The recent price surge in Bitcoin has brought renewed focus to blockchain and distributed ledgers. Whether you work in financial services or technology, chances are you’ve read about how blockchain will disrupt everything. It is only a matter of time.
What’s harder to examine is the substance behind the hype – a balanced analysis of the technology and business needs conducted from a first-principles standpoint.
In this context, a recent paper by the Japanese Exchange Group (JPX) offers details of proof-of-concept experiments conducted by bank consortia. The paper reveals key compromises made to blockchain-as-we-know-it to adapt to the real-world needs of the market participants and regulators.
We find that the initial use cases for Banking Blockchain v1.0 reside squarely in back office processes. Proposals of mutualization of expensive back-office and client on-boarding processes make intuitive sense, though regulatory and legal implications are as yet unexplored. Also missing thus far are suggestions of new revenue-generating opportunities.
This post explores these issues in detail.