WEF: Blockchain to Form Foundation of New Financial Infrastructure
Distributed ledger tech will play a key role in the foundation of next-generation financial services according to a new report by the World Economic Forum (WEF).
Released today, the 130-page report aims to provide a “clear view” of how financial services could be reimagined by combining blockchains and distributed ledgers with existing and emerging technologies including mobile, machine learning and robotics.
Overall, the WEF report stressed that distributed ledgers should not be viewed as a “panacea” or held back by existing financial “orthodoxies”. It further emphasized that applications of the technology will differ by use case, but that all will bring a great simplicity and efficiency to the global financial system.
Finally, the WEF sought to call on the full diversity of industry stakeholders to collaborate to bring about this future, stating:
“The most impactful distributed ledger technology applications will require deep collaboration between incumbents, innovators and regulators, adding complexity and delaying implementation.”
Perhaps the defining feature of the report, however, is the clarity with which it outlines the benefits for distributed ledgers, calling immutability, transparency and autonomy “transformative characteristics” that are unique to the tech.
It identifies nine use cases that highlight its potential and six value drivers it believes are powerful enough to fuel transitions in these areas.
Participants in the report included a wide range of financial industry leaders including BlackRock, MasterCard and Visa. Further, startups as diverse as Bitfury Group, Consensys, Eris Industries and R3CEV provided subject matter expertise.
The report builds on previous work by the WEF to better understand the technology. To date, this has included mentioning blockchain as part of its 2015 ‘mega-trends’ report and holding distributed ledger workshops this year in Australia and New York.
Also identified in the report are three primary hurdles for the technology. These include an uncertain and “unharmonized” regulatory environment, nascent standardization efforts and the absence of legal frameworks.
For instance, the report theorizes that in order to best reimagine global payments, banks will have to make additional considerations, such as how they would hold cryptocurrencies running on a distributed ledger as assets on their books.
In this light, the WEF stressed that bringing distributed ledgers to life will require infrastructure replacement, legal and regulatory changes and the alignment of industry participants who may today be driven by different interests.
Additional research is also needed, according to the WEF, which went on to outline four questions it believes need to be answered moving forward.
These included determining the “financial viability” of distributed ledgers, creating roadmaps for market collaboration, working on improved governance models and better understanding regulatory challenges ahead.
For more information, read the report in full here.
Images via the World Economic Forum; Shutterstock