In January of 2016, the Hutchins Center on Fiscal and Monetary Policy at Brookings explored the future of distributed ledger technology, paying special attention to the innovation’s impact on financial services and policy making.
David Wessel, a Senior Fellow of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, mediated the discussion which included Michael Barr, a University of Michigan Law School Nonresident Senior Fellow, Brad Peterson, Executive Vice President and Chief Information Officer at NASDAQ, Barry Silbert, the Founder and Chief Executive Officer at the Digital Currency Group, and Margaret Liu, Senior Vice President and Deputy General Counsel of State Bank Supervisors.
The most notable guest that present was Barry Silbert, the SecondMarket Founder and CEO. Barry Silbert thinks his online marketplace for trading alternative assets can play an important role in creating a new model for capital markets. Silbert also offers reasons for why he thinks current public markets are broken and his vision of a new way forward.
Wessel started the discussion by posing the question, “Is this [the blockchain] the internet twenty five years ago or a dud?” Wessel follows this up with the statement that most people believe the blockchain is somewhere in between a fad and a fraud. Wessel then quotes Tim Swanson, the head of research at R3, who said, “The blockchain is a bit like gluten — everybody talks about it, but no one knows what it is.” Many people talk about it but few adequately understand it enough to speak on it. For that exact reason, the Brookings Institution brought a panel of knowledgeable individuals to speak about the blockchain.
Bitcoin, the digital currency, has attracted both attention and controversy. But the most potent innovation is not the currency itself. Rather, it’s the technology that undergirds bitcoin, the distributed-ledger technology known as the blockchain that allows payments to flow through an economy in an entirely decentralized way—without banks or other intermediaries. This infant technology could change the financial system; think the Internet before browsers. It could reduce the cost and increase in the speed and accuracy of financial transactions; it could truly disrupt the banking business. Or it could fizzle. But already it is raising a host of policy questions – about financial stability, consumer protection, choking off terrorists’ finances, and tensions between established and upstart financial institutions and between regulatory agencies.