What’s your Blockchain Strategy in the Decentralised New World?


Setup a google alert on blockchain, and these days you will be overwhelmed by the linkage of articles to blockchain.  At the high level, you probably want to assess if Blockchain is a disruptive technology in your space – if you have no idea what/how blockchain can impact you, then its time to cut to the chase fast, as there is the distinct possibility that the ground under you could change, more than likely forced by disruptive startup’s.

Reducing BackOffice/Legal Cost

The legal terms and conditions, appropriate financial and personal check required to trade, just on a personal level, let alone a corporate level are steep.  Could blockchain offer an opportunity to simply the legal paperwork chain, expedite the process, and reduce the paperwork mountain? Can SmartContracts  offer a solution?  Obvious proof of identify will be key, as it is today – think money laundering.
Eric offer insight into the reason why tokens are not the silver bullet in the world of blockchain.  Tokens have their place, but so do Smart Contracts – We need to have a chat about cryptocurrency tokens.
Private Equity – dealing with the “cap table management problem“.  Have a read of Symbiont CEO Mark Smith view of blockchain and private equity.
Putting shares in private companies on the blockchain, according to Smith, provides a perfect proof of concept for the technology’s capital markets applications.
“What can be done then is transfers to other securities. Because we did straight equity and debt, we demonstrated you can do a bond on the bitcoin blockchain and then you can do it on a permissioned ledger system,” Smith continued.

Disruptive Consortium

We’ve seen over the last few years a number of bank lead consortiums that have been driven by the need for bank to take charge of change, instead of waiting for change to be forced on them.  There have been numerous comments in the press recently from bank employees with regards to the disruptive change the blockchain will bring to finance.  Its inevitable that the banks will need to form a consortium to tackle the challenges to revenue that blockchain could bring. As discussed elsewhere, collateral, post trade, trading and more is being investigated by banks individually, at cost.  A consortium would allow banks to pool their knowledge and resources at an individual lower cost post to decide their collectively future in the world of blockchain, before their lunch is eaten by the startup culture.

Trading Lifecycle

Expect experimentation in ownership, transfer, payment, collateral, and more. Full-featured smart contract language from Symbiont offer a smart securities system, and not just for equities – built-in coupon payments for bond.  Central securities depositories, smart-bonds etc. Goldman sees asset ownership as being in the blockchain sights:
distributed ledger as a technology that would have “massive implications” for asset and ownership transfer.
Barclays and UBS appear to be playing in this space with Ethereum.  Clearly Blockchain is the new nuclear arms race in finance.

~ by mdavey on September 1, 2015.

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