Summary of major blockchain reports in the industry: Emphasizing the disruptive development potential of blockchain (download all reports)

The potential applications of blockchain in various forms have been described in great detail. If you take a quick look at the research documents of some multinational corporations, industry organizations, and central banks, you will find that they are all touting blockchain, distributed ledgers, and even Bitcoin itself.

BraveNewCoin (BNC) organizes various industry papers together, puts them under one theme, separates them by year and quarter, and each research paper has a concise summary. So far, BNC has collected more than 140 research papers. The following is a focus on the industry trends presented in these papers.

Not having a blockchain strategy today is like not having an Internet strategy at the beginning of this century. If your company has documents that need to be stored in a formal way, some people will suggest that you use blockchain technology to improve the trustworthiness and efficiency of your procedures.

The European Central Bank, in one of its many documents, has shown this tendency, distinguishing distributed ledger technology (DLT) from blockchain technology, defining it as “a store or database of information that can be shared across a network and can be either open, publicly accessible, or restricted to a specific group of people or organizations.” The report then argues that blockchain “makes this technology possible.”

There are other definitions besides these two, but this level of definition is a good reference and few people redefine it. But there is an exception. In January this year, Mr. Mark Walport, the chief scientific adviser to the British government, submitted a report to the government, which is probably the best report so far, describing the overall situation in this technology field. You can read its summary here: http://bravenewcoin.com/news/british-prime-minister-and-cabinet-advised-to-start-using-distributed-ledger-technology/

The theme of these reports is almost always the disruptive potential of blockchain. In December 2015, Goldman Sachs released the "Emerging Themes Exploration Research Report (full report download)" and boldly stated that "blockchain may disrupt everything." The Goldman Sachs report said that "the solutions provided by blockchain not only provide opportunities for consumers, but also provide companies with greater profit potential."

In April, Morgan Stanley Research released a 31-page report (full text download) examining the question of whether blockchain is a disruptive threat or a disruptive tool. The report addresses some misconceptions and points out 10 obstacles that blockchain faces before it can become a banking tool. "It is clearly an opportunity, but it is not realistic to expect it to have a significant impact on us in 2017 or 2018," the report said, which also includes an interview with Blythe Masters, CEO of Digital Asset Holdings.

Some reports also focus on regulatory policies. The European Securities and Markets Authority (ESMA), the European market authority, has published some reports on topics that hint at regulation, stating that it will regulate distributed ledgers and remain cautious about digital currencies such as Bitcoin.

“ESMA is concerned about emerging digital currencies such as Bitcoin, but it must be emphasized that ESMA’s work is limited to the application of this technology in the securities market. Of course, the related virtual currency payment issues are not within the scope of ESMA’s research. These issues are what the European Central Bank and the European Banking Authority should take seriously.” - ESMA

In June, ESMA published a discussion paper titled “Distributed Ledger Technologies for Securities Markets” (full report download), inviting public participation. “ESMA will use feedback from this paper to develop a case for the application of DLT to securities markets and assets, regardless of regulation,” the report reads.

In April, the European Central Bank (ECB) published a report titled “Distributed Ledger Technology for Post-Trade Securities” (full report download), discussing three application models of DLT technology in post-trade: peer-to-peer, full participation, and cluster participation.

At the end of the 35-page report, the authors conclude that “DLT may find a way to mainstream markets, if at all, and it will likely be done incrementally rather than revolutionizing the market.”

Also in April, the ECB released a nine-page report focusing on DLT in general, stating that “the Eurozone is keeping pace with developments and is considering all possible roles such as operator, catalyst or regulator.”

“DLT is a very new technology, so it is difficult to predict what impact it will have on financial markets and institutions. However, there are many interesting possibilities that deserve further study.” - ECB

The Federal Reserve will certainly not be absent from such a report, and it has its own regulatory views on blockchain. At the blockchain roundtable held by the Institute of International Finance (IIF) in April, Lael Brainard, a member of the Federal Reserve Board, gave a speech and tried his best to persuade regulators, saying:

“If the safety and integrity of these technologies are proven and their potential to benefit the public interest is discovered, then we should be prepared to adjust regulatory policies.”

He also pointed out that

"We cannot afford to assume that necessary change equates to greater risk."

The use of blockchain, including Bitcoin, as a tool for financial market settlement and payment remains the most common type of application explored by financial institutions, and overall these are the main content of most reports, all of which are reported in the first three years.

In May, SWIFT released an 80-page report (full report download) titled "The Impact and Potential of Blockchain Technology in the Securities Trading Lifecycle". Given that more than $40 billion is spent each year on post-trade processes such as clearing and settlement, as well as real-name registration and anti-money laundering procedures, the report infers that "blockchain technology can reduce the global securities market by tens of billions of dollars per year."

“Realizing the full potential of public distributed ledgers is not an easy process, nor will it be accomplished spontaneously. It will also cost a lot of money. It requires both buyers and sellers in the industry to sign investment contracts and commitments. Regulators must play an active role and not become stumbling blocks. The reward is a substantial improvement in corporate efficiency, which is a once-and-for-all investment in the future.” - SWIFT Institutional Research Report

Prior to this, in April, the company and Accenture jointly released a report (full report download) on how DLT can be applied to financial services. In this document, SWIFT and Accenture pointed out that if DLT wants to be widely used in the entire industry, it must overcome eight key issues. They include strong supervision, data control, compliance with regulatory laws and regulations, and scalability.

Just as you would expect to happen with Bitcoin, the application of blockchain in capital markets has been thoroughly studied by financial institutions, bill clearinghouses and exchanges.

In January, the Depository Trust & Clearing Corporation (DTCC) released a report (download the full report) calling on the industry to come together to realize the potential of DLT. "The industry now has a once-in-a-lifetime opportunity to reimagine and modernize its infrastructure to solve long-standing operational challenges," said Michael Bodson, CEO and chairman of DTCC. The report outlines the limitations of the current financial market and its improvements, and recommends that the industry's own organizations position themselves to guide execution in this regard.

In February, another post-trade financial services company, Euroclear, released a separate report (full report download) exploring the application of blockchain technology in capital markets. In their report, Euroclear urged authorities such as the European Securities Authority (ESMA) to develop relevant regulations for the application of DLT in capital markets. However, institutions such as DTCC and Euroclear also suggested that it would be more appropriate for industry organizations to take the lead.

Nasdaq, which has always been interested in cutting-edge technology, has long been exploring the use of blockchain in the financial market. They are also studying voting proxies. In January, Nasdaq announced that its private market Linq was the first to issue stocks on the blockchain.

The following month, the exchange released a report outlining its views on the EU’s capital markets union. After exploring the use of DLT technology, Nasdaq pointed out that the technology has potential in many areas, such as “payments, trade finance, trading, clearing and settlement, and transfer of physical property.”

Another very interesting report related to Bitcoin comes from ARK Investments, which suggests that Bitcoin should not only be considered as a real asset class, but that this new asset class can also be an ideal hedging tool to diversify investment portfolios.

ARK is not the only company to make such recommendations. In March, Needham, an investment bank and asset management company focused on growth, looked at the Hilbert Bitcoin Investment Trust (GBTC) and gave a buy recommendation with a price target of $62. "We believe that Bitcoin's price support stems from the growing demand for its functions, which are mainly two-fold: 'digital gold' and payment alternatives." The company wrote in the report. The current price of GBTC is $120, which is down from a high of $144.

In May, the U.S. Postal Service Inspection Office released a 26-page study (full report download) examining the potential for blockchain use in the U.S. Postal Service. The report outlines four ways to use the technology to improve efficiency and reduce costs on the part of the government, writing that “blockchain technology could impact the Postal Service in a number of ways.”

“By experimenting with blockchain in financial services, the Postal Service can improve existing services. In the long run, the Postal Service’s exploration of the application of blockchain technology in financial services will be expanded to other areas.” — U.S. Postal Service report

In its 2016 Technology Trends report for CIOs, Deloitte examined the potential of blockchain and other technologies. Deloitte explored blockchain’s ability to “democratize trust,” citing “the increasing number of trusts that are being maintained is expensive, time-consuming, and in many cases, inefficient.” Blockchain could have a profound impact on communications, transactions, and contracts, the company wrote in its report: “fundamentally transforming current business, government, and society.”

"Some organizations are exploring the blockchain technology behind Bitcoin, which may provide alternatives to current procedures and organizations, and blockchain can help create institutionalized trust in the current technical architecture." - Deloitte report

In their report titled “Israel: Blockchain Hot Spot,” Deloitte looked at a number of startups in Tel Aviv whose businesses are based on non-financial blockchain uses, such as international shipping supply chain alternative Wave, consumer protection company BitRated, and internet messaging client GetGems.

There are a lot of reports from other companies that focus on non-financial uses between companies, but so far, no papers have been published specifically reporting on non-financial uses. Please pay attention to our industry resources page (http://bravenewcoin.com/industry-resources/industry-research/2016/), our collection of relevant reports is expanding rapidly, and if relevant papers are published, it will only be a matter of time before they appear.