Patrick Harker, President of the Federal Reserve Bank of Philadelphia: The real value of blockchain lies in authentication, not in virtual currency

Patrick Harker Harker, president and CEO of the Federal Reserve Bank of Philadelphia, weighed the possibilities of blockchain technology in a new speech this week.

In a speech titled “Financial Technology: Transformation or Evolution?” delivered to a group of engineering students at the University of Pennsylvania, Harker praised the “tremendous potential” of blockchain technology.

Additionally, Harker said he believes blockchain could become a more efficient way for banks and institutions to manage risk in the future.

He told attendees:

“However, in my opinion, the real value of blockchain lies in authentication, not in distributing a virtual currency. Distributed ledgers can provide nearly foolproof data storage, and the impact of this technology in terms of risk management is huge for any enterprise. ”

It’s also clear from Harker’s words that he believes blockchain will ultimately be an enabling platform for existing businesses. For example, he believes that financial technology (FinTech) companies will never be able to fully disintermediate trusted third parties and currency brokers.

He said:

“Similarly, no matter how the financial technology landscape changes, you will still need a trusted currency broker. The roles may change and adapt, but someone needs to be the source of money and credit.”

Furthermore, Harker was more pessimistic about the idea that digital currencies could operate outside of government surveillance.

“On the other hand, one of the things you see with cryptocurrencies is that they fluctuate so wildly. The question is, ‘Will there ever be a digital currency that is stable enough for governments to use widely?’ ”

He also believes that privately held digital currencies may not be able to manage a large money supply, adding:

“Unless the government issues digital currency, the answer is probably “NO”. Digital currency will not replace our own currency anytime soon.”