The World Economic Forum (WEF) and Deloitte have concluded that the blockchain is “the future of financial infrastructure” in a new report published today.
Also read: Central Banks’ Fedspeak ‘Reflects’ Bitcoin Disruption Fears
World Economic Forum Praises So-Called ‘DLT’
Both parties announced the results of a year-long study based on the findings of their 2015 report, “Disruptive Innovation in Financial Services.”
The report spoke consistently of the virtues of so-called “distributed ledger technology” (DLT), and how it could transform the financial sector.
“DLT has great potential to drive simplicity and efficiency through the establishment of new financial services infrastructure and processes,” the first of its “key findings” stated.
“DLT is not a panacea,” the report continued, “instead it should be viewed as one of many technologies that will form the foundation of next-generation financial services infrastructure.”
Traditional finance has frequently turned out research lauding the possibilities of blockchain technology in particular, but when confined to aiding organizations like banks, such technology can lose the disruptive characteristics for which it is known.
Specifically, references to DLT have often been accompanied by warnings of the need for further research, or the possibility of damage to fiat-based finance sectors.
In the latest WEF report, a further issue was identified, describing private blockchains as “immutable” — no evidence is supplied to prove bank-instigated blockchains would be free-floating. Proof-of-Work mechanisms, which prove immutability in public blockchains, could be absent, according to the report.
Bitcoin.com reached out for clarification on the immutability concept, with a reply still forthcoming.
@COINSULT @wef not quite sure how they assume DLT = immutability in that report
— Allen Scott (@allenscottoshi) August 12, 2016
Distributed Tech, Centralized Control
Meanwhile, the report stated that applications of blockchain tech “will differ by use case, each leveraging the technology in different ways for a diverse range of benefits.”
The ties to legacy finance are apparent even in the WEF’s projections for DLT. The report incorporated further jargon, including “digital identity” and “digital fiat,” which appear inextricably bound to a future that includes the blockchain.
“Users of formal financial infrastructure will demand high levels of liquidity between assets on the system and fiat currency,” the report stated, at the same time noting that “correct identity information is critical to ensuring financial transactions are accurate and compliant — but integrating physical identity protocols with DLT creates frictions and increases the potential for errors.”
Nonetheless, it is now widely assumed that the phenomenon of blockchain is not a temporary one. The WEF report predicted that by 2017, 80 percent of banks will have begun experimenting with it. Presently, 90 central banks have already started looking into the technology.
$1.4 billion has been invested in blockchain technology over the past three years.
What do you think about the fate of blockchain in traditional finance under the DLT label? Let us know your thoughts in the comments section below.
Cover image courtesy of the World Economic Forum.
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