Distributed ledger technology is one of the most interesting innovations I have encountered in the last decade. Distributed ledgers allow groups of people to validate, record, and track transactions across a network of decentralised computer systems. Current developments confirm that the technology has potential well beyond Bitcoin, the cryptocurrency that revealed the technology.
With the increasing pervasiveness of computers and the Internet, the demand for distributed ledgers has grown. The technology offers very promising prospects for application in a range of sectors; including financial services. Distributed ledgers could be particularly relevant to identity, compliance, contract and registry management.
Distributed ledger technology is evolving. Experimental projects such as InterChainZ are a critical step forwards in so far they help to explore first hand the functioning and possible applications for the technology. These are essential to test the often-quoted security and integrity of the technology while driving learning within the financial services industry.
As a Member of the States of Alderney, I firmly believe that regulation has a role to play in supporting new technology and business opportunities. Experimentation with distributed ledger technology and related regulation is perhaps easier to implement in smaller jurisdictions. In this regard, the States are currently leading discussions exploring the development of a consultative Channel Islands Standard for Distributed Ledgers which would set out why financial regulators need standards for distributed ledgers, what type of standards they need, and how they would use them.
As InterChainZ reveals, distributed ledgers are essentially utilitarian function to support financial and administrative record keeping in enterprises; they provide straightforward functionality to record transactions and verify identity. However the increased security, speed and transparency they can provide for businesses and individuals offer a brilliant opportunity to transform financial services.
- Bob McDowall
Regulatory advisor to InterChainZ
Deputy Chairman of the Policy & Finance Committee
States of Alderney