Cryptocurrency and blockchain are no longer the main sources of financial news. However, despite the generally decreasing interest, blockchain continues to be viewed as one of the most promising technologies. According to The Future of Jobs Report for the World Economic Forum (WEF), 45% of respondents believe that the blockchain will seriously change the labor market in the future. Pavel Shust, Executive Director of the E-Money and Remittance Association (EMA), Chief Specialist at St Petersburg University Center for Blockchain Technology, explained in an interview with Invest Foresight why the hype around the blockchain ended, what would happen to large projects and why it became unprofitable to hold ICO.
– Could you say a few words about the St Petersburg University Center for Blockchain Technology? What does it do?
– The main goal of the center is to eliminate barriers hindering the implementation of distributed ledgers. There are most diverse barriers today, from purely technological issues such as the limited speed of information processing in distributed ledgers to legal and other limitations.
– Does the center offer educational programs?
– Yes, we develop programs for bachelor and master students. But we mostly focus on additional education. Part of the center’s programs is aimed at explaining the distributed ledger basics – something lawyers, civil servants, and even physicists and mathematicians would find useful and apply in their professional activities. In the near future, the center will have a rather extensive portfolio of educational programs on data processing, digital economy principles, digital regulation, and so on.
– Does your center provide blockchain consultations to young entrepreneurs?
– We work with young people who develop distributed ledgers, and hold various events for them. For instance, the center recently held a hackathon on blockchains. We are interested in teams that already have developments that could later be turned into a successful commercial product.
– What are Russia’s most promising blockchain projects?
– Many blockchain projects employ not only Russian developers, but also entire teams from foreign countries. I can name several most advanced areas; these are the use of blockchains in the financial sector, logistics and medicine. However, it is difficult to predict the exact time when these developments will make a hit. These are long-term projects.
– How many years does it take to successfully implement blockchain startups? Five, ten?
– About two years, I think. In the next several years we will see how blockchain can be used in various sectors of the economy.
– Why did the blockchain hype come to an end?
– There has been hype around cryptocurrency, not blockchain. It was caused by a price gauging on the market, when people made huge profits. It attracted attention of the media. Then the interest in cryptocurrencies dropped and professionals began to pay more attention to the technology itself.
– The volume of investments in ICO in 2019 plummeted by 90% as compared to the similar period last year, according to data from the ICObanch rating platform. What is the reason for this?
– There are several reasons. The first one is decline of trust; most ICO projects proved to be either unsuccessful or even fraudulent. Many people invested money in ICO without any financial knowledge and the ability to forecast risks. The possibility of losing money while investing in projects at the idea stage is very high, and most people indeed suffered losses. Of course, this curbed interest. Another reason for the decreasing ICO popularity was intensified regulation. Regulators make ICO a more cost-intensive tool and consequently less popular.
– Do you think legal certainty is needed around blockchain at all?
– It is certainly needed, but we should not replace legal certainty by excessive regulation. Tough regulation inevitably suppresses innovation. So I think the most optimal solution is framework legislation as a fact of acknowledging the existence of distributed ledgers in the legal field.
By Alexander Stolyarov