Behind the bitcoin hype its underlying blockchain technology has the power to revolutionise business and society, says Ser-Huang Poon.
"Everyone is trying to swallow so fast that there is a bit of indigestion at the moment."
Professor of Finance Ser-Huang Poon is referring to the global excitement around blockchain, the technology which has the potential to transform not just business but everyday life for us all.
At its most basic a blockchain system allows a list to be continually updated and maintained electronically. This list can literally relate to anything - whether a consumer product, service, or everyday object - or to any individual. Take the example of a car. Blockchain could tell you exactly where it came from, its history of repairs, and where it had been driven through its life.
Prof Poon says although all kinds of information can be attached to a blockchain entry, until now much of the focus has been on its perceived benefits for the financial services industry which is quickly waking up to its full potential. "Banks in particular are beginning to start thinking about the impact this could have across their operations. There are clear benefits for the financial services industry as using blockchain technology means being able to cut out middle men, and also means transactions can be completed extremely quickly and easily across jurisdictions."
In this fast-moving landscape she says regulators are struggling to keep up. "The world literally has no choice but to wake up to this as it is happening here and now. You can actually trace much of this back to the smartphone revolution. As soon as Apple released the iPhone the genie was set free."
From a business perspective, Prof Poon says blockchain offers strong benefits for managing global supply chains and tracking specific goods, for instance if products are being sourced from a developing world country where information might not be freely available.
She adds: "If the information that a company seeks about its supply chain or about specific factories or goods is not very forthcoming, then companies and suppliers can effectively club together to build up a full picture of what is happening on the ground. That can become a very powerful tool. One of the beauties of blockchain is that you don"t have to rely on any one jurisdiction in one country to get the answers you need. Everyone can be part of this and blockchain has the power to help develop much more trust in terms of contracts."
Prof Poon and her team have started investigating the potential of using blockchain in tracking multinational supply chain networks in relation to corporate child labour violations. "In this field the UK has led the way with the introduction of the Modern Slavery Act, legislation which has forced CEOs to become far more actively involved in addressing modern day slavery and human trafficking in their supply chains. A global blockchain might be just the tool we need in tackling these cross border criminal activities."
Blockchain for good
This ties in with the emergent "blockchain for good" movement which is attempting to use the benefits of blockchain for non-commercial purposes.
For instance individual humanitarian organisations, UN agencies and social enterprises have all recently launched private initiatives. "Part of the beauty of blockchain is that it is a very bottom-up "consensus" based process and doesn"t necessarily need to be driven by governments, and hence cannot be sabotaged by one corrupted regime," she adds.
Against this backdrop it is little surprise that this has become a fertile area for academic research.
Prof Poon admits that she has probably never been busier in terms of the research opportunities that are offered by this exciting new technology and she is currently preparing two major grant applications. As she adds: "The EU wants to encourage take-up of the technology among SMEs and understand what are the obstacles in terms of technology and implementation gaps, and what the regulatory framework should be.
"Among the key questions we are asking is how blockchain will change corporate finance, investment and money. Over the last 200 years economic theory has been based on the principles behind fiat money, a legal tender whose value is backed by the government that issued it. But this logic doesn"t apply to cryptocurrencies and the potential economic and social impact is both huge and disruptive."