Press Release - Building Business Cases With Distributed Ledger Technology: Things to Know

Market players are now predicting the database technology underlying the bitcoin protocol, known as blockchain or distributed ledger technology (DLTs), could be the cure for the financial services industry’s inefficiency and disorganization ills. But is it really? 

Boston, August 3, 2016 - Over the last decade, information technology has ramped up financial markets’ evolution. But very few technological advancements revolutionized the way financial institutions interact with each other until the emergence of bitcoin as a pure peer-to-peer payment network. The explorations of this technology have gradually moved away from cryptocurrencies, and market players are now predicting that the database technology underlying the bitcoin protocol, known as blockchain technology or distributed ledger technology, could be the cure for the financial services industry’s inefficiency and disorganization ills. But what can DLT realistically achieve, given the technology’s inherent constraints?

With the ongoing discussion around DLTs spurred by the advent of the bitcoin protocol, more and more financial institutions and venture capital firms are looking closely at blockchains and other distributed ledgers, with good reason. Despite the lack of proven live use cases in the capital markets at this moment, it is extremely helpful for companies to establish an evaluation framework when determining a viable business case. To address this need, Aite Group’s latest report, Building Business Cases With Distributed Ledger Technology: Things to Know, clarifies the terminology relevant to DLTs and explores five different DLTs’ characteristics—throughput, latency, node scalability, security, and cost—identifying how they could impact business models in the financial services industry.

“Among the five factors, cost is the most important one for accelerating or delaying DLTs’ adoption. Aite Group estimates that it costs a private DLT US$91 to process 1 million transactions, while it costs US$1.1 million and US$149,000 for Proof of Work and Proof of Stake blockchains to process 1 million transactions, respectively,” explains analyst Gabriel Wang at research and advisory firm Aite Group.

Similar to the situation of legacy system migration, decision-makers have to weigh DLT platforms’ long-term cost-saving benefits against the short-term costs of replacing some existing infrastructures. But at the end of the day, migrating away from legacy systems and adapting to a new business model with enhanced workflow efficiency is an inevitable trend for financial institutions, and the emerging DLTs are without a doubt a big part of it.


About Aite Group:
Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn.

Press Contact:
Jennifer Molgano
Marketing and PR Associate
Aite Group

+1.617.338.6050

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