The difference between the two is not so much a ‘difference’ but more of a super set. Cryptocurrencies are usually an instance of a blockchain, and blockchains themselves are an instance of DLTs.
This is interesting in financial services (FS) because of
the flaw (for the FS industry) of blockchains; namely that if blockchains work by replicating the same database across all participants in the network, then most financial institutions explicitly want the exact opposite! For example if Bank A trades with Bank
B, then the last thing they want is details of the trade being accessible to Bank C. Even if the details are encrypted, financial institutions will be reluctant due to the encryption potentially being broken in the future.
The more questions that are answered ‘yes’, the more a DLT could be right choice for your use case. As you can see, something like a cryptocurrency meets many of these; which explains the focus on these right now.
As a general rule, if you are meeting three
or four of the categories, then it would be worth it. Alternatively if a use case can
only achieve one of the benefits using a DLT, then this could be a good reason e.g.
the funds that a client is using have not been involved in any money laundering activity. The bottom line is that whilst it is still definitely early days for production use cases of DLTs, if the use case fits the current constraints well enough, and the benefits match up, then now is the definitely the time to be progressing with DLT! Read more from finextra.com…
thumbnail courtesy of finextra.com