Blockchain in Italy, an evolving ecosystem

Intro

What can political authorities and businesses do to put blockchain (link) at the service of renewal and improvement of our production system? How long will it take for the educational and research system to meet the formative, economic, and legal needs, and represent a turning point for the spread of blockchain?

Blockchain and governance to leave the niche

In response to these questions, it can be observed that for some years now, in various events and conferences where projects, experiences, and prospects are recounted, it emerges that blockchain is increasingly integrating into business processes and that the development area on which blockchain can provide “special” value is that of governance.

Source: AI and Blockchain Report – Strategy Innovation Forum 2020

In rethinking business models or, for example, smart cities as a platform, blockchain is not only one of the technological infrastructures but is one of the bases for writing the rules that accompany the path towards new habits and behaviors. The paradigm shift, in these cases, lies in the fact that the most advanced projects are based on the principle of overcoming silo logic and the fact that integration capability is required.

We are faced with two value concepts for which blockchain can bring a very valid contribution: transparency and trust. Recognizing these advantages is not obvious. If the impacts of blockchain at the business level are in many ways more widespread but still uncertain, at the societal level, the implications still appear to be all to be discovered.

In his intervention on the Affidaty blog at this link, Luigi Corvo illustrated well how social and territorial inequalities can be addressed with blockchain technologies since “the adoption of open protocols that can hold together the perspective of micro-management with that of governing complex processes, transparency about the qualitative and quantitative characteristics that the desired events must assume to generate a consequence, the accessibility of the knowledge created and the signals that determine the behaviors of agents are essential elements to create trust towards impact-oriented change.”

A good example of how technology, when combined with economics and law, can offer innovators many opportunities to reinvent themselves, identifying new forms of innovation and new models to explore. Viewed in its multidimensionality, the blockchain is ultimately moving beyond the niche of topics reserved for technical aspects, finding more and more space in various fields of knowledge. This is happening with the phenomenon of tokenomics – digital tokens.

The blockchain, in fact, through tools such as smart contracts and digital tokens, presents itself as a technology that has the potential to change the way cities are governed, strengthen the productive value of our manufacturing excellence, and carry out daily transactions all over the world. Its applications, in fact, are not limited to cryptocurrencies alone, but can be channeled into all environments where any form of transaction is executed. The search for blockchain applications is a continuously expanding activity, certainly a very interesting area of innovation.

[1] The World Economic Forum has recently published a toolkit (link) to assist businesses and organizations in the work they need to undertake in implementing new blockchain projects, to consider potential unintended consequences, and to encourage integrity, interoperability, and inclusivity.

[2] According to a survey conducted by the World Economic Forum, by 2027, 10% of global monetary exchanges will be managed by blockchain platforms.

Policy recommendations

The OECD experts have identified five main areas in which several recommendations have been made to be addressed to our policymakers.

Education and awareness – The first proposal is to extend the use of “Innovation Manager vouchers” to projects focused on distributed ledger technologies, which are currently not explicitly mentioned in the list of 14 technologies provided. This result could motivate blockchain experts to enroll in the list of “Innovation Managers,” contributing to the growth of the ecosystem.

Data to support the definition of informed policies – To “uncover” where the best companies are that see the spread of DLT in business processes, including the ability to identify emerging blockchain ecosystems at the regional level, it is necessary to rely on national data regarding the entire population of companies. For this reason, it would be important to conduct surveys on the diffusion of DLT in business processes and awareness at the corporate level, in order to better understand the level of blockchain adoption by SMEs and their geographic distribution. In this sense, it becomes important that the competent institutions, in collaboration with research institutes, conduct specific surveys, also providing information on the effectiveness of incentive programs that the Government provides to entrepreneurs and startups.

Provision of public services to SMEs through a DLT infrastructure – If a strategic objective becomes to increase the number of applications used by the Government for the provision of public services and the fulfillment of bureaucratic formalities, one could consider organizing a hackathon among Italian companies in the sector, inviting them to compete to propose a blockchain-based solution for a specific policy aspect (for example, simplifying the procedure for requesting financial support within the MiSE programs, in order to make it more transparent and effective).

Financing innovative startups and SMEs – It becomes increasingly crucial to avoid the fragmentation of interventions that SMEs have to face without receiving specific support. For this reason, a mode of coordination of incentive programs promoted at the local level by authorities and by entities and trade associations (such as the Chambers of Commerce) could be considered in order to provide startups and SMEs with clear information on all the financing channels available to them. At the same time, in order to strengthen financing for innovative SMEs, it could be considered to include the diffusion of blockchain technology in Italy among the objectives of the “CDP Venture Capital SGR – National Innovation Fund” and of the “Sustainable Growth Fund” managed by the MiSE.

Cooperation at the local, national, and international levels – The proposal for coordination (also within program agreements) with interested local authorities (such as Regions or Municipalities) that actively apply innovation strategies including the provision of services to SMEs and citizens through DLT-based systems is interesting. At the international level, instead, cooperation for the creation of a pan-European blockchain infrastructure is an effort that Italy should undertake, leveraging its presidency of the European Partnership for Blockchain. In this sense, for example, support could be provided for the adoption and operational diffusion of the unique digital identity system developed within the European Blockchain Service Infrastructure.

Conclusion

In the next two years, central bankers, policymakers, and business leaders will decide what the future of the digital economy will look like. Western economies have the opportunity to embrace decentralization and the internet of value, thereby maintaining their leadership positions in the global economy. On the other hand, growing Europe’s innovation is one of the most important challenges that policy must face, and this will be even more so in the coming decade. However, leaders will need a level of flexibility and openness that we have not yet seen. Like everything that is bold, the future is not something to predict but to achieve.

Now more than ever, the issue of who will build that future should be at the forefront of this end-of-year period. The first jurisdiction to embrace blockchain and fully develop a regulatory model will reap the benefits of employment and economic growth. Therefore, this technology can finally reach maturity in our country, becoming an enabling technology capable of supporting the digital transition of organizations if accompanied by specific and consistent actions that the Italian government should adopt to support the diffusion of DLT in the entrepreneurial sector.

It is important that Italian authorities become increasingly aware of this, also in view of the new projects to be supported by the National Resilience and Recovery Plan that will have the financial support of Europe. It will also be important to present clear ideas at the third Global Blockchain Policy Forum 2020 (link), which the OECD is organizing for November. Relying on a technical body such as the Benessere Italia Steering Committee (link) to evaluate the coherence and effectiveness of policy actions or establishing an inter-ministerial group, which could be managed by MiSE, can represent a guarantee that government actions and resources invested in this technology sector are adequately coordinated based on a common vision for the future.