Blockchain has sparked a new wave of innovation in financial services. And, it’s easy to see why. Consensus mechanisms, which provide the technology infrastructure for blockchain and other continuously evolving distributed ledger technologies, hold tremendous potential for financial services. They offer the potential to execute transactions in discreet, efficient, and highly cost effective new ways than the existing centralised network in financial services. As innovation accelerates, proponents are eagerly seeking solutions that may work within the current regulatory framework for financial services. As you’ll discover from reading our new whitepaper, it’s an opportune time to think through how distributed ledger technologies can be effectively and efficiently used to overcome previous challenges and seize a host of potential new opportunities for the future.
Certainly, building consensus is not a new concept. It’s a way for a diverse group to make decisions without conflict. And within computer science, consensus has become the backbone of blockchain and other distributed ledger technologies. In distributed ledgers, a consensus mechanism is the way in which a majority (or in some mechanisms, all) network members agree on the value of a piece of data or a proposed transaction, which then updates the ledger. Consensus algorithms allow connected machines to work together as a group that can even survive if some of its members fail. This tolerance of failure is another big advantage of blockchains and distributed ledgers, which have a kind of redundancy built in. Many are looking closely at blockchains and other distributed ledger technologies for their potential to execute transactions in a secure, decentralised manner based on consensus.
Entrepreneurs and companies, including some of the world’s biggest banks and technology firms, are investing massive amounts of money, talent and resources to explore and develop this technology for a wide range of potential applications. Despite being a highly regulated industry, many within the financial services community foresee real potential promise in distributed ledger technology. Therefore, financial services decision makers need to stay on top of the evolving consensus mechanism landscape. This paper aims to provide the relevant questions to ask when deciding on whether this technology is right for your organisation, and if so, what kind, and how it might best be implemented.