Terry Roche
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While fierce debates rage over cryptocurrencies and ICOs, many within capital markets may be missing the ultimate point: The fabric of commerce is about to be fundamentally transformed. The revolution of decentralization is upon us. Cryptocurrencies and coin offerings, along with blockchain, are the enabling means for a new economy. Will the capital markets be involved?
Blockchain, otherwise known in capital markets as Distributed Ledger Technology (DLT), could potentially change the most fundamental foundation of capital markets: the transaction. DLT provides much needed functionality by embedding processing logic directly into contracts, decentralizing the trust needed for smooth risk transference, and bringing consensus-driven verification to transactions. DLT will have a tremendous positive impact on operational efficiency and cost overheads. DLT also will enable workflows to be created that will transform virtually all economic activity. However, standards and protocols are still being defined. Reference architectures are being contemplated and subjected to rigorous proofs of concept. And while there are now numerous production-level projects underway to bring the benefits of DLT to capital markets, significant challenges remain, given the complex technological ecosystem that is at the core of capital markets. For DLT to transform this ecosystem, it will need to operate within that ecosystem.