Skip to main content

Blockchain: Is it the future of FinTech?

(Image credit: Image Credit: Zapp2Photo / Shutterstock)

Blockchain might seem like a technology that is far from mass adoption by organisations around the world. Contrary to this belief, it is very much a real-world tool people are adopting and using. Companies are gunning to find a form of native digital trading that does not require physical world confirmations to prove validity

Take insurance, for example.  Companies like Guardtime provide ledgers that digitise and automate processes in the commercial insurance industry, improving the speed and accuracy of settlements and claims. In FOREX, companies like Cobalt have adapted blockchain technology to enable faster trading and more precise settlement of trades. Blockchain is definitely useful, but it is being adapted in different ways to help improve processes, it is not a singular solution to all Fintech problems.

Trusting hash ledgers

Blockchain’s system of encryption and linking of data into chains of events that cannot be edited or copied offers that potential.  At blockchain’s heart is the concept of a hash ledger.  The entries in the ledger are immutable and it is distributed so it is held independently by many parties.  If the ledger entries are changed, or the sequence of the entries is changed, the hash codes don’t match.  So, you end up with databases that everyone can trust.

Hash ledgers can be attached to legacy systems relatively easily.  You can add a hash ledger that records the data generated by the existing system, and that data is then trustable.  There is no need to throw out the old system. For example, Cobalt has stripped down the amount of data that needs to be attached to a trade to give it a unique ID, so that Forex trades can happen at speed, but now the individual trades are much easier to identity, track and settle.

Is blockchain here to replace conventional contracts?

Replacing conventional contracts with one that lives on the blockchain might seem like the natural aspiration to have. However, it is unlikely that blockchain contracts will replace conventional contracts until a way can be found to efficiently mimic the qualities of conventional contracts, that make them reliable documents of record that cannot be disputed or easily falsified. Qualities such as the time and place of execution and the unique identities of participants.

One of the biggest barriers to the adoption of blockchain is that people think the technology is a tremendously complicated, compute-intensive cryptocurrency system, when it is in fact a simple mechanism to enable data to be trusted.  Once that is understood, the potential applications become quite clear., for example, was set up by a consortium of major banks to facilitate cross-border trade and settlements. . The biggest challenge for practical adoption is for everyone to agree on a common standard they wish to use, test it delivers efficiencies over what it will replace, and that it is sufficiently secure for the bank and its customers.


The focus for a number of technology companies right now is developing ledgers that can bolt on  immutable in time and place, generating watermarks that not only guarantee the data is genuine, but also where and when it was created. This means that the native digital data now has a physical world verification embedded in it through the timestamp. Time only accumulates and the rate at which it accumulates is measured by Universal Time (UTC), which is a consensus of what is the accurate time as administered by the BIPM in Paris. Blockchain systems eschew the use of central authority; the distribution of data to multiple ledgers is designed to allow majority consensus to confirm data. However, no matter how distributed the consensus becomes it will still need to occur at a time, in a place and the parties participating will need to have unique identities. By adding UTC  and location to blocks as they are created, we can ensure that two vital parts of giving data a unique identity are fulfilled.

Applications of immutable ledgers go far beyond FinTech. Being able to prove that you complied with GDPR, for example by keeping a record of the permissions to acquire personal data and how it was used will be increasingly important in the future or being able to prove that the data generated by your medical devices is genuine and has not been manipulated.

To increase the adoption of native digital contract formats like blockchain, we need to find a way to integrate or mimic the qualities of physical contracts in a way that is not easily copied or edited. To be able to embed the consensus of UTC in the data at the point of creation plus the location of the device and the ID of the device, in a such a way that there is an unbroken chain of comparisons to the physical standards (That itself can be placed in an immutable ledger) would make blockchain data richer and less vulnerable to manipulation

Simon Kenny, CEO, Hoptroff London

Simon Kenny is CEO of Hoptroff London Limited, the owners of Traceable Time as a Service, which is carried by BT Radianz and BSO, and is already serving 9 financial services customers including a large North American Bank.