty, eliminate hunger," said Dave Birch, a director of
innovation at consultancy Consult Hyperion.
"A lot of people said they would get into blockchain because
they thought it was sort of magic."
Many in the financial technology industry, Birch included,
say it is important not to expect too much too soon.
"Many blockchain platforms announced the beginning of
projects in 2016 that will never be completed. In some cases,
the technology simply didn't work. In others, implementation is
taking longer than expected," said Adam Krellenstein, co-founder
of blockchain start-up Symbiont.
Still, experts hope the doubts will be dispelled as some of
the smaller-scale projects - especially in the financial
services sector, which has poured hundreds of millions of
dollars into blockchain - are put into operation.
"2016 was a year of 'proofs of concept'; 2017 is much more
likely to be a year of implementations," said IBM's global head
of financial markets in London, Keith Bear.
"CRITICAL MASS OF UNDERSTANDING"
Blockchain is unlikely to change the world fundamentally
this year, but awareness of it is expected to grow and this
should speed up development.
Alex Tapscott, founder of investment firm Northwest Passage
Ventures, believes blockchain is a "general purpose technology",
whose most lasting impact will not be in the financial sector.
He sees blockchain enabling decentralised applications to
run peer-to-peer services such as ride-sharing, without the need
for centralised businesses such as Uber to run operations.
"2016 was a coming-out party of sorts," he said. "2017 will
see the technology reach a certain level of critical mass of
(Reporting by Jemima Kelly in London and Anna Irrera in New
York; editing by David Stamp)