Chapter 17: Blockchain Applications in Finance

Blockchains and their distributed ledger technology (DLT) are often characterized as disruptive, meaning that the approach is so ground-breaking that if an institution does not complement its existing operations to take advantage of the opportunities offered by blockchain, it may not only miss out on newly created lines of business, but may lose some of its existing profitable positions in the marketplace. Blockchains are designed in a way to distribute ownership of data across many parties and counterparties. With relevant data in the hands of more people, participants can engage in peer-to-peer (P2P) transactions with little or no centralized authority or control. Thus, blockchains can pose serious threats to companies that do not take them seriously (Jepkemei and Kipkebut 2019). Since most financial institutions are already well-adapted to using advanced network-based information systems to obtain, maintain, protect, and deliver proprietary information (Baltzan 2020), they are poised to embrace the new opportunities that blockchains facilitate, especially for those markets with no definitive regulator or authority.