Blockchain Conference D.C. tackles hype to regulation

Some of the biggest questions amongst conference goers at the second annual Blockchain D.C. conference were what is Blockchain, do I need it, and how can my company value from it?

Peter Van Valkenburgh of CoinCenter said, “everyone needs to understand Blockchain before beginning to architect systems,” and distilled a recent CoinCenter post, Do You Really Need Blockchain For That?, down to a few key points.

When you’re dealing with multiple writers of a database who don’t trust each other and can’t agree on a centralized intermediary, Blockchain is perfect, states Van Valkenburgh. If the writers trust one another, he recommends, “just use Oracle.” Oracle Corporation is a multinational computer technology corporation, headquartered in Redwood Shores, California. The company offers a comprehensive and fully integrated stack of cloud applications and platform services.

Van Valkenburgh went on to say that, “Blockchains are experimental, strange, and built from scratch with very few eyes on the code.” Another panelist added that in general, Blockchain helps removes risk and cost from the equation when used properly. In his panel and keynote, Brendan Blumer, CEO of EOS, also warned, “there are “very few people who can add technical value in this space.”

- Brendan Blumer, EOS CEO

Kathryn Harrison, Blockchain product leader at IBM, states that we’re at the top of the Blockchain hype cycle, and there will be very little involvement from most companies around use of the Blockchain down the road. However, Harrison added that, "Blockchain announcements will continue to grow in 2018, some will surprise you.”

Further panelists made it clear, when applying Blockchain to business, the key is understanding the use cases and communicating that need to stakeholders. Jerry Brito and Van Valkenburgh concluded that there is a “fine line” between permitting innovation versus allowing regulatory roadblocks in the United States.

Internally, there have been 200 unique use cases submitted to the federal repository on Blockchain technology. Some ideas have included use cases for the appropriation of funds and identification, such as Visas or Passports.

Tori Adams, of Booz Allen Hamilton, was straightforward in her assessment of Blockchain technology in the US federal government, “a radical disintermediation of government services is very likely.” The consultant added that she was not, “optimistic for large federal government projects in Blockchain for at least two more years.” In the end, “you won’t realize you’re even using Blockchain.”

- Tori Adams, Booz Allen Hamilton

Adams and others on the panel concluded that cities will experiment on a smaller scale first, and eventually meet the Federal government in the middle. The Brooklyn Microgrid is one such example where Blockchain facilitates the peer to peer energy market cultivated through renewable sources.

Adams concluded that, “anyone who says the United States government is behind on this is sadly mistaken.” There is also an active outreach and exchange between the public and federal government in Blockchain related matters.

Several panels included thought leaders around ICO launches and regulation. Keynotes from EOS, designed to perform millions of transactions per second on the Blockchain asynchronously, and LOCI, a company with a novel patent search engine InnVenn, were two of the largest ICOs highlighted.

Further ICO specific discussion included a decentralized real-time consultation fee platform easily connecting knowledge providers with knowledge seekers and whose ICO includes a revenue sharing model. Also discussed was Omega.One, an exchange which promises to fill liquidity gaps by buying and selling on every available exchange to fill customer orders. It was touted that this method was "80-90% cheaper than using exchanges" directly.

Panels also discussed what it took to launch a successful ICO. Emmie Chang, managing partner of Superbloom Capital, said that she focuses on “team, tech, and token” adding that “valuation goes down when you have revenue" because it’s much harder to accurately evaluate potential.

- Emmie Chang,  Superbloom Capital Managing Partner

There were a multitude of lawyers at the conference, many of whom were interested in regulatory clarity surrounding ICOs. All the lawyers I spoke with noticed a large increase in clients regarding these matters over the past three months.

The Howey Test was recommended as a baseline guideline when deciding to register an ICO as a security. When in doubt, one panelist warned, “you’re probably issuing a security,” including the moment the ICO is sold on a secondary market publicly. The location the ICO launch occurred was also stressed, with particular attention paid to the legal perception of ICOs in that jurisdiction. Currently, Switzerland is a preferred site due to regulatory warmth toward ICOs.

Investors were advised to avoid unlicensed exchanges selling unregistered ICOs, as the SEC will likely not shut down ICOs one by one but instead extinguish these secondary markets. Other panelists were optimistic that ICOs, in some form, are here to stay due to their direct-to-consumer investment, tying the money invested directly to the technology.

The lawyers familiar with the SEC concluded, “be prepared to be regulated" and that there needs to be clearer guidance before allowing investment by US citizens in ICOs broadly. There is also a rising, yet untapped investment tier mentioned by David Duke, of LDJ capital, known broadly as the “family office” which is skittish on entering something they largely do not understand.