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Webcast: Blockchains and Distributed Ledgers - From Bitcoins to Financial Markets

Speaker: Dr Massimo Morini

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A course on this topic is available in Singapore, London and New York

Webcast Agenda


Moving from the 'BlockChain Hype' to real business cases for financial markets - understanding which cryptocurrency technology and business models can be useful.

Topics covered:

  • Consensus-by-reconciliation and its problems: inefficiencies, slowness, disputes, risks
  • A case study on Derivatives: reducing credit, funding, and capital costs via Smart Contracts and Distributed Ledgers
  • Understanding the possible consequences on business models, accounting, legal, and regulations
  • Overview of course topics: Cryptocurrencies, Blockchains, Smart Contracts, Consensus Algorithms, Payments, Post-Trading, and Collateral


Q&A


1. How will confidentiality be addressed? It seems unlikely that banking nodes may see all transactions from one another.
A. Collateralized derivatives with cash collateral work very well on a distributed ledger shared only between parties with a material interest in the deal – i.e. in this scenario, there is no confidentiality issue which differs from today’s reality. When larger ledger-sharing is needed, for example to avoid double spending of ledger-endogenous collateral, the solution is in cryptography and hashing to verify collateral uniqueness without revealing the counterparties.

2. Could you elaborate a bit on the potential role of a counterparty of last resort in this new model?
A. Today CCPs are counterparties to every player, from inception. This is a very risky role; it remains such in spite of the fantastic collateral fencing put in place to protect them. When counterparty risk is reduced by acting on its very sources on a distributed ledger, without a central point-of-failure, CCPs are still useful for example to provide consensus margin computation. Moreover, when a counterparty steps out of a distributed ledger, we may have counterparty risk under control through more efficient and deterministic collateral and closeout (but market risk remains open). Finally, what about if a CCP guarantees to step in at the same valuation that the CCP itself just provided for collateral exchange?

3. How will it be effective since bitcoin is not really considered a currency? And what about the security level?
A. Distributed Ledgers do not need bitcoins to work. Any digital money can do. Bitcoins could be used, of course, as soon as their legal/fiscal status becomes clear. But we can also use digital Central Bank money like those BoE, BoC and Fed are working on, or, with some caveats, the IOUs (I Owe You) issued by financial institutions, like those used in Ripple.

4. In one of your slides I saw 'a' smart contract calling an oracle. How can we guarantee consistency between different nodes calling an oracle?
A. Good question, but there is technology for this. See what Oraclize™ does, for example. Cryptographic proof of the fact that exactly what is required by a smart contract is provided by an Oracle to the Blockchain.

5. In regards to proof-of-work and global visibility of ledgers, are you sure finance can do without them in all use cases?
A. See answer in the video recording at 41:56 (and slides at 17:50).

Thank you to those attendees who submitted their questions.


LFS offers the 2-day 'Blockchains and Distributed Ledger Technology' programme with Dr Massimo Morini in LondonNew York and Singapore.

To find out more, click on the location links above or contact us at advisor@londonfs.com

Are you interested in running our public courses in-house? Contact our in-house team to discuss further.


Why travel? Many clients are already attending our courses from the convenience of their home or office with LFS's state-of-the-art remote learning platform: LFS Live