Ask a few people on the street and if you’re lucky, maybe a few know anything about blockchain. More soon will, as industry is busily developing what will eventually be Internet Version 3.0.
One of the people helping make that vision a reality is Syed Hussain, CEO for the Americas of BANKEX, creators of a platform by which illiquid assets like real estate are tokenized and listed on exchanges.
Mr. Hussain said many in the establishment risk falling behind because they became comfortable with the status quo, thinking because the markets were operating fine new technology was not required. But innovation means something, somewhere needed improvement.
“Blockchain and Bitcoin are reactions to failures in the existing banking system and the frustration that existed with it,” he said.
Elements such as consensus mechanisms and a trustless society are novel, and force market participants to look at interactions and transactions in a different way, Mr. Hussain explained.
Bankex helps bridge the gap between digitization and securitization, he added. Both aren’t new concepts, but until now the two have operated in isolation, which limits their utility.
“You can validate and verify, but how practical is it to validate in a timely fashion when you need to have an answer?” Mr. Hussain said.
Bankex operates in a new world where any thing with value associated with it can be digitized because you can tokenize it, Mr. Hussain explained. Think of it as “ securitization 2.0” where a digital trail can verify the underlying cash flow of an asset class, thereby allowing to create liquidity for any asset class you create.
Bankex’s technology has applications in a variety of industries but before it can be widely applied the supporting hardware must be created and installed, Mr. Hussain explained. Much like cabling, towers and other infrastructure are required in order for the Internet to flourish, similar work needs to be completed before industry can realize the benefits blockchain provides.
That is where we currently sit, Mr. Hussain said, and it is a spot from which Bankex can advance the environment.
“That is one of the advantages we have as a technology organization,” he explained. “Our focus is to build out that piping and infrastructure.”
And make sure all stakeholders clearly understand how blockchain technology can benefit them, Mr. Hussain added. Explain the effects and benefits of implementing the technology, how blockchain positively addresses issues affecting them.
Once the benefits come into focus it is easier to discuss implementation, Mr. Hussain said.
“Once you qualify, then you can quantify by addressing how inefficiencies are addressed. When they see value in dollars and cents they react better.”
This task is helped by the experience of the Bankex executive team, Mr. Hussain said. Many have banking experience and are approaching the technology from the viewpoints of financial professionals.
“The technology is second. We are businessmen first, so our focus is to ensure the technology enables businesses to solve business issues. That is what comes first – how to minimize expense while maximizing revenue.”
Bankex’s first use case, MovieCoin, utilizes tokenization to provide accessibility into a market which until now has had little, Mr. Hussain said. Developed in conjunction with Hollywood producer Christopher Woodrow, MovieCoin addressed entertainment industry accounting, which is notoriously opaque. Are the appropriate royalties being paid, for example? With traditional systems it’s anyone’s guess.
Many are predicting blockchain will make significant progress in 2019, and while Mr. Hussain agrees advances will be made, he cautions it will be years before blockchain becomes mainstream. But he is fine with that pace because blockchain’s progress has been more consumer driven, a process which validates market demand more than any industry-driven effort.
And while it isn’t sexy, that underlying infrastructure is being developed and once in place growth should accelerate. Look to the Internet’s origins. Establishment and installation of underlying infrastructure took its time, but once in place, the time between Internet 1.0 and 2.0 era of search engines was much less. Decentralized blockchain technology, often referred to as Internet 3.0, should quickly flourish.
“Before the Internet the previous revolution didn’t take 15-20 years, it took 25-50,” Mr. Hussain said. “That was halved. There is not a lot of public talk, but at the industry level I can assure you the internal talks are very real.
“There’s two issues, hype and bullshit,” he added in reference to a long list of companies who made outlandish claims about huge returns within unrealistic time frames. Thankfully, many of these companies have failed or will soon do so, but those who remain will have an impact.
“Out of the smoke of these failures will be the next Google, Netflix and Amazon,” Mr. Hussain predicted. “What they became of the Internet 1.0 these guys will be of the 3.0 world.”
BANKEX among the companies establishing Internet Version 3.0