2 min readDistributed ledger technology (DLT) or blockchain has everyone in finance talking. While it has the potential to be used for many different purposes, companies must assess the individuality of the issues they face, and whether DLT is an applicable option.
Before jumping on the bandwagon, ask yourself some of the following questions:
Do I need it?
DLT allows for one record of truth—a clean and immutable record, with decentralized access to an ever-updating system. However, at its heart, it is a technology and must be treated as such; not a silver bullet to all your problems. Yes, it has the potential to reduce technical and process overheads. However, the opportunity cost and alternative solutions need to be carefully assessed, along with your customers and partners before you go replacing proven, established processes and infrastructure.
Can I make it safe?
Most agree that establishing decentralized trust using DLT is a key benefit, but not all agree on the potential transparency that comes with it. Therefore, how can this technology be leveraged for your specific market or business to engender trust without breaching the confidentiality so necessary in financial services? Do you have the knowledge or the partner to ensure implementation won’t leave you or your partners with vulnerabilities?
Who is this for?
The D for “distributed” is critical. Understanding what will be distributed and to whom and why are all questions that must be addressed in advance of making any decision around the type of distributed ledger ecosystem that might be most applicable. Once you have clearly identified what every participant in your new world looks like and what they have to gain from distributing certain aspects of their business, then you can have meaningful discussion around how to organize your DLT ecosystem. Wh ether using a public, private, or consortium-based environment depends entirely on the governance questions that need to be asked and addressed up front. Understanding the benefits and drawbacks of certain DLT models will help drive decisions around which governance models are right for you and your partners to leverage this exciting opportunity.
Interested in learning more about how DLT can work for your business? Check out our latest white paper, “Can DLT Work for My Business?”