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In 2017, blockchain moved from a fringe innovation used by a small, tech-savvy community, to a tool being developed and deployed by stock exchanges, banks, shipping companies and governments. Blockchain and distributed ledger technology (DLT) has great potential to improve security, reduce costs and drive efficiency gains in the financial ser vices industry. But it is not a panacea. Despite the hype of 2017, there are limitations. While some may be improved through further innovation, others, like processing speed, are fundamental to blockchain’s functioning. The wild price fluctuations of cryptocurrencies like regulators’ misgiving about initial coin offerings as a means of raising capital, and high-profile hacks of digital currency exchanges, all give reason to pause. In 2018 and beyond, we expect to see blockchain deployed by financial services companies to solve specific, bounded problems, like trade finance, while other payments mechanisms remain dominant in the consumer space. This white paper explores the events of the last year, and what they mean for the future of payments.
