A critical take on banks’ interest in developing a “middle way” for blockchain tech, using distributed ledgers that replace Bitcoin’s mining process with trust requirements. This seems spot on.
Blockchain technology is useful not because it offers efficiency in a world of message-passing but because it uses a complex process to settle value between untrusted parties. But distributed ledgers do not offer users the ability to easily convert their tokens and messages into fungible units of value. Nor do distributed ledgers escrow value between parties that don’t trust each other.
If a ledger is not a public resource, it will have the pressures incumbent to existing settlement systems plus the overhead of maintaining a shared database among competitors. What efficiency will remain thereafter remains dubious.
If distributed ledgers do offer the ability for banks to improve efficiency in their processes, it will likely be because they’ve afforded banks permission to innovate — not because they’re able to provide settlement to underserved notarization clients.