The blog post’s authors (Sumedha Deshmukh, Mercina Tillemann-Dick, Sofia Arend) note that standards for blockchain or distributed ledger tech (DLT) serve as “the baseline” for performance and consumer protection.
The authors also mention that digital currencies have been rallying to near-term highs following major announcements from PayPal (will allow users to buy and sell cryptocurrencies) and Square (acquired $50 million in Bitcoin for its treasury). The Chinese government and around 48 other countries are also considering launching their own virtual currencies. Developments related to central bank digital currencies (CBDCs) have “accelerated dramatically” during the past 18 months, according to a new report.
According to Arend, Deshmukh, Tillemann-Dick, these are positive development signs for a technology that was “once riddled with hype and, in some cases, fraudulent behavior.” But the authors claim that the lack of proper standards could prevent the blockchain sector from moving forward and gaining more users.
The authors write in a blog post published by WEF:
“With emerging technologies, coalescence around technical and regulatory standards has marked a turning point. They provide a baseline for interoperable systems – think about the ability to send email between Gmail and Outlook – and for businesses to operate smoothly in a cross-jurisdiction manner.”
“Industry leaders across verticals, from financial services to supply chains, frequently point to interoperability and regulatory fragmentation as being among their chief concerns. In fact, ‘replacing or adapting existing legacy systems,’ ‘regulatory uncertainty,’ and ‘burdensome regulatory environment’ – each rooted in standards – were among the top barriers to great investment in blockchain technology, according to 1,488 respondents in Deloitte’s 2020 Blockchain Survey.”
As explained by Arend, Deshmukh, Tillemann-Dick, there has been some standardization activity around blockchain or distributed ledger tech (DLT) and crypto-assets. However, little work has been done to assess or evaluate the existing DLT standards upon which the blockchain sector can continue to build.
The World Economic Forum and Global Blockchain Business Council have teamed up with industry leaders to work on blockchain standards. Analysis of over 30 technical standard-setting entities, 185 jurisdictions, and around 400 DLT industry consortia groups reveals that “education is key to thoughtful standardization.”
The analysis also found that “a lack of coordination has led to fragmentation and information siloes.”
Other key findings from the analysis include:
- Some standards may be “premature or unnecessary.”
- Terminology remains “inconsistent.”
- Standards for blockchain technology should take a “flexible” approach.
- Organizations should “proactively determine strategies for standards creation and implementation.”
(Note: for more details on this analysis, check here.)