Blockchain is? Pick a headline: a) the global panacea for lots of ills, or b) all hype and more talked about than actually used. Does it matter? Unequivocally, it does. Well, at the very least, for those of us in Financial Services.
Is the DLT potential real, why haven’t we realised it, will we ever realise any of it? These are all questions worth examining. Here’s my view as we end 2019 and plan for progress in 2020. It’s a long piece; your feedback is really welcome.
Where’s the headphone jack on the latest iPhone? There isn’t one. If you want to use headphones, you need an adaptor. Compatibility is always a consideration when you try to take a big leap forward.
As we build out financial market infrastructures (FMIs) based on distributed ledger technology (DLT), face-to-face human interaction has much to contribute to the pace and direction of progress. This truth was self-evident at SWIFT’s Sibos 2019 conference, attended by 11,000-plus delegates at ExCeL London. I was privileged to moderate a panel discussion on the possible paths toward efficient digital cash settlement; a prerequisite step to realising new efficiencies, risk reductions and value in DLT-based financial markets.
We often read that we live in an increasingly polarised society, retreating too easily into digital echo chambers, inhabited only by like-minded souls. We also see divided opinions in the financial sector, such as over the adoption of technology innovations. When assailed on either side by fierce optimists and implacable sceptics, the pragmatist will remember that any new platform multiplies its chances of success by attracting a large and diverse range of participants.
Among the new technologies being explored, the crypto asset space is perhaps the most controversial. Certainly, it has earned many column inches, from Bitcoin’s surges in Q4 2017 and Q3 2019 to Libra’s recent launch. True...
Delivering a 'peer-to-peer' digital settlement asset for wholesale banking
In this third article in a series, we examine some methods for creating tokenized assets on a blockchain and set out some of the necessary prerequisites. Cryptocurrency was lauded as a way to control the supply and issuance of a medium of exchange without a third party. Making transparent the supply and issuance of this currency decouples it from unforeseen political events, such as quantitative easing.
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In this second of a series posts, we explore how a distributed Financial Market Infrastructure (dFMI), a Financial Market Infrastructure (FMI) based on a blockchain protocol, could have a system of governance that satisfies the relevant legal and regulatory frameworks and takes advantage of the improved economic mechanism features that blockchain can offer.
A major appeal of Blockchain, more generically described as “Distributed Ledger Technology” (DLT), from the perspective of financial market participants has been the promise of simpler and less risky operational processes. But this is only a part of its full potential and misses an even bigger story: how DLT will enable a big disruptive shift in the shape of financial market structure.