An interview with Rik Willard, blockchain consultant in New York City.
Rik Willard is the Managing Director of Agentic Group, a consortium of blockchain and related companies that provide executive education, consulting, and development in the emerging blockchain sector. Agentic Group is based in New York City, with member companies in the EU, Canada, South America, and Asia. So, without further delay… here are his questions:
CV: We hear a lot about blockchain, but this technology is not easy to understand for novices like me. So Rik, in simple words, what is it?
RW: Simply put, a blockchain is a distributed ledger that maintains a continuously growing list of data records that are hardened against tampering and revision, even by operators of the data store’s nodes. It is essentially a record, a ledger, of digital events — one that’s “distributed,” or shared between many different parties and, once entered, information can never be erased. The bitcoin blockchain contains a certain and verifiable record of every single bitcoin transaction ever made. It can also be a private transactional ledger.
CV: What are the main advantages that blockchain technology could bring to the financial sector?
RW: The main advantages of blockchains consist of benefit to the consumers in the form of safer investments due to decreased fraud activity, increased transparency, and reduced costs — all trackable, recorded and transparent according to the prevailing rules of any given transaction. You can think of this transaction record as a hyper-database infused with a set of business rules that can be launched automatically. This is where the idea of using blockchains for ‘smart contracts’ essentially came from. Smart contracts are those that do not require the parties to know each other. All identification, provenance, due diligence, stipulations, and legal terms are stored in the blockchain, and executable on a contingency basis. You could think of it as a digital escrow — in simpler terms if one thing happens, then the other happens; if goods are received and accepted, payment is made automatically. Since the record is permanent, tracking and analysis for information-rich big data applications become obvious advantages, as well.
CV: Would you give us an example of a future blockchain application and its concrete impact on people’s lives?
RW: In Luxembourg, distributed ledger applications like SnapSwap are just beginning to be introduced. SnapSwap allows users to issue and receive payments, remittances, and currency exchange services through the blockchain and open-ledger consensus. This can work for individual citizens, companies, and financial institutions alike and will certainly have an impact in Luxembourg and the EU, allowing faster, more immediately accessible and less expensive money transfers over multiple currencies.
CV: What are the major obstacles that blockchain adoption will face in the financial sector?
RW: Financial institutions have taken great pains over the last few centuries to help people adapt and evolve to the practices we have in place now and have set rules of cooperation in place, which blockchain technology alters in some significant and some subtle ways. We are just in the beginning stages of introducing new thinking into the sector so I believe that the EU BitLicence will be essentially an evolving legislation, as new applications — some known, some yet unknown — begin to come online. This means that the key to winning will be a close and collaborative effort between the financial and government sectors. There will need to be common standards in place that provide enough transparency to work efficiently while safeguarding an acceptable level of individual privacy.
CV: I understand that we are at the early stage of blockchain, the obstacles are significant, and it will take time to get there. What has to be done? How long do you think it will take?
RW: In order for the financial sector to thrive in this environment, they must approach the opportunity systemically. There will be significant pressure coming from the top, from entrepreneurs who are bent on completely reimagining approaches to embedded inefficiencies. The best thing the financial sector can do right now is to learn: to incubate new companies and teams, create trials based on new thinking, and implement quickly based on results. Depending on many trial and implementation variables, and on which part of the financial spectrum one is discussing, the mainstream adoption timelines can vary anywhere from five to twenty five years.
CV: So I can now see that blockchain has the potential to disrupt the whole financial industry. What advice do you have for a country like Luxembourg to stay on top of technological innovation?
RW: As the needs of consumers adapt to these new modalities, it is important that financial institutions leverage the aggregated big data opportunity inherent in this technology in a constructive way: i.e., to create feedback loops whereby potential consumer needs are both recognized and acted upon frictionlessly, and eventually even anticipated through predictive algorithms. This approach could aid in establishing truly personal relationships with the consumer. Again, this will require close collaboration between business and government, most notably the financial sector and the CSSF, as well as the continued financial sector R&D efforts of Luxembourg as a whole, which I believe directly affects efforts already underway to support and nurture the Luxembourg technology startup scene.
In my mind, Luxembourg stands at the starting gate of major fundamental shifts that have the ability to create amazing financial innovations, develop a set of global standards for the industry, and unlock trillions of Euros in value — thus positioning itself for increased financial leadership in the 21st century. For our part, Agentic Group has been selected by Jeremy Rifkin’s TIR Consulting Group to provide blockchain guidance in the planning of the financial portion of the very important and ambitious Digital Luxembourg project. We are proud and excited to be a part of it. Luxembourg and New York have much in common in terms of creating a vibrant FinTech infrastructure.
CV: Thanks Rik. We do not know yet what will emerge from blockchain technology but I retain the idea that the government, the financial sector, and the FinTech community will have to work closely together to stay ahead of the tech curve, all of this in the best interest of customers. We see a lot of initiatives happening right now in that direction.
We look forward to hearing more about your work and more generally the Digital Luxembourg project in the near future! As Rifkin said: “the Grand Duchy could become the ideal laboratory to test these innovative and clever ideas on a national scale”.
RW: Indeed… and thank you, Chrystelle. It is our intent to help this important goal be achieved.