Blockchain, introduced with the virtual currency Bitcoin, appears to be a significant breakthrough in financial record-keeping. Most of the leading banks, exchanges and governments worldwide are experimenting with blockchains to reduce costs and improve the reliability of their transactions.
However the CMCRC CEO remains sceptical. Whilst accepting that Bitcoin’s blockchain was a worthwhile experiment with proof of work an ingenious concept for untrusted networks, Professor Aitken noted that the practical use of Bitcoin’s blockchain in securities markets, particularly in settlement, was based on a misunderstanding of its purpose.
“For a start there is no concept of an issuer in Bitcoin’s blockchain and the distributed ledger is simply a movement from one ledger balance to another rather than a movement of value between one digitised asset and another. In others words in its current form it doesn’t address the settlement problem.”
Professor Aitken noted the CMCRC would release its answer to the problem of settlement on August 15 via a system known as Digi.Cash a free version of which is currently available on the App store or Android.