2018 – The year of Cryptomania?
Three days after the value of a cryptocurrency based on a Japanese dog internet meme broke the $2bn mark, I am looking at the future applications of blockchain (the technology underpinning all major cryptocurrencies) on company valuations and beyond.
With eight days to go until the start of London Blockchain Week, "cryptomania" seems to be gripping the business community around the world.
On 9 January 2018, New York listed Kodak doubled its share price announcing a partnership with London based Wenn Digital and the launch of its very own cryptocurrency, Kodakcoin, which aims to ensure photographers get paid for their work.
Media outlets are reporting that businesses can expect increased valuations by simply changing their name to include the words "blockchain" and "crypto". The advantages of utilising 'buzzwords' in company names is certainly not a new phenomenon, but the publicity driven by the success of Bitcoin is clearly reverberating around the business world. Although I am not sure we will ever see the day that changing a law firm's name to "Blockchain Crypto LLP" would lead to anything other than raised eyebrows, there are possible uses of blockchain technology in the services sector.
The Swiss branch of Ernst & Young has issued cryptocurrency wallets to all its employees, installed Bitcoin ATMs in its offices and now accepts Bitcoin as payment for all of its consultancy services. There is no reason to think that tech savvy law firms will not follow suit in the near future.
The Swedish Land Registry has begun trials of the use of blockchain to speed up land sale transactions. It is not entirely inconceivable that a blockchain based Land Registry system could exist in the future given the advantages of openness, speed, security and proof of ownership.
Smart contracts utilising blockchain to automate the execution and completion process could represent a tectonic shift in the operation of commercial contracts. The legal implications are as yet unclear until more detail is revealed about the proposed operation and reliability of such a system. However, the days of paper based execution and manual release of funds could one day be at an end.
Will current trends continue making 2018 the year of cryptomania or will this just be the next .com bubble? Only time will tell!