This article appeared in the July/August issue of Practical Compliance and Risk Management, a journal published by Wolters Kluwer. It is printed here with permission.
New technology exists that provides a shared, immutable record of who owns which asset, and exactly when they bought or sold it. It provides a perfect audit trail. It can automate business processes that today are duplicated by many parties, and are slow, manual and error prone. It can enable real-time, desktop monitoring by both external regulators and internal compliance and risk management professionals alike. Distributed Ledger or “blockchain” technology is capable of all of this and more.
This article first explains what blockchain technology is, as well as related concepts such as distributed ledgers and smart contracts. It then addresses common questions about blockchain technology and how it can help the financial services sector. Lastly, it discusses blockchain uses for solving real-world problems and the promise of blockchain for more efficient and effective regulation.
Answers to common questions:(1) One blockchain or many?(2) Standards?(3) Cybersecurity?(4) Speed/scalability?(5) Privacy?(6) Timing?
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Bitcoin/blockchain, ex-Wyoming Blockchain Task Force, 22-year Wall Street veteran.
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