by Miloslav Hoschek, PhD., e-Silk Road, NGO
ECB as a First Lump of Sugar in a Blockchain coffee
The blockchain technology is destroying infrastructure of existing systems with no intermediates and without central authority. Every ledger entry is retractable across its full history and can be reconstructed. Every node applies the same rules and real
Transaction linkage – every transaction record is linked to previous transactions and is standardised for every participant role. There are the standardised rules and conditions applied to a transaction distribution. There is a standard network protocol
that allows every participant node to receive every transaction and apply same validation rules.
Every node adheres to that standard and can have a full copy of the data. Records or blocks of transactions are added to the blockchain and include a link to the previously added block. There is the single standards for how every node stores the transaction
data /ledger data.
DLT are not present simply a ledger of transactions, that is essentially replaced to all of the cooperating servers. Every transaction record / ledger is linked to previous transactions and is standardised for every private participating mode. This is official
point of immutable recording of decentralised transaction. This Consensus of the standards and rules for how every node exchanges the blockchain information. The mathematical rules for all nodes to agree on the integrity of that data . All data is encrypted
in common manner and can be only decrypted and inspected by the owner of the required keys to the data.
Every ledger entry is retractable across its full history and can be reconstructed. Transaction linkage – every transaction record is linked to previous transactions and is standardised for every participant role. Every ledger entry is retractable across
its full history and can be reconstructed. There are the standardised rules and conditions applied to a transaction. Every node applies the same rules. Newer version of a blockchain have expanded the scope and capabilities of those use which form the basis
of what is called „smart contracts“. Transaction distribution / there is a standard network protocol that allows every participant node to receive every transaction and apply same validation rules.
DLT may well offer enhanced efficiency in payments, that involve multiple currencies. There are many issues to consider before the decision to take a DLT based systems. Blockchain can be unable to handle large number of transactions, such as blockchain script
less bond issuance, blockchain Letter of guarantee modules, bond allocation.
BIS Basel as second Lump of Sugar in Blockchain coffee
Data is more important than the payment, it is associated with DL models. History for Asset of Assets ensuring a common shared version of TRUTH. The DL can provide an immutable digital recording of an assets. Blockchain payment decentralised
platform as a shared ledger, used by every trusted party, involved in trading a particular asset establishes a network and data standard that can be integrated with tools, work flows and AM assets management systems in a simplified consistant manner.
Byzantine Fault Tolerance is a decentralised notary using ccombination of – scalability, resilience. Confidentiality and finality. Trust Boundaries is a place,where the ledger integrates within anything that is not in a ledger, such
as on boarding trusted entities as ledger members or entitling an entity and that those assets ore property secured off the ledger.
For DLT to reach their full potential, all these functions, which exist in the current post trade process and have been constructed over the years by the experts and industry professionals, will need to be integrated into this platform. DLT offers between
decentralised processing and the more traditional computing model of centralised processing. Decentralised processing is by definition, a shared computing function among members of community ‚ which requires synchronisation and co-ordination.
Present DLT does not include any of extensive reprocessing logic, that often accompanies complex matching, allocation or other processes, what precede the point at which a transaction is ousidered complete. A valuable feature of the DL platform is that all
transactions are considered immutable and never to be modified, cancelled or revoked. DLT is an emerging technology , does not include supportive work flows, does not include supporting work flows and exception processing or reporting or analytic tools ,
it does not improve upon existing data retrieval, enquiry. It does not allow data searching tools in a manner that is even equivalent to modern databases. It does not integrate with a modern data tools and it does not address the non-functional requirements
of most processing systems.
Several consensus banking algorithms tested that Blockchain decentralised database fully failed. They are not achieving the full certainty of a transaction and to be inefficient in term of both costs and energy consumptions. Banking Blockchain Technologies
infrastructure platforms such as Hyperledger, R3’s or Corda in with Blocks, matchmakers operating across multiple modes for matching on a DL platform may have at present functioning payment processing limitations in capacity, efficiency and certainty of
payments, compared unfavourably against current systems T2 and T2S.
Every transaction record / ledger is linked to previous transactions and is standardised for every private participating mode brings a lack of blockchain scalability and privacy issues. The transactional Transfer of that Asset for value shared among the
others parties in the Ledger Network. But if the Asset itself is in Psychical Form or not Shared Directly and Completely on the Ledger, then the centralised Trust Remains with a Custodians of the Asset to ensure the Asset exists, is protected, and is not entered
into multiple disconnected shared ledgers. e-voting for bondholders via Blockchain providing a cryptographic proof that the tokenised votes, e-voting platform as well as a blockchain solution for recording commercial they cast from anywhere in the world are
properly counted, to avoid miscounting and double voting.
SWIFT services industry as a third second Lump of Sugar in a Blockchain coffee
All current work of DLT financial contracts, that could be encoded within distributed ledger of transactions has been done without regulatory oversight. In decentralised design requires significant computing and storage resources, because all nodes perform
the computerisation's. To store of ledge data which can also result in significantly increased network bandwidth requirements depending on the number of network and the size of network and the size of each transaction. In contrast, the use of centralised
processing provides a single view of information with a single judgement on a truth, typically on a single machine. It is certainly possible to take some of the paradigms of a distributed ledger platform, such as improved security.
Blockchain technology would eliminate SWIFT financial markets infrastructure, such as Central Securities Depositories/ CSDs and Central Counter Parties/ CCPs. Cash pro-mobile Apps to dramatically lower transactional costs, automate manually processes .
Some smaller CSDs are largely depended on settlement fees and have been reduced as a consequence of T2S. CSDs are facing difficulties in implementing the new business model, since it has become more expensive pricing of certain post trading services change
due to the CSD and T2S.
Identity and Access Management Systems are critical components of every financial industry organisations infrastructure within every financial firm, associating a user identity and their account of assets holdings requires a customer on boarding process
and proven its ability to survive attack. wheather a central single source of trust is required or whether the advantages of the decentralised ledger approach could be leveraged.
In real time. Blockchain application with common SWIFT service standards tested and validated the PoC‘ s Blockchain API , payment tracking apps, sanction screening, nostro account reconciliation via Hyperledger Fabric V1.0 Tech and acted validation group
to the further test the app. SWIFT „stop and recall“ calls via gpi treatment, the biggest overhaul of the cross border payments since 1970s to replace Telex.
A new adoption of full gpi service for SWIFT allows to extend the scope of multi-lateral testing of blockchain appl. , thus add considerable weight to the findings. This evaluate how the technology scales and performs PoC is a part of SWIFT gpi / trials
on a use of DLT.
SWIFT had signed a MoU with several CSDs/Central Securities Depositories to explore how DLT can be used to improved oost trade processes such as corporate actions proxy votings, trade processing. SWIFT/CSD WG on DLT will explore feasibility of using existing
standards such as ISO 20022 to support any DLT initiatives.
Global Payment Innovation, service, its new standard for cross-border payments to Innitiative solves many of the points experienced by corporate clients. SWIFT is running its own PoC – Proof of Concept with Blockchain real time visibility accounts called SWIFT gpi innitiative,
where several banks and open a closed communities are testing wheather technology can help banks their international nostro accounts.
Blockchain projects face many uncertainties and complexities wheather financial, legal or technical. Blockchain as a specific kind of distributed decentralised database, which save repeated and increased number of files. Data are saved do self-standing chains
called „block, they are put to chain one after other / therefore chain. Current Settlement Times are more at T+3 for Money Transfer and Securities with Added Costs to the SWIFT messaging protocols and Securities Trade Compliance and Regulatory Compliance. In
banking can blockchain Decentralised Platform eliminate the need for third parties, to collect customer info and associated credit application data in the cloud for an immediatable network and reduce costs and decrease settlement time for money transfers and
Funds migrate to DLT market infrastructure
Blockchain has strong encryption to enable STP and automated reconciliation by using DL to record and transmit payment instructions. In some markets we had seen custody fees being increased to compensate for this effect/the cost base has not been changed. Blockchain to
develop a common global market place fo trading and settlement of mutual funds. DLT has strong potential to dramatically lower transactional costs, automate manually processes, reduce opportunities as for fraud and risks. This enable the tokenisation of
existing securities and non-bankable assets to make previously untradable assets tradeable. Blockchain technology and global financial systems we can realise greater operational transparency and inter ledger open outsource protocol as an alternative global
standard decentralised depository and custody or post trade processing decentralised/P-P, data management or confirmed asset Trades, peer to peer. asset or securities issuance and servicing for more complex assets types, trade validation, assets monitoring,
over the counter trading recording, matching, collateral management, netting and clearing in real time settlement, where security keys are required to gain transactions output and so on. Capable of settling basic corporate actions analyze the technical performance
and the scalability of this kind of blockchain applications such as Blockchain prototype. Coupon payments on securities, Redemption of maturing securities. Maintenance of confidentiality and access right, which will be done in a blockchain based concept on
the basis of flexible and adaptable rights framework
Blockchain decentralised payment platform without central authority with no intermediates has risk of repeating the past and creating countless new siloed design of financial industry.
Regulators and pension fund have to know who the lender and borrower are and what kind of collateral they have in transactions. The idea is to run the Blockchain based system in paralel with its existing system with the goal of migrating the process of complexity
to a DLT to track collateral relationship.Cloud computing and DLT in risk models and business processes using Blockchain for shareholders proxy voting suing Blockchain company registration using Blockchain to reduce barriers preventing investors from participation
in shareholders voting.Using Blockchain as the market alternative investment for smaller firms and start ups to power a new service ,to enhance delivery and payment processing, mitigate the risk of supply or shortfalls and to provide secure transactional
data. Blockchain Technical platform could decrease infrastructure costs for Cross Border Payments
There are significant regulatory considerations, particulary around privacy protection for non public personal identity information for smaller and more occasional users. Identity and Asset management are often one system within financial firms that have
single source of TRUTH and are highly integrated across their entire portfolio of front-middle and back Office applications.
The Asset Management Industry continue to outsource data management and standard reporting. The Blockchain AM services will provide a safe solutions environment for issuing, securities lending and trading digital assets , to reduce errors, possible fraud
and processing time for each transactions / private Blockchain network for the Exchange of information where participating banks and regulators will also operate nodes. The key thing that Blockchain will provide is transparency related to the collateral in
the lending short site.
Hyperledger fabric prototypes related to Blockchain technology
Every node adheres to that standard and can have a full copy of distribution ledger records or blocks of transactions are added to the blockchain and include a link to the previously added block. Every transaction record / ledger is linked to previous transactions
and is standardised for every private participating mode. This is decentralised consensus point of immutable recording of transaction. The mathematical rules for all nodes to agree on the integrity of that data . This consists of the standards and rules for
how every node exchanges the blockchain information.
Identity and Access management systems, with their non-public, personal information and keys to financial holdings and have also become the most appealing target for attack. The current reality is that systems considered unbreakable and extremely secure
are being compromised with relative ease. Given the nascent nature of DLT, data associated with identity would not be appropriate to have shared on decentralised ledger.
The new Blockchain technology is used for an original documentation service using Blockchain infrastructure build of a Hyperledger fabric is working on several prototypes related to Blockchain technology and DLT / Solution for cross border securities transfer.
Prototype for the settlement of securities transactions technology based on blockchain from Linux Foundation s hyperledgers project and will allow for functionality for the settlement of securities in the DvP - Delivery versus Payment mode for centrally
issued digital coin ts / as collateral .
Blockchain post trade environment technology enables real Time Settlement off Board Trading Market or OTC securities and settlement and clearing platform contributing to cost reduction to facilitate securities trading between buyers and sellers to enable
equity shares of start up companies to be traded on in the open market The technical performance analyse and scalability of this kind for post-trade, improving operations efficiency, reducing transactions costs of Blockchain speed of execution apps for mid
size and small companies to make cross border settlement easier and more efficient and to create new systems for the trading of low liquidity assets
Blockchain Outsourcing core banking and payment systems to the public cloud growing shift towards operational risk – moving towards more technology based solutions based on Security System Focusing along with document type and document URL are stored in Blockchain ledger
document and identify authetifications ,serviced on high level of security both via cloud and on location, while supporting all protocols and applications, Low cost security, Authentication of electronic signature of the certification authority to share information
of documents build on Blockchain technology
To establish blockchain based SE by integrating equity trading into Exchange platform to publicly traded equity on a Blockchain based Exchange platform fully in use the blockchain control for all trading for listed and non-listed companies and private
securities issuance using Blockchain technology completely that can record a private security transaction using a new DLT to record and transmit technology based on Blockchain payment instruction.
Finality in the Security World that means the number of players in the post trade area. Working on a new methods to overcome such scalability hurdles and harness the potential of blockchain to the bank guarantees process for commercial property leasing. Defining
the fundamental building Blocks to Integrate a transactions ledger into an enterprise, Integration with existing systems of financial entity information, user identity Information
DL eliminate manual interactions, data exchanges and reconciliations with the other systems and help enforce industry standardisation of data formats. DLT provide a platform to reduce time and risk to complete a transaction. There is the single standards
for how every node stores the transaction ledger data. The inherent authorisation and encryption of the DL improve the overall security of this business process and its data information that support transaction processes.
The Transaction Distribution model with complete traceable transactions, which is more resilient to local database corruption. Blockchain real value comes about from technology being adopted more widely acress the transaction banking industry. The different
technologies and supports the creation of blockchain standards trial also addressed other tracking and reporting of a guarantee status through multiple changes ensuring standardisation and interoperability to generate more business and improve services to
clients, particularly in trade finance.
A secure DL have the potential to modernise streamline and simplify the existing siloed design. There are several key building blocks for leveraging distributed ledgers in financial services, incl. Creating an Idifine number of Different DL silos will
add costs, complexity of
steady stream in the technology Reducing risk of complexity in financial market infrastructure. Blockchain as network and database removes friction around delay, costs, poor integration of to payment Instruments enabling financial institutions. Blockchain ability
to target and customise rewards, redemption can be dramatically increased of platform of fully scalable and robust blockchain Value amplified for the end user based loyalty solutions.
The conuterparty‘ s ability to properly settle trade is it being settled daily how do price move, using tools. as market risk, Asset and counterpart risk. Operational risk of incorporating Blockchain onto legacy systems. A new Risk Management Protocols
with mass adoption of Blockchain Technology. A new Account Segregation Reconciliations requirement with a new DL Solution for investors, listed companies to replace present. The best authentication model for interaction with TPPs. Maintaining independence
of elements it is Redirecion Embedding Decoupling, banks hires more engineers that traditional bankers, same day end to end delivery with full tracking and transparency and Transforming the cross border payment experience, but the security keys are required
to gain transactions output and this is official point of immutable recording of transaction.
Are preventing banks from using DLT to process cross border payments, hindering mass adoption of Blockchain technology. Exception processing or does not include any master data about legal entities or securities. Direct Access to Global Payments increase
Operation Efficiency and ease to reconciliation with real time visibility of Payment Transactional Activity on the DL, without endorsement The latency of this model is virtually zero where adaptation of formally defined standards for financial Instruments,
same participants will no longer be able o borrow even collateralized credit lines. Blockchain and Authorising Access to Customer Bank Accounts, with no longer be able to borrow without providing collateral. Collateral management capabilities are this gaining
importance, where blockchain and P2P Connections between Banks Banks and Payment Service Providers, included risk of repeating the past and creating countless new siled solution. Blockchain and Business Identity information verification and shared before
the time of Internet users has less patience with it in In the world of instant information , anywhere, anytime. All nodes perform the Computerisation and Store of Ledger Data transactions could become a security bottleneck.
Blockchain funcionality works, but the question mark is about performance, the use of distributed ledgers to match nostro reconciliations with each bank operation own node
operational testing of a Blockchain capabilities for cloud enabled trading and clearing infrastructure. Cross border instant payments need of wide development of instant payment project on blockchain based interbank reconciliation to first group of lenders