By Shaul Kfir
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Discussing the State of Distributed Ledger Technology
By Shaul Kfir. Jun 1, 2021
Recently, I had the pleasure of taking part in Information Management Network’s Synchronize Virtual Series panel discussion “Market Trends in Distributed Ledger Technology.” Sandra Ro, chief executive officer of the Global Blockchain Business Council, moderated the event, which also featured panelists Csilla Zsigri, vice president of marketing and strategy at Blockchain Technology Partners; Janina Farr, project manager for new digital markets at Deutsche Börse Group; and Val Dahiya, partner and Perkins Coie.
The goal of the discussion was to uncover and discuss topics critical to the evolution of distributed ledger technology, such as interoperability, security, scalability, and regulation, as well as the challenges that currently exist within the distributed ledger technology (DLT) community and industry.
Here are some of the many key takeaways from the event:
Demand for enterprise DLT is quickly accelerating
In general, DLT adoption is beginning to cover a wider set of use cases and a wider set of industries, but businesses are getting smarter about it. “Many organizations are now setting their blockchain or DLT adoption strategies based on a more realistic assessment of the technology’s strengths and weaknesses,” Zsigri observed. As she pointed out, businesses are focusing more on pragmatic projects that don’t require large initial networks to provide value, but still solve existing pain points in business processes and deliver immediate value. This makes sense, because when businesses have real problems that need solving, technology typically gets adopted much more quickly.
Achieving true interoperability remains a significant challenge
When an application is developed, you can import library one and library two, but they’re two different pieces of code that other people wrote. You may want to add in your own business logic and compose that into a larger application, but without an interoperability protocol, similar to what Daml offers, that’s not really possible because the runtimes of those blockchains for library one and library two don’t really know how to make those things work across two separate networks. There’s a lot of code that the developer needs to start thinking about in order to synchronize applications across multiple networks. While we’re seeing the beginning of interoperability with solutions like Daml, I think the actual rollout will be a multi-year process.
DLT infrastructure is being built in parallel to legacy systems
One of the biggest challenges for large institutions or organizations is how to prepare for the future while also maintaining and improving on current infrastructures. With this the case, everything that’s done in the DLT space essentially starts in parallel to everything else on the legacy side. As Farr noted during the event, DLT teams build up infrastructure and then “pull a string” to legacy systems where possible, especially for regulated infrastructures. Sometimes a project escalates with DLT technology, but the regulation of the product itself won’t change. “These are like test cases where you can see how to use the technology without changing regulation, and where to tap into or work with existing regulation,” Farr said.
Speaking of regulation, the U.S. is lagging. Or is it?
On one hand, you could certainly argue the U.S. is falling behind when it comes to regulation, particularly as compared to Europe. At the same time, it’s all about context. “The U.S. still has the premier markets globally, so I think that there is a very deliberate and thoughtful approach when it comes to any regulation that might disrupt the functioning of those current markets because of the potential impact,” Dahiya said. She notes that there is a substantial amount of interest in increased innovation, and so regulators are beginning to provide more clarity to facilitate the adoption of technology. “I believe that that is happening behind the scenes, but it’s happening in a very thoughtful manner because of the breadth and scope of our market infrastructure,” she added. In that vein, she argues that the U.S. actually isn’t lagging behind, but rather taking a much more thoughtful approach because there is so much at stake.
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