In Davos, blockchain has already become mainstream
TRIBUNE. Sheraz Ahmed, who is the manager of Storm Partners and the co-founder of Decentral House, was in Davos last week. For The Big Whale, he recounts what happened there.
Last week, I headed to the snow-covered town of Davos, nestled in the mountains of eastern Switzerland, for the annual 54th World Economic Forum (WEF). The stated “theme” for this year’s event was rebuilding trust, a topic near and dear to my heart for reasons I’ll explain shortly; the unstated theme for this year was artificial intelligence (AI).
As an under-thirty entrepreneur, common wisdom would indicate this event was too high-level and broad for a Web3 (blockchain and digital assets) CEO - So, why was I there, and why do I keep returning after all these years?
Davos is where ideas worked on in small boutique tech firms and specialised research institutions finally go mainstream. It’s where the world’s most prominent players talk openly about things they’ve worked on quietly and where other big players decide to follow suit. Think of it as a small rudder that turns a really big ship. The foundation of the WEF in 1971 coincides with the invention of email, and as President Bill Clinton put it, they “spotted the networking of society before the Internet was out of its infancy.”
For someone whose mission revolves around the sustainable and mass adoption of Web3, not just in niche use cases but as a vehicle for innovation, the WEF is the place to be. Here are a few things that surprised me when talking to some global leaders with the power to make significant changes to the world: It turns out that the Web3 revolution was not televised. Many other Web3 enthusiasts and I have felt likewe were fighting the good fight for years in the name of trust, decentralisation, and disintermediation.
We have leaned into headwinds and discussed how distributed ledger technologies would be a new age of personal sovereignty and the end of the traditional banking system. Much of the news around the recent rise of Bitcoin and other cryptocurrencies has touted that the rise is due to recent retail adoption; what I heard at the WEF from players like CITI, Visa, Meta, and others was that blockchain is just another technology that the banking industry, among others, will use to serve its customers. When did this happen? J.P. Morgan launched the Interbank Information Network in September 2018 and the JPM Coin in February 2019, even before the COVID-19 pandemic.
Similarly, HSBC completed its first blockchain transaction in 2018 with ING and Cargill, one of the largest privately held companies in the United States. Like I said, Davos isn’t necessarily where innovation happens, but it's where it gets announced and where changes worked on quietly become public. What shocked me compared to previous years wasn’t that banks were using blockchain to track and clear transactions or offering crypto to their clients—I knew that, and I’ve been responsible for some of those transformations.
What surprised me was the casualness of it. Everyone assumed that this was the standard way in which business was done. A representative of Citi Bank told me, “Crypto is like a means of transport. Digital payments, cash in a briefcase... It’s just another transportation system. We’ll use all of them like we do a bicycle, train, or plane to go from point A to B.” Someone representing Standard Chartered told me theonly things that mattered were “Cost, transparency, cross border, and speed.” Only a month ago, JPMorgan's CEO Jamie Dimon told the U.S. Senate that cryptocurrency had no legitimate use and primarily benefited criminals and that “If I were the government, I’d close it down.”
So, what gives?
The truth is that the global banking system cannot afford to operate without blockchain and cryptocurrencies. It’s becoming too expensive not to. I recently asked the CEO of a major Swiss bank where he thought mass adoption of distributed ledger technologies would start, and he said, “In the back offices of U.S. banks.” Blockchains are secure, immutable, auditable, available 24/7, and, with advances in AI, can automate a lot of the high-touch effort that goes along with moving assets.
From my techy perspective, we’re talking about revolutions in privacy, safe-listed traceable digital cash, instant KYCs, and reductions in costs greater than 80%. More importantly, we’re talking about the changing expectations of consumers for whom three to five days of clearing or not having transparent and interoperable visibility of their assets is simply unacceptable.
Some bankers are uncomfortable with this, while others are enthusiastic about what it means for their businesses. Regardless, the ship has started to turn. The institutional Web3 players like Circle or Grayscale that lead our conversation are no longer alone. Instead, the mainstream players now talk about our disruptive little movement like they’d always belonged.
As for AI, the elephant in the room, has also begun to be normalised. Don’t get me wrong, there is still an enormous hype surrounding the technology. A lot of money is flowing into AI companies, and many people still fear how AI will change their lives, but strong pronouncements about AI being humanity’s doom were notably absent. Instead, I heard from Microsoft that “AI is not something that should be seenas operating on autopilot, but will rather be a copilot for the humans using it.” It’s a nice little nod to Microsoft’s chatbot, named Copilot, which is the latest evolution of their Siri competitor, Cortana.
How does that impact blockchain adoption? According to an executive at PWC, “Hype around AI will create a trickle-down stream for innovative technologies.” While I think it’s always a shaky principle to count on this type of passive method to drive your business, my Web3 insider’s perspective tells me that truly scalable technology is coming to blockchain, augmented by AI and intelligent uses of quantum computing, which will make things possible in the next five years that couldn’t have been done before.
A representative of VISA reminded me, “If it doesn’t scale, it doesn’t matter.” If my conversations at Davos and my knowledge of the state of Web3 technology are any indication, the moment the adoption curve takes off has arrived - welcome to 2024.