Distributed ledger technology (DLT), more commonly called “blockchain”, has captured the imaginations, and wallets, of the financial services ecosystem. DLT provides transaction immutability, which is a key requirement for eliminating the need for an enforcer of trust in the ecosystem. Tamper-proof distributed data enables an environment in which trust is not an issue and allows counterparties to operate with a single version of the truth.
- Traditionally, asset and transaction information was stored within physical books to independently reference previous actionsinternally and externally. As technologies advanced, physical books were translated into digital ledgers.
- Today, every FI maintains its own digital “book of record” repository.
- As a result, central intermediaries proliferate in the industry, providing unbiased reconciliation services to facilitate transactions between counterparties without requiring them to trust each other. For transactions executed internal to the organization, reconciliation is performed within lines of businesses.
DLT transformative potential
- At its core, DLT is a growing repository of transactions organized in chronological blocks where the technology intrinsically makes changes to previous transactions functionally impossible.
- DLT has been designed to replicate data among participating nodes in real time, ensuring all parties operate off of a single version of the truth at all times.
Financial services implications
- Challenges information silos between market participants and eliminates the need for inter-firm reconciliation.
- Disintermediates central intermediaries and reduces the fear of arbitrage within the ecosystem.
- Enables audit trailsto be established for assets and transactions with a significant reduction in disputes.
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Posted in Fintech, Strategy, Technology Tagged with: Blockchain, Distributed Ledger Technology, DLT, Financial Infrastructure, World Economic Forum
The credibility of blockchain
The concept of distributed ledger technology — or blockchain as it is commonly called — has taken the financial services sector by storm, with venture capital and investment pouring into technology startups. Debate over blockchain’s promise, as well as its limitations, is ongoing. For every believer who says blockchain is the most revolutionary technology platform to emerge since the internet, there are skeptics who claim it is merely the latest tulip mania.
Nonetheless, a broad consensus is emerging that it represents a real innovation over many of the systems and processes used in financial services and banking today.
Our view of the credibility of blockchain technology is informed by candid discussions with clients, banks, exchanges, central securities depositories and existing market service providers. There has been an influx of attention and initiatives from market participants, including startups and newly formed industry consortia focused on driving technical standards and fostering collaboration.
While in the United States, the Depository Trust & Clearing Corp. is fielding proposals for a complete replacement of its credit default swap (CDS) settlement and reporting infrastructure, the Australian Stock Exchange is attempting to address changing regulatory requirements with a blockchain-based pilot. Regulators such as the Bank of England and European Securities and Markets Authority (ESMA) have published thoughtful commentary on the feasibility of digital cash and distributed ledger technology. Collectively, the tone of conversations has shifted from “Is this worth exploring?” to “How do we best engage?”
Financial commitments to blockchain are also growing. Investments in blockchain startups to date have reached $300 million, a figure that is growing swiftly. Investments totaled $125 million in 2015, and this has already been surpassed in the first half of this year. Although predominantly venture capital-backed, a handful of companies have attracted significant bank investment. Furthermore, we see growing internal spending by banks, which we estimate totaled $80 million in 2015.
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Posted in Fintech, Report, Strategy Tagged with: Asset Managers, Blockchain, J.P. Morgan, Olivier Wyman
La Financial Conduct Authority (FCA) pourrait donner des agréments à des entreprises utilisant la « blockchain ». Et si le Royaume-Uni post-Brexit était le théâtre du grand soir de la révolution financière ? On n’y est pas encore complètement, mais Londres s’y prépare. En effet, le régulateur britannique vient d’affirmer qu’il envisageait d’accorder son agrément à des entreprises utilisant la « blockchain » – cette technologie qui fait fonctionner le bitcoin – au cœur de leur activité.
Posted in Les Echos, Technology Tagged with: Blockchain, FCA
Plus mature et diversifié, le marché du bitcoin s’est distancé progressivement de l’économie informelle et du « web de l’ombre ». Les activités illégales, qui représentèrent jusqu’à la moitié des volumes, n’en pèsent plus que 3% à 6%.
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Posted in Les Echos, Technology Tagged with: Bitcoin, Blockchain, Cryptocurrency