The evolution of blockchain, smart contracts and its role in data distribution – Ledger Insights
This is an opinion piece by Mark Smith, CEO of Symbiote.
As we reflect on 2021 and how early adopters of enterprise blockchain technology have benefited from the efficiencies generated by new technologies, we are optimistic about the future of the blockchain industry, particularly in capital markets and financial services.
It is becoming increasingly clear that blockchain can dramatically reduce risk in a way that impacts bottom line. We have tested a range of capital market applications and see a growing appetite and plenty of opportunities to troubleshoot OTC, OTC, stocks and indices back office issues. In addition, we believe that major financial institutions will consider blockchain as the solution of choice in the field of green energy.
In 2021, we saw huge projects come to life, including some of our own key initiatives with our Smart Collateral app, in which we demonstrated the potential of blockchain to reduce counterparty exposure by around 80% on the forward exchange market compared to the current convention. . Asset managers such as Vanguard and custodians such as State Street have been blockchain champions in the industry and through our collaboration we have led the evolution of the FX industry into a new realm.
Eliminating the reconciliation issues inherent in data applications is another key area of opportunity for enterprise blockchain. We strongly believe that the role that blockchain can play in data will become clearer in 2022. Models have started to emerge on how to integrate blockchain with existing data solutions to improve overall data quality and deliver more of value to end users of the data.
Overall, our prediction for the next year is that blockchain technology within institutional finance will play a critical role in improving speed, efficiency, and transparency while correcting the complex issues of business. financial market infrastructure.
In the early 2000s, we saw technological innovation take off in capital markets, but it was limited to the front office. So far, technological innovation in the back office has been ignored and overlooked. Smart contracts are the next generation applications for solving financial market infrastructure problems. As we proved at the end of this year with our partners, blockchain technology will be the technology of choice to modernize operations as more financial institutions seek to optimize costly and inefficient processes and outdated applications. who support them.
When a blockchain is used as a registration system for financial instruments, a smart contract will do more than just improve operational workflows; it will make the transition from traditional financial markets to a digital infrastructure shared by all market players. Blockchain technology allows financial instruments to suddenly take digital form for the first time.
Finally, as ESG continues to grow, we anticipate that early adopters of enterprise blockchain will also see the benefits of using technology to solve problems in new markets. This innovative technology can easily solve the environmental, social and governance problems encountered today. There is currently no effective platform to solve green energy projects and we believe that blockchain can significantly reduce contract negotiation time while lowering transaction costs.
A smart contract is a “contract” that governs the behavior of computers rather than that of people and organizations. And a blockchain, because it is a decentralized and internally consistent system, can serve as a platform on which stateful decentralized applications, such as smart contracts, can run. With blockchain technology, financial instruments can be objects in smart contracts.
At Symbiont, with our Assembly blockchain platform, we use smart contracts to model the complex business logic and multi-stakeholder workflows of traditional financial instruments that can themselves live entirely on a blockchain network. In conclusion, we strongly believe that the widespread adoption of blockchain will continue to increase dramatically in 2022.