The rapid innovation in financial technology (" FinTech ") has been hailed as the wave of change that will alter the financial services industry. The most prominent FinTech development is the advent of distributed ledger technology (" DLT "), most notably the Bitcoin blockchain which was initially hailed as a potential ‘disruptor’ to the financial services industry as we know it. Initially led by developers outside of financial services, banks and other financial institutions have recently invested significant time and money in identifying how they can use blockchain technology to improve their business and develop trial applications.
On 16 June 2016 many financial businesses were interested to receive copies of the speech the Governor of the Bank of England (" BoE "), Mark Carney, had been due to deliver at the annual Mansion House dinner on "Enabling the FinTech transformation"; and on 21 June 2016 Mayer Brown’s London office hosted a forum run by the BBA on "Utilising Blockchain in Banking".
What is blockchain?
A blockchain is a decentralised electronic ledger of transactions, recorded as blocks of data in a sequence (or "chain"), built up using mathematical algorithms. Each block of data records a set of separate transactions and the chain sets out the full transaction history back to the first ever transaction. Because the ledger is distributed amongst different processors or "nodes" and secured by strong cryptography, transactions cannot be reversed and the entries on the ledger are secure.
The first notable use of a blockchain, in 2009, was as the distributed ledger which recorded transactions in the decentralised digital currency Bitcoin. While the Bitcoin blockchain operates an open network, blockchain ledgers can be restricted to a private network of users (or "permissioned"). The blockchain as used in the Bitcoin blockchain was originally designed to be fully peer-to-peer: thus […]
