Slouching Towards The Blockchain Institutionalism

Blockchain is not being treated as a gamble anymore, but as a separate institution that big players are ready to engage with and are waiting for a pathway for them to open.

There are so many articles that you can find, and definitely more than you have time to read, about the need and potential of mass blockchain adoption. The idea is fascinating, more than that, it is quite inspiring to think that I can use my Facebook messenger app, without worrying that someone is looking through my messages. Or going to Starbucks and getting my usual flat white with a debit card full of Ethereum or Bitcoins. Or for that matter even paying my electricity bill with the same card. So, why do we only read about mass adoption and not actually experience it? The reason is simple: we cannot enjoy the full potential of a cryptocurrency if the big institutions that we engage with on daily basis are missing from the scheme. In other words, we can come to the beach but can’t swim, if all we have is a paddle.

What Do the Institutions Want?

There is a misconception that the institutions are not interested in the Blockchain, the truth is that they are simply cannot find a satisfactory entry point. Institutions look for the infrastructure, which corresponds with their values and expectations.

First of all, the institutions engage only with players that are regulated. Legal regulation always means a higher degree of accountability and repercussions for wrong doings. Secondly, there are is a deficit of individual custody accounts, in which clients can find records of the money transactions and futures trading activity of an individual customer. And thirdly, the institutions will engage only with entities who undergo audits at least once per year and uphold transparency.

What is the Hitch?

Blockchain is afraid of regulation and it feels that the only way to be disruptors of the system is by being in denial. But, what is the point of putting a blind fold when the sun shines: it will protect you from the sun, but it will also prevent you from seeing. Such manner of conduct will be harmful in the long run, if there is going to be a run at all. The point of the blockchain is innovation, not fear of advancement and obstruction of long-term utility. The point is to create a new institutional order, together with the traditional players, that will make the previous one obsolete.

Can’t Kill Them and Trade with Them Too

It is quite interesting to see how blockchain startups that understand the need for convergence and accommodation of traditional institutions operate. For example, the Hedera hashgraph platform provides a model of governance that includes oversight by 39 renewed enterprises and organization. Ternion offers a licensed and regulated fiat-to-crypto hybrid exchange.

There are also those who have decided to invest in traditional structures, an example of such strategy is a partnership between LTC Foundation and Token Pay, who have united to buy a stake in a German WEG Bank.

As we can see, there are players who understand the importance of bringing the institutions and subsequently, their clients and their money to the table. However, the biggest obstacle on their way are blockchain startups, that conclude too early, that Blockchain alone is enough.

By: Ester Gritsaeva

Love to write and read. Thirsty to gain new knowledge and learn new perspectives. Current passions: international politics and fintech solutions. Toronto, Ontario


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