There is broad support for an open source approach among those working to apply distributed ledger technologies to financial markets, according to a new Greenwich Associates report.

This presents the results of a study of 402 global market participants working on blockchain, including banks, brokers, technology companies and exchanges. 52% of these  see open source as the best model for distributed ledger technologies. Among technologists, support is even stronger, at 61%. “The goal of many of these new technology companies is to  replace the existing global financial market infrastructure with distributed ledger technology,” says Richard Johnson, Vice President of Market Structure and Technology at Greenwich Associates and author of the new report. “This is a monumental task and as such, support for open source technology reflects an understanding that transitioning to this new technology can only be achieved by having the widest possible community of developers working on the codebase.”

At the same time, however, there is recognition of the potential risks. 46% of study participants were concerned about damaging bugs being introduced into the system and 47% cited the risk of systems being hacked through vulnerabilities inserted into code. 58% see hardware security modules (HSM) that provide strong authentication and encryption as an important element in addressing security concerns related to DLT. HSMs are already in use in retail banking and in payment transactions, such as those processed through the SWIFT network. 53% see multi-signature technology as a valuable tool for adding security to DLT solutions.

81% view permissioned blockchains as inherently more secure than public blockchains. “In the end, a blockchain-enabled financial market will likely consist of a core plumbing of market infrastructure developed by the open source community, operating beneath proprietary applications that provide a higher level of security,” says Johnson.

 

by Scott Thompson
Scott is Senior Editor at IBS Intelligence. You can follow him on Twitter and contact him at: Scott.Thompson@ibsintelligence.com
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