The World Economic Forum's latest authoritative blockchain report: Blockchain technology will form the basis of new financial infrastructure (download the full report)

Distributed ledger technology will play a key role in the foundation of the next generation of financial services, according to a new report released by the World Economic Forum (WEF).

The 130-page report aims to 'clearly demonstrate' how financial services can be redefined by combining blockchain technology and distributed ledgers with existing and emerging technologies, including mobile, machine learning and robotics.

Overall, the WEF report emphasizes that distributed ledgers should not be viewed as a “panacea” or held back by existing financial “orthodoxy.” The report further emphasizes that the technology has different use cases, but all of them will bring tremendous simplicity and efficiency to the global financial system.

Finally, WEF seeks to call on various industry stakeholders to unite and work together to achieve this future, saying:

“The most effective applications of distributed ledger technology will require deep collaboration among incumbents, innovators, and regulators, adding complexity and delaying implementation.”

However, perhaps the most important feature of the report is the clear outline of the benefits of distributed ledgers. Immutability, transparency and autonomy are the ‘transformative qualities’ that are unique to this technology.

The report identifies nine use cases that highlight the potential of the technology and six value drivers that it believes will drive transition in these areas.

The report was compiled by a broad range of financial industry leaders including BlackRock, MasterCard and Visa, with firms such as BitFury, Consensys, Eris Industries and R3 CEV providing subject matter expertise to the report.

The report builds on previous work by the WEF to better understand blockchain technology. So far, this has included a mention of blockchain as part of the WEF's 2015 'mega-trends' report, as well as distributed ledger symposiums held in Australia and New York this year.

Overcoming obstacles

The report also identified three main barriers to the technology, which include an uncertain and 'discordant' regulatory environment , new standardisation efforts and the absence of a legal framework .

For example, the report suggests that in order to best redefine global payments, banks will have to give more thought, for example, to how they incorporate cryptocurrencies that run on distributed ledgers into their asset range.

On this point, the WEF stressed that bringing distributed ledgers to life will require replacing infrastructure, changing laws and regulations, and aligning industry players with different interests.

The WEF said more research was needed and went on to outline four questions it believed needed to be answered .

This includes determining the “financial viability” of distributed ledgers , creating a roadmap for market cooperation , researching improved governance models , and better understanding future regulatory challenges.