Vermont decided against blockchain technology for public record-keeping. Photo: Shutterstock
The state of Vermont made a bit of a splash last summer when Governor Peter Shumlin signed an economic development act into law.
That law commissioned a report investigating how the state government might leverage blockchain technology for managing public records. The general premise was that the use of blockchain technology could reduce government overhead.
The idea that a state government might employ blockchain technology on an institutional level obviously created quite a bit of buzz. As GovTech’s Adam Stone reported at the time, “The state’s foray into blockchain may serve as notice to other public-sector entities that the technology’s potential soon may be coming to fruition.”
Vermont’s findings have now been published.
The report, commissioned as part of a broader legislative effort aimed at promoting economic growth, was prepared by Vermont’s Secretary of State, Attorney General, and the Department of Financial Regulation. Representatives from the Center for Legal Innovation at Vermont Law School and the Uniform Law Commission also contributed to the report, which was delivered to the legislature on 15th January.
So what did Vermont figure out?
That they don’t need the blockchain. In fact, the costs far outweigh the minimal benefits. The report concluded in matter-of-fact terms:
In light of the very limited possible benefits and the likely significant costs for either entering into a private or public blockchain or setting up a state-operated blockchain, at this time, blockchain technology would be of limited value in conducting state business.
If you’ve been following Ripple Insights, you’ll know that this has been a common theme for us in 2016, which is the year we believe people will realize that they don’t actually need the blockchain.
And much of the hype and hoopla surrounding the technology up until now has been just that, hype—more of a way for companies (and state governments) to signal innovative intent than to produce material use cases.
Consult Hyperion Director David Birch says as much in a delightfully blunt op-ed published on Finextra this morning.
The snark is thick with this one:
Exciting news arrives from a friend. “Check this out” he tells me, “they’re using the block chain to replace the Pound Sterling / create a land registry in Ruritania / cure cancer” (*delete where applicable) and there’s a URL attached. I click on it. It says that a company has signed a memorandum of understanding to create a working group to examine the possibility of a pilot to use a database that has the “potential seamless integration with blockchain technologies”. I emailed him back, pointing out that my backside has potential seamless integration with blockchain technologies but that doesn’t make it a blockchain.
The entirety of Birch’s much needed blockchain rant makes for an entertaining read.
Of course, that doesn’t mean there aren’t important use cases for blockchain technology. There are—which we’ve outlined in the past.
But it’s pretty clear that this will be the year we start cutting through all that hype.