Rob Kaplan, CEO of the Federal Reserve Bank of Dallas, is keeping a close eye on the traction of cryptocurrency, blockchain and artificial intelligence and what role it will play in the economy of the future. While he's skeptical about cryptocurrencies in their current form, he's much more certain that emerging technologies like blockchain and artificial intelligence will transform industries and put pressure on the workforce.
"My guess is we look back 20 years from now, and [blockchain] is going to be used by a range of industries we can't imagine right now," he said. "It could be very powerful."
Kaplan was one of three speakers featured on a panel titled “Cryptocurrencies, AI, and Disruptive Technologies That Will Redefine the Global Economy.” The panel took place at the George W. Bush Presidential Center on Oct. 22 and was moderated by Ken Hersh, CEO of the center. Tuur Demeester, founder of Ukraine-based bitcoin fund Adamant Capital, and Barry Eichengreen, University of California-Berkley professor of economics and political science and a former senior advisor at the International Monetary Fund, also spoke on the panel.
The conversation revolved around the future of cryptocurrencies, blockchain technology and artificial intelligence. Cryptocurrencies are digital forms of currency, like Bitcoin, that use blockchain technology. Blockchain uses a decentralized, public, digital ledger to record encrypted transactions. So what you end up with ideally with a cryptocurrency is an encrypted form of decentralized digital currency. Though the technologies are relatively new, they have created an entirely new industry full of investors, users and developers.
On the panel, Demeester served as the proponent of cryptocurrencies, though he was mostly supporting Bitcoin and was much more skeptical of other cryptocurrencies; and Eichengreen served as the opposition, claiming cryptocurrency was unreliable, risky and volatile. Kaplan fell somewhere in between, skeptical of cryptocurrency but providing a rather positive outlook on blockchain technology.
"Where it hasn't met expectations is as a transactional currency," Kaplan said. "It flunks a number of tests—the most important being that it's not stable."
Kaplan was referring to the exchange rates of cryptocurrencies which started relatively low. Then as people started to feel less secure about the stability of the currencies run by their governments, the rates started to rise, panelists said. They skyrocketed late last year into early 2018 only to plummet shortly thereafter.
"In the payment space, this is not the most exciting or innovative thing going on," Kaplan said.
But when it comes to blockchain, Kaplan changed his tone, suggesting that the applications are endless. And he's not alone. Apple co-founder Steve Wozniak has called Ethereum, a blockchain-based platform for transactions beyond currency, the next revolution of information technology, saying it could rival the revolutionary power of Apple, Hersh said at the panel.
While he recognizes the growing applications for blockchain, Kaplan is more focused on the rate of technologic transformation and the demand that will place on employees across industries.
"The world is transforming in ways … that the question becomes what do we do that's distinctive?" he said about human workers. "It puts tremendous pressure on education and the adaptability of the workforce—creating more haves and have nots."
Industries are already seeing some of that transformation with the introduction of artificial intelligence, which is changing the way companies can distribute computing power. It's a rate "we've never seen before," Kaplan said.
And this is particularly concerning for people without college degrees, who may have a harder time adapting to higher-skilled jobs. They could see their jobs being disrupted, which could drop their incomes or eliminate their positions all together, he said.
"It's very promising, AI and a lot of these great tools we have, but our education system has not caught up," he said. "Skills training has got to be dramatically beefed up to keep up with the dramatic rate of change or we're going to have a lot of challenges in society."