B2B Payments

DLT, Moving Beyond The Testing Stage

blockchain innovation

Distributed ledger technology is still in its nascent stages. What will it take for financial institutions to embrace DLT more fully? Caitlin Long, president and chairman at Symbiont, offers up a roadmap of adoption that might see some traction next year.

Distributed ledger technology (DLT) seems a thing of the (near) future. But what will it take to get large financial players on board with the system and with blockchain in the first place?

In one recent move, Symbiont last week announced the availability of a software development kit for Assembly, billed as the permissioned distributed ledger component of Symbiont’s smart contracts system — opening up the ledger to developers.

In an interview with PYMNTS, Caitlin Long, president and chairman at Symbiont, noted that distributed ledger technology, which is getting a fair share of press, is also, perhaps not surprisingly, gaining traction and interest among financial institutions. “Every large FI is exploring blockchain to some degree,” she said. “Most are participating in proof-of-concept programs, as blockchain is still in its early stages.” And, she continued, while “no FI is yet deploying it, I’ve already publicly predicted that bank deployments will begin in 2017 in syndicated loans, for example. And Visa just announced it will deploy a blockchain for B2B payments in 2017 as well … It’s transformational rather than incremental, and all institutions are operating in a budget-constrained environment that requires short payback periods.”

But, continued Long, “the industry is overcoming these barriers to adoption. I believe 2015 was the year of education about distributed ledger technologies, 2016 is the year of pilot programs and 2017 will be the year of adoption.”

Distributed ledger technology also has its use cases beyond blockchain, as Long maintained, extending into what are commonly known as “smart contracts,” which are especially appealing in the use of government data, information flow and (of course) contracts, which “have a sunset date beyond which the government is required by law to destroy [those documents].” By turning a government document into a smart record, on the sunset date, a smart contract can render the document cryptographically unsearchable — and it’s also unplayable — which means, legally, the document no longer exists.

“You may be wondering how data stored on an append-only distributed ledger can be destroyed — actually, the record does not disappear,” explained Long, “but it becomes impossible to retrieve ever again and, therefore, not discoverable in litigation, for example.” Those added measures of security mean that DLT has innate advantages over legacy document maintenance, storage and security efforts, as data (not to mention paper), said Long, is “rarely encrypted when it’s stored in centralized databases.” That data also can find its way to, and reside in, several databases. But with distributed ledger technology, she said, the data simply no longer exists, which can help satisfy compliance mandates.

As for the age-old technological debate over speed versus security, Long noted that the two need not be mutually exclusive, as Symbiont’s own distributed ledger technology allows for processing speeds of up to 80,000 transactions per second and can go from multiple nodes to single regions at that speed, with what is known as “Byzantine fault tolerance” in place.

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