Much ado about Blockchain — Standards for Blockchain: a worthwhile effort? —
by JT
Yes, this in not article about how to get rich fast with crypto. Well, actually maybe it is, but I will not be telling you which alt-coins you must buy to go to the moon.
This short article is about the conversation that has been taking place in the background of the crypto craze and bust, that is:
can we help regulate the blockchain revolution by developing a set of international standards making sense of it all?
This conversation is increasingly becoming relevant for investment funds, insurance companies and government regulators coming under pressure to protect the general public (increasingly becoming users and investors of crypto currencies and blockchain apps). This has been noticeably evident in the last few months as an array of blue chip companies such as terra (LUNA and UST) went bust in a matter of days.
The general feeling is we quickly need a roadmap that will help make sense of the panoply of blockchain technologies out there.
In this regard, International Standards Organization (ISO) experts are already working hard on this very issue and in the last two years they have already published the first 4 ISO standards on blockchain technology and many more are under development.
But Why is standardization important?
In my opinion, the development of ISO standards for blockchain technologies is fundamental:
- To bring blockchain technology out of its obscure and esoteric mantra by improving the public’s understanding of the underlying tech;
- To determine compliance with regulatory frameworks being implemented by governments and investment institutions. This is fundamental to evaluate a blockchain technology’s capacity to provide privacy, access, control, confidentiality, security, etc.
- To improve the utility and adoption rate of standardized blockchain technology by establishing best practices and common frameworks. This would also help innovators from different cultural systems to collaborate and share technology more seamlessly.
- To nudge stakeholders and investors towards trusting the blockchain technology underpinning new financial instruments (what we now term as the DEFI revolution) while at the same time easing regulators’ concerns.
What has been done so far?
The ISO is actively working on a road-map to develop international standards for blockchain under ISO-TC 307.
ISO TC 307 (ISO) which was first proposed in 2016, was tasked with developing standards regarding: reference architecture, privacy and personally identifiable information protection, legally binding smart contracts, guidelines for interoperability, etc. Four Standards have already been published in the last two years on vocabulary, smart contracts, security, and Personable identifiable information. There are 11 more standards under development.
A word of caution
The work under ISO TC 307 is nothing short of exciting and it reflects the recent interest that the public has in blockchain tech. However, some voices are critical of this effort. They believe that, even if we are to painfully navigate our way through the mess of standardizing blockchain technologies, we risk breaking the system or outright killing it.
The very essence of blockchain technologies is that it provides innovators with a system that can adapt to a multitude of needs. In this regard, the process of standardization may bring with it a limited set of standards that oversimplifies the scope of the technology, while leading to a situation where risky innovators would be labelled as non-compliant.
This is dangerous as it means that the standardization of blockchain could punish edgy developers that fall outside the standards’ scope by restricting their access to investment funds, and by decreasing their chances to lure new users.
So, what should we do?
As with many other things, the best approach should attempt to strike a balance. On one hand, we need to develop standards that are open-ended and thus allow the technology to evolve in new and unpredictable ways. On the other hand, we must promote the development of a common vocabulary that eases the concerns of regulators and facilitates the collaboration between blockchain creators in different cultures.
We also need to improve the interoperability of emerging systems with legacy solutions and in this sense a set of standards may come much handy.
Soon, I will be writing in more detail about some of the standards that have already been published and their impacts on how the technology is evolving. Stay tuned!
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