This article in Forbes Community Voice hopscotches across multiple very complex blockchain, tokens, and securities related issues and suggests banks need to immediately prepare for tectonic changes the author expects these technologies will cause:
“Enterprise technology is nothing new. But it could hold the key to one of the greatest economic opportunities in modern history: blockchain technology and its role in digital finance.
Over the last year, major software giants such as IBM, Amazon Web Services and most notably Microsoft Azure, have entered the cryptographic landscape.”
Securities are not Mercator’s area of expertise, but as the article states there have been a number of ICO failures that should give us pause. The idea that software contracts can account for every possible situation, or that consensus can be reached by voting if a flaw demands updates is optimistic to a fault. Witness the many virtual currencies that have forked because there was a lack of consensus.
Security tokens stand to transform private capital markets when they can be deployed safely, compliantly and efficiently. We must think about the solution not in how regulation can be skirted but how it can be adhered to in a way that does not undermine the efficiencies and security provided by tokenization.”
Related to blockchain the reality is that blockchain technology is not the key consideration for partnering and data sharing. The first problem to be solved is deciding how data will be shared in a format that is flexible enough to address participants different perspectives and changing semantics (solved in ISO 20022 with business models that define how each data element is created) while also managing access to the data with permissions that change daily. These problems haunt database administrators today even in private implementations, but when this problem is opened up to trusted partners this data management problem becomes the first issue that everyone needs to agree on. Once that’s done, the evaluation of the appropriate technology to implement that data management approach can be undertaken. If the problem is evaluated in this order it wouldn’t surprise me if a more traditional cloud database model wins out in 95% of the cases.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group