Joe Lubin: CBDCs and Supply Chain Defined Blockchain at Davos 2020
To launch this year’s World Economic Forum gathering in Davos, Switzerland, Klaus Schwab warned: “People are revolting against the economic ‘elites’ they believe have betrayed them, and our efforts to keep global warming limited to 1.5°C are falling dangerously short.” These were striking words to hear from the founder and executive chairman of the World Economic Forum.
2020 marks the 50th anniversary of the Davos gathering, and this year brought what felt like a clear shift in tone. Rather than self-congratulation, the more tempered atmosphere of the event indicated how much everyone present felt the urgency of managing the Earth and our resources better and more sustainably, making policies and economies more inclusive, while addressing the mounting sense of anger and mistrust fomenting in many parts of the world. In other words: the need to repair and rebuild trust and construct better systems on which to conduct our activities and steward our planet was a salient theme throughout the proceedings.
Perhaps unsurprisingly, blockchain was more central at this year’s summit than ever before––and as an integrative thread across core themes rather than in isolation. Fittingly, number of major blockchain-related announcements emerged over the course of the week. Most notably was Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC), announcing an organization to explore the framework and potential of a digital US dollar. He stated that current USD users are “underserved by an analogue currency in a digital world.”
Stablecoins in general, and central bank digital currencies in particular, presented a fulcrum throughout the week. Many nation states have recognized the potential benefits of these technologies: more elastic policy making, to cross-border cost saving, to fighting corruption and money laundering––and a powerful Fear of Being Left Behind. Having anticipated this phenomenon, ConsenSys launched a CBDC-focused white paper laying out the issues and options available to central banks. CBDCs will enable a quantum leap in the efficiency of the global economy that should unlock enough currently-wasted value to stimulate the kind of economic growth that can enable us to solve some major, global-scale problems. Later in the week, six central banks announced they are exploring CBDCs; the WEF launched their own CBDC toolkit and a Global Consortium for Digital Currency Governance.
Decentralized protocols were invented and developed to facilitate an alternative to how we can all collaborate better and more efficiently, eventually better meeting the needs of our increasingly global, connected, complex human society. We’ve made amazing progress over a small number of years toward laying the path: a new objective trust foundation for the planet, with a global digital asset settlement layer, atop decentralized identity and verifiable credentials to enable all actors to participate with greater economic and political agency. But critically—and this was very evident this year in Davos—we’ve made progress in building bridges between existing systems and infrastructures and the path-breaking systems of the future.
An example I was particularly excited to announce at Davos is our ConsenSys technology partnership with the Covantis initiative, a consortium of leading commodity industry players aiming to standardize and digitize global agricultural shipping transactions. This platform is evidence that blockchain technology has started to deliver on its promise of unlocking value through collaboration and removal of information silos within and across industries. We also hope that making agricultural shipping processes more efficient can conserve resources across the supply chain and make the industry more sustainable in the long run.
ConsenSys partnered throughout the week, along with Microsoft and Bitcoin Suisse, with the Global Blockchain Business Council, or GBBC, to support a host of great programming and dialogue to advance the conversations around blockchain and decentralized technologies, particularly in the areas of government, financial services, and sustainability. Thanks to Sandra Ro and her team for leading that very productive effort, which launched at Davos in 2017.
We went first to Davos two years ago in hopes of sharing our excitement around decentralized protocol technology. This year, there wasn’t the same wonder and excitement around a bleeding edge technology. Instead, nearly everyone had a fairly informed opinion on its uses and challenges. The bulk of the discussions were around how best to use the technology to build the new systems the planet needs to evolve itself: supply chain track and trace, stablecoins, CBDCs, and evolution to digital assets in all forms.
All of this suggests to me that our once-futuristic view of things has successfully entered the mainstream of the present, and people are more comfortable with the basic principles and value propositions of blockchain technology. We have decisively moved beyond the awareness building phase. Blockchain is no longer a buzzword, and major governments, central banks, and financial powerhouses are seriously investing in blockchain business cases and recognizing that the tide is already turning. As a species and global society, I expect that we are on the precipice of fully leaning into this new reality so that we can properly take stewardship of this planet.
Read the white paper, “Central Banks and the Future of Digital Money.”