Corporate Blockchain Defector Speaks on Sector Hype

December 3, 2018 @ 11:16 am By Cali Haan

A former blockchain division head at Ernst & Young (EY) has gone public about his misgivings regarding the much-hyped potential of corporate blockchain.

Angus Champion de Crespigny, who graduated as an engineer and who has worked in cybersecurity, data analytics, regulatory compliance, and technology worked at Ernst & Young for ten years and ran the company’s blockchain division specializing in finance.

He began studying Bitcoin in around 2013, and, according to an interviewer at Barron’s, “was excited about the technology at first…” but decided to leave the EY after becoming, “…extremely skeptical about blockchain’s usefulness for businesses.”

Despite Champion de Crespigny misgivings, Ernst & Young, nonetheless appears to be continuing with the tech and told Barron’s:

“(W)e continue to see areas in financial services institutions where permissioned or private blockchains really can provide value.”

Champion de Crespigny said he became personally interested in Bitcoin in 201, and witnessed interest in blockchain as a possible corporate solution mount in 2014 and 2015:

“I could see how exciting this could be, but also what sort of a regulatory minefield people were walking into.”

Champion de Crespigny says he was one of the early corporate entrants in the new field of interest, and, “There was a time up until about maybe mid-2014 when I knew every single company in the New York area that was working on this, and all of the people.”

Like many approaching the subject, he was enthused:

“Yeah, I was optimistic. It would be silly for me to say otherwise. My views were aligned with a lot of the common views at the time.”

But over time, and through much practical consideration, he realized adapting a tech designed to “run automatically” without a single point of oversight in a corporate environment (which necessitates and benefits from oversight) was proving not only complex and costly, but also unnecessary:

“Once you can get all of those stakeholders together, you generally form some sort of trusted central entity anyway. If you managed to do that coordination, which is the difficult thing, there is technology that you can use that is far easier… Just a distributed database, which is faster.”

As he was trying to adapt the tech to a context it was never designed for (the first well-functioning blockchain, Bitcoin, was designed as an payment system for and by anarchists), it caused him to recall the story of a cat he heard in childhood.

In it, a group of mice conspire to protect themselves from a cat, and one proposes, to much enthusiasm, putting a bell on the cat’s neck.

A skeptic mouse among them asks how they propose to safely bell the cat.

Similarly, the idea that blockchain will do away with the metaphorical cat (or cheater in business) is a potentially naive prospect, said Champion de Crespigny:

“That is a little bit like this industry. If we could create one big blockchain that everyone is on, that isn’t owned by anyone, that works perfectly, if everyone agrees on the standards—then it would be a great setup. In reality the process to get there is just incredibly, incredibly complicated.”

Champion de Crespigny is now among numerous experienced researchers aying that, practically speaking, in corporate environments, where some degree of central command or hierarchy may be a fact of life, a blockchain is not required and may not competitive:

“The reason (a private distributed database) is faster and the reason it is more efficient is because it is all built around a central controlling entity…Typically, as it evolves, you end up having to coordinate everyone. And if you can coordinate everyone, then there is often a better technology to use than a blockchain.”

But why then are companies like EY continuing to propose blockchain solutions to clients?

“I won’t comment on specific companies, but there is a certain amount of headline chasing. I think once you have spent a certain amount of money with this you better have something to show for it…”

Generally speaking, what appears to be happening now is that some companies are continuing to use the word “blockchain” for the sake of continuity.

When they deliver, chances are they will simply be offering a standard distributed database with perhaps some enhanced encryption rather than an authentic “blockchain.”

Champion de Crespigny says a viable solution may already be in place at an enterprise:

“The traditional ones are [ Microsoft ’s ] SQL Server and Oracle. Any traditional enterprise database can be set up to be distributed in that way. This is technology that has been around for a long time. People are now being sold a dream that a blockchain is going to be easier to do all of this, and I just don’t think that’s accurate.”

Champion de Crespigny questioned Gartner’s claim that blockchain would be worth $3.1 trillion-plus to businesses in 2030:

“I didn’t see where private blockchains could create any value to business. So I am not sure how they assess those numbers. The thing is at the 20,000-foot level, it sounds like it makes sense, because you get told this could automatically reconcile and get rid of errors. When it comes down to the technical nuts and bolts, how does it actually do that? But most errors are at the inputs and outputs of the systems. I haven’t seen anyone who has been able to tell me how to actually do it. I think there is a lot of strategic thinking and buzzwords and not enough hands-on technical knowledge.”

Champion de Crespigny is now working on building his own enterprise, “pulling together workshops for asset managers to help them manage cryptocurrencies… advising businesses on regulatory issues and helping to establish Bitcoin and cryptocurrency infrastructure here and abroad.”

He still thinks Bitcoin is promising:

“I think we have a habit in the West of being rather Western-centric and not realizing that there are a significant number of people in the developing world who don’t trust their local government, at least not enough to store all of their money in that local currency. Having some sort of digital alternative is very beneficial to them.”