Kroll Bond Rating Agency (KBRA) released a comment entitled “In Search of a Business Case: Does Blockchain Technology Benefit Investors?” The comment makes the following key points:
- KBRA believes that despite a great deal of media attention and accompanying hype, the utility of blockchain technology to investors remains unproven. There are as yet few compelling business cases for the broad deployment of this technology in the financial markets, including global payments and securities clearing.
- A number of financial institutions and private investors have devoted significant time and financial resources to looking at ways to monetize the blockchain technology, but to date only the bitcoin payments system has achieved even modest adoption. Beyond the narrow example of bitcoin, blockchain technology has yet to demonstrate its utility to investors, much less demonstrate commercial viability.
- KBRA believes that the focus on the blockchain concept will put into sharp relief the discussions within the financial community regarding the existing payments system. The cost of operations, credit requirements for clearing, and counterparty risk among the various contituencies represented on the centralized payments network will all be highlighted by these discussions.
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