The Blockchain Progress at Synechron Part-2
Authored by: Tim Coates, Head of Blockchain, Synechron
A Use Case with a Business Case
In this series exploring our key learnings to ensure successful blockchain strategies in 2018, we previously discussed how incumbent-driven solutions have a significantly greater speed and likelihood for success over others. In this next installment, we explore our next two learnings:
Only Exchange of Value use cases will deliver enough benefits to achieve adoption
The use cases now emerging will commence as exchanges of information, with a goal to transition to exchanges of value on-platform. We’ve grown to oppose that approach due to the high cost and complexity of the initial setup.
In order to be the exchange of value system, the application needs to be a tokenized system of record. Tokenization is the combination of a digital title to an asset, and its terms & conditions in one easily transferable unit. This in effect collapses the investment process, much like one-click shopping did for Amazon, and has benefits by both reducing operations costs and improving liquidity. Also similarly to Amazon, expect firms to seek out new platforms that could disrupt incumbent SaaS providers.
For some asset classes, tokenization would require actors like the DTCC to participate as regulation-backed settlements agent. For other non-marketable assets, it requires an issuer willing to digitize and perhaps disrupt themselves, and a solution to the cash-leg payment.
For non-asset based use cases, such as KYC and Trade Finance, the network must be golden source for end-users. The value is drastically marginalized if any 3rd party data stores, off-chain validation or reconciliation is required to mitigate fraud or operational risk.