By Staff Writer
Paulo Sironi is an author Fintech Innovation: From Robo Advisors to Goal Based Gamification, and Financial Market Transparency: Essay on Theory and Principles, amongst others. He is an elected member of the IBM Academy and represents IBM worldwide. In this capacity, he advises C-level financial institutions, and mentors entrepreneurs on a host of issues related to business model transformation in the age of digital banking. He speaks on Blockchain Asset on Review on his views on the general trends in the blockchain industry with the focus on the financial sector and asset management.
Q: In your work as a fintech consultant to big banks, what sort of enterprise blockchain your clients are most excited about? Are they really into it, or just paying lip service?
A: Blockchain is foundational innovation which requires the interaction of a few strategic elements to succeed: such as large networks of players / users, 5G powering up IoT for smart contracts, better cross-border payment consensus. Banks went through a necessary phase of experimentation in recent years, which taught them about the need to cooperate across Industry 4.0 ecosystems in order to achieve the necessary economies of scale and for the ultimate convenience all business stakeholders.
Q: What are some of the best use cases of blockchain you have seen so far in finance? Where do you think it can be most useful and practical?
A: Blockchain is a transparent technology which operates underneath business processes. As such, it doesn’t resolve an individual person’s problem but ecosystems’ interaction. This is the reason why crypto-currencies and smart contracts attract high attention to smooth large operations and make operations frictionless (setting aside unfortunate cases of greed and abuse by crypto scammers).
Q: What do you think of crypto assets as a new asset class? Do you see more fund managers, both traditional and new, issuing crypto assets in Hong Kong now that the SFC has issued a new legal framework for crypto assets? What are you hearing from your clients?
A: The fact that blockchain is a transparent technology doesn’t mean crypto-currencies are transparent assets. I personally believe there are better ways to make our money work for the good of society.
Q: What do you think about the Chinese government’s new cryptocurrency, DCEP? Will it help China establish a leadership position in financial innovation, especially in blockchain?
A: Stablecoins are indeed the most interesting evolution of crypto, whether they can be called crypto or not. We cannot conceive a digital world without better mechanisms to share money on digital, which can be addressed by stablecoins. Yet, this can lead to many unwanted side effects related to how monetary policies operate, credit cycles are managed, personal financial liberties are guaranteed. The governor of the Swiss central bank recently addressed this topic, highlighting his concerns about increased systemic risks and, most interestingly, the realization that central banks would become commercial banks under such a stablecoin scenario. I believe the Chinese government is addressing two needs: an internal need to gain higher control of the operation of Chinese tech giants; the strategic willingness to set an international standard on its geographic areas of influence through payments and money supply. Such standards can be powerful, and Americans and Europeans should be aware.
Q: Finally, the future of Bitcoin and cryptocurrencies? Where do you think they will be in say two to five years’ time?
A: Bitcoin is a truly ingenious, fascinating and well-orchestrated development. Its real intrinsic value is about the narrative that other crypto do not own. Bitcoin portrays the idea of decentralization to benefit individuals, although it’s a mechanism intended to build a highly concentrated currency market. Just play it forward this way: Satoshi conceived the first Bitcoin phase as “digital gold” to use speculators’ greed against political bans; he then assumed a second phase in which Bitcoin could further evolve as “digital currency” for payments against fees once all is mined, owned by the many and controlled by nobody.