Blockchain and Distributed Ledgers: Permission Makes All the Difference

by John Dwyer, October 22, 2015
Other
Global, EMEA

Abstract

In this report, Celent deconstructs blockchain and distributed ledger technology into key constituent parts. The report then adopts a modular approach to identify components of the problems being targeted within capital markets to assess the requirements of a solution.

The Key Components

The constituents of blockchain versus distributed ledgers are different in certain key aspects. This report walks through these differences and the implications for incorporation into the capital markets.

Permissioned Vs. Permissionless

Celent provides definitions regarding the emerging terminology within this sector and additional perspectives on the potential of this technology in an effort to redefine how firms should be thinking about its disruptive potential.

A Framework for Assessing Startups

In our regular dialogue with clients, Celent recognizes that a framework is required to assess the many startups that have emerged. Therefore, Celent provides an overview of the key issues used to assess the startup community. Celent foresees pivoting of business models by certain companies within FinTech, which is likely to be the trend as the true potential of this technology begins to emerge and engagement continues to grow.

Path to Innovation

Finally we set out the three key issues for transitioning the movement of financial assets and consideration onto distributed ledgers, which markets are likely to see disruption first, and how fiat currency on a distributed ledger can accelerate and transform the potential of this technology.

“It appears that initial investments in this technology have focused on taking the first incarnation of blockchain and trying to fit it into the capital markets, rather than identifying capital markets problems and then establishing a solution,” says John Dwyer, senior analyst with Celent’s Securities & Investments practice and author of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Blockchain 1.0: The Idea Vs. the Reality

3

 

CryptoTech Vs. Cryptocurrency

4

 

Capital Markets and Blockchain 1.0

5

 

Five Key FinTech Themes

6

The Potential of Blockchain / Distributed Ledger

7

 

Redefining the Technology

7

 

Terminology

8

 

A Framework for Assessing Startups

10

 

The Paths for Future Innovation

12

 

Innovation in the Capital Markets — The Two Paths

14

Leveraging Celent’s Expertise

16

 

Support for Financial Institutions

16

 

Support for Vendors

16

Related Celent Research

17

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