PCM vol. 3 issue 5

Thought Leaders Corner
Bringing Blockchain to the
World of Finance
by Anish Mohammed
The story starts a few years back, CTO of a very large
organisation was on a panel with me. He presented the
case that whatever “Cloud” offered was nothing new,
as author being the contributor to many of the thought
leadership pieces including “Cloud buyers decision guide”, it
was authors turn to respond. Having agreed with the CTO
that what he was suggesting was true, however one thing was
going to be changed, transparency and ability to take actions.
Until then everything that happened was communicated via
the “IT” department. This was disintermediation of one kind,
fast-forward time to present, no-one has any doubts that Cloud
changed the world of IT. It’s worth billions, and Amazon made
a killing out of it, still with an offering which is questionable
but not yet enterprise ready.
Recently the author was on a panel with the CTO of one the
largest banks in the UK. The topic of discussion was blockchain,
the CTO in question described blockchain as “write once read
many times”. The author agreed to disagree with him, its far
too simplistic a view to take on things. Lets try look at this a
bit more detail. The very least blockchain would bring to the
world of finance is the following:
• Improved effciencies
• New trust models ( and disintermediation)
• Provenance
• Ability to attach policies to code ( smart contract)
Improved efficiency - lets look at this with a “cloud” glasses
on. When cloud was introduced, everyone understood what
efficiency means. One could monitor usage of the cloud and
could turn the tap off once the use was over. In the blockchain
world, it’s more the case of transactions that did not make
economic sense that suddenly becoming viable. This is similiar
to how this situation changed for startups doing MVP during
the pre-could days and to do one in AWS these days.
New trust models - this is could also be seen as
disintermediation, the parties that traditionally controlled
access to something getting bypassed. Let’s go back to the
cloudy world, in the pre- cloud world the IT departments were
the masters of the domain, they controlled who got access
to infrastructure and when. Now in the new world order,
anyone with a credit card could get access to computational
infrastructure on AWS. How does this translate to blockchain?
The pubic blockchain has the decentralised model of trust.
That means, the value that intermediaries bring to the table
has been decreased significantly. What does this mean for
finance? Entities which traditionally had the ability to do
transactions of no value add high overhead intermediaries
would find themselves being bypassed.
Provenance - this is something which is harder to explain
by cloud paradigm. But it’s easier to explain from a finance
perspective, the basic reason behind the financial meltdown
in 2008 was CDO’s or collateral debt obligations. This could be
thought of as aggregators and wrappers, if one were to wrap
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