DTCC Connection

Mar 16, 2017 • DTCC Connection

Blockchain and Distributed Ledger Technology: Lessons Learned

By Sophia Stuart

Blockchain and Distributed Ledger Technology Lessons Learned
Panelists (left to right): Jesse McWaters, Emmanuel Aidoo, Brian Behlendorf, Chris Church, Todd McDonald and Jennifer Peve

A year after the DTCC 2016 Blockchain Symposium, industry leaders, analysts and emerging technology players continued the dialogue at the DTCC Fintech Symposium 2017 in New York.

This year’s event focused on the impact transformative technologies such as distributed ledger, robotics, machine learning and cloud computing, will have on the post-trade ecosystem, market structure and market practices. The symposium also provided an opportunity to discuss regulatory and policy objectives and their impact on the financial services industry.

In the day’s first session, “Beyond the Hype of DLT: Hard Lessons Learned 1 Year After the Blockchain Symposium,” panelists set out to address how blockchain has evolved and what’s on the horizon for 2018.

The panel was moderated by Jesse McWaters, Financial Innovation Lead, World Economic Forum. Panelists were Jennifer Peve, Executive Director, Office of FinTech Strategy, DTCC, Emmanuel Aidoo, Head of Blockchain and Distributed Ledger, Credit Suisse, Brian Behlendorf, Executive Director, Hyperledger Foundation, Chris Church, Chief Business Development Officer, Digital Asset, and Todd McDonald, Co-Founder/COO, R3.

Vaporware No More

“About three years ago, a lot of people in this room, and I’ll put up my hand and confess to being one of them, might have looked at Bitcoin and thought, ‘well, that seems like nonsense,’” McWaters said. “But at Davos this year everyone asked ‘is 2017 going to be the end of blockchain tourism?’”

Aidoo agreed, adding, “My CIO went from: ‘This is vaporware to wow, if DTCC is looking at this, this looks real.’”

Peve noted that DTCC’s work with blockchain technology evolved in 2016. “By the end of the year we were focused on specific use cases clearly supported by addressing a market need or a business challenge,” she said. “While we haven’t achieved implementation of critical mass adoption, what we have done is we’ve seen financial institutions, technology providers, regulators, industry experts all come together to work towards a common goal.”

Delivering Practical Business Applications

So what’s being built for market, as opposed to still incubating in the lab? Plenty, it seems, according to the panelists. Peve pointed out the industry has moved from a “flurry of experiments” and little collaboration in 2016 to a focus on specific use cases which address a market need or a business challenge and an atmosphere of increased collaboration. She noted the recently announced partnerships with IBM and blockchain startups Axoni and R3, to re-platform DTCC’s Trade Information Warehouse onto a distributed ledger.

Behlendorf got a laugh from the crowd due to his bullish confidence in blockchain technologies, which, he claimed, persuaded him to “jump from my cushy job at a venture capital fund” last year in order to take on his new position. As part of The Linux Foundation, Hyperledger sees its role as an “umbrella” in forging collaboration amongst the open source software development community, particularly, as Behlendorf confirmed, toward its “Fabric and Sawtooth Lake products, to potentially public chain technologies, though with very much an enterprise bent.”

Privacy Versus “Controlled Transparency”

The panel then tackled the contentious issue of “permisionless chains” within an industry that requires top level security around data. McDonald pointed out there’s a “natural tension between auditability and privacy.”

Church confirmed they’ve addressed customers’ concerns at Digital Asset by segregating private data off the blockchain “which should really only be viewed by those who are a party to a transaction, and you only keep on chain the synchronization and notifications of those. And that helps with the scalability and also privacy.”

Priorities for 2018

All the panelists said hiring is an issue for 2018, as expected when dealing with still nascent technologies. But rapid adoption within the software development community means teams will scale fast, especially with the credibility major banks and DTCC all bring to the field. “The allure of distributed ledger technology is very strong,” confirmed McDonald. “There are probably dozens of folks that you don’t even know about that are hacking away on the weekends on this technology.”

What became clear throughout the panel discussion was best summed up by Church who said he felt 2017 showed these technologies had come of age - because the big players are now driving the industry forward: “The role of market infrastructures is absolutely cemented in the future. What they’re going to do and how they’re going to do it will be different, but it’s absolutely key to the success of this technology.”

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