Get Smart About Blockchain & Smart Contracts

How to Overcome a “Legacy Mindset”

Blockchain and smart contracts are just not that smart.

I hear this argument a lot recently.

The idea is simple: current iterations of these technologies are only useful if the current centralized platform or database is prone to failure (and cannot be trusted). Otherwise, introducing blockchain and smart contracts in a centralized environment make no sense and will only lead to new difficulties and additional costs.

The conclusion? The only “real world” use for blockchain and smart contracts are Bitcoin (or other digital currencies).

There is a second (different and competing) argument that I also hear a lot:

Blockchain (and smart contracts) will be the basis for the next generation Internet.

“Evangelical” believers in the technology often refer to the introduction of the “Internet of Value.” The opportunities are endless. Or, so they claim. Blockchain and smart contracts have the potential to disrupt industries with slow and cumbersome processes and numerous middlemen who are prone to human error, corruption, and fraud.

Any industry, business, or organization will be disrupted if they don’t embrace these new technologies.

I heard these two views again at a Blockchain Challenge event, organized by the European Investment Bank (EIB) last week.

These two views are not new, but it was intriguing to see that both of them “failed” to disrupt the “legacy mindset” that was also present in the room.

By “legacy mindset”, I don’t mean the “technology-skeptics” (i.e., those who simply dismiss new technology as a fad or passing trend). The experience of the last thirty years has shown everyone how innovative technology can change and has changed the world. Very few people I come across are genuine skeptics or non-believers.

Instead, there is a significant group of people who, for the moment, don’t know what to make of next generation digital technologies. This is the “legacy mindset.”

They want to be persuaded about the opportunities and advantages of blockchain and smart contracts, but neither of the competing narratives of the future are compelling enough. For the moment, they prefer to stick with the “certainties” (the legacy) of the (recent) past, rather than commit to any narrative about where the technology is taking us.

This is what I experienced at the EIB last week: competing visions of the future that were not really able to persuade or convince the majority of attendees.

What Is Missing?

So,why is it so difficult to overcome a “legacy mindset” and convince people about a particular vision of the opportunities and advantages of blockchain technology and smart contracts?

A big reason for this is the lack of basic knowledge about digital technologies among most non-technologists. In large part, the “legacy mindset” is a function of a lack of information about the underlying technologies. Without the necessary knowledge, it is simply impossible to commit to any vision of the future.

And this is the main reason I introduced a “Coding for Non-Technologists” course on my university Master’s program. This is why everybody should “learn how to code.”

Don’t get me wrong: I don’t want my students to all become professional web designers or programmers. I don’t expect my students to suddenly become capable of professional standard coding. After all, coding is hard and “good” coding is not something you pick up in one intensive course.

Rather, the “Coding for Non-Techies” course is designed to teach students how to think in a digital age. As I have written before, it is about giving them the capacities to navigate a world in which computer code is embedded in every aspect of economic and social life.

As such, “coding” is an important resource to make sense of the digital world and to overcome a “legacy mindset.” We shouldn’t be sat around arguing over competing visions of the future. Instead, we should be giving people the resources to make sense of the fast-changing world that is emerging around us.

A Meaningful Dialogue

An understanding of the underlying technologies and mathematics behind blockchain and smart contracts is a “must” in the current digital age.

It will not only augment the skills, knowledge, and experience of non-technologists. It will also — and crucially — enable them to enter into a meaningful dialogue with technologists (and to constructively engage with them).

This will, in turn, make the “coders” smarter.

In my experience, coders, programmers, and other developers do not always understand the disruptive potential of the new digital technologies in the current economic, social or legal environment.

And, why should they? Coders are taught to solve problems but identifying the problem that needs solving requires a local knowledge that coders cannot be expected to have.

For instance, I’ve heard many commentators say that computer-based “smart contracts” will never be able to replace highly-sophisticated traditional contracts (which have been developed over many years and are “predictable” because they are supported by case law).

But any experienced business lawyer will tell you that this view of old-world contracts is naïve. It is true that there are still many issues with “smart contracts.” But let’s not forget that the same is true of paper contracts. Most traditional contracts that I deal with (and this is a significant number) are also suboptimal, to say the least.

When thinking about the future prospects of new technologies we shouldn’t expect those with the skills of the future (coding smart contracts) to have knowledge of the legacy issues of the past (drafting and working with “paper” contracts). Instead, we need to recognize the importance of meaningful engagement between technologists and non-technologists, and the need for effective strategies to achieve this goal.

The Benefits of “Co-Creation”

Non-technologists (such as business people, bankers, lawyers, accountants, advertizers, consultants, etc.) need to acquire a basic understanding of coding. Equally, technologists would certainly benefit from a better understanding of how organizations and society operate and the role of intermediaries in the current social and economic environment.

Here are three very tangible benefits of more collaborative forms of “co-creation”:

1 — More knowledge leads to “smarter” dialogue and facilitates more organic forms of collaboration

I’ve written before about the power of collaboration in a “blockchain-based” supply chain. Such collaboration allows us to identify problems, find solutions and reveal new opportunities.

Another example is an early stage tech company, Semada.io, in which a professor of law, a professor of mathematics and several coders and distributed ledger technologists work together to create a blockchain-based “reputation verification platform.” The platform rewards trustful parties and punishes bad actors. Trust will be created through an “eternal reputational record,” which is open to review and driven by proper incentives.

2 — More collaboration breaks down “silos” & results in better “problem-solving”

In the types of collaboration described here, multiple perspectives are taken into account: the tech-perspective, the business-perspective, as well as the perspective of key intermediaries (bankers, lawyers, accountants etc.).

Too often, we think about technologies in isolation from each other.

For instance, you don’t have to be a futurist to understand that many problems with blockchain technologies, such as energy inefficiencies with Bitcoin’s Proof of Work protocol, the “mining pools,” the anonymity in blockchain organizations (making them prone to “Sybil attacks” and “51% attacks”), will be solved by other technologies. Developments in sensor-technologies, machine learning, and deep learning will make blockchain-based platforms more effective and efficient.

“Silo-thinking” is the enemy of progress and more collaboration gives everyone the resources to break out from these restrictions.

3 — More collaboration maximizes opportunities for genuine innovation

Open, informal and multidisciplinary collaborations are necessary in a digital age. Only then will we be able to ensure that we build an inclusive digital world that offers greater transparency, convenience, trust, and opportunities for everybody.

This was my takeaway from the event at the European Investment Bank last week. It showed the importance of co-creation between technologists and non-technologists (which was also readily acknowledged by the Bank).

But it also showed that we have to first work on creating the best possible environment in which co-creation initiatives and activities can flourish.

This must start with making sure that we all speak the same “language” and are, at the very least, able to understand, collaborate, and experiment together.

Coders, bankers, and fintech experts “collaborating” and “co-creating” at the EIB Blockchain Challenge in June 2018

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