Cryptosoft 2020 – Two ideologies meet each other

How much of the backend of financial applications should be based on the blockchain – so the question that determined a small dispute at the Money2020 conference. This dispute also points to a great need for discussion on this issue.

Despite broad agreement on the principle of blockchain applicability in the cryptosoft industry, splits occurred

Emmanuel Aidoo of Credit Suisse challenged Yolanda Goettsch of Nasdaq by postulating that cryptosoft could address the inefficient sides of the stock markets. Goettsch himself argued that the market is already “very liquid” and “very stable” – in contrast to Judd Bagley, head of tØ, an Overstock subsidiary.

According to Goettsch, it would not be enough for cryptosoft to reduce the settlement time to ten minutes – which is feasible according to tØ. Although such an improvement is certainly noteworthy and desirable in the long term, it would not compensate for the effort involved in converting all processes.

“If you have to pre-verify the existence of values and money, that changes everything. That’s not how the markets work at the moment. The processing time may be long, but it is currently being used to guarantee that all regulatory processes have been implemented and that all market players have been taken along.

On the other hand, Bagley replied that the new technology would do well to remove unnecessary players from the market. This argument was put forward somewhat polemically because he suspected a certain bias among financial institutions.

“Yes, many people will lose their jobs in technological change. But here we are talking about the people who are slowly becoming part of Wall Street’s inventory. tØ is located in Utah, far away from Wall Street – so we don’t care much about historical things. We’d rather burn down and then rebuild.”

Bagley then got lost in the statement that with the Blockchain events like the Flash Crash of 2010 would have been impossible.

Aidoo was the moderator of this debate

In his opinion, the adaptation of the blockchain in financial markets will be gradual and will first ensure that trades are completed on the same day and not three days later. Some stakeholders like the high frequency traders are already working on blockchain pilot projects. Credit Suisse itself is investigating how to strike a balance between the challenges of implementing the blockchain and the benefits.

Aidoo himself believes that the blockchain leads to a rethink of the existing processes and expressed this somewhat polemically:

“We can start by deleting words like clearing from our vocabulary.”

Stumbling blocks on the way
Later, Jacob Farber of R3 explained how the debated problems had so far ensured that there was hardly any cooperation between open source blockchain startups and traditional financial companies.

With his comment Jacob Farber has also described the role of R3 as evangelist for the blockchain. For example, R3 provided large banks with a sandbox for testing the new technology using the examples Ethereum and Ripple.

There was a great deal of agreement in all discussions on one thing: that there are inefficient sides to the current financial system and that interest in the blockchain can help to find solutions here.

Scott Robinson, the Fintech director of Plug and Play, explained how the Blockchain is attracting more and more interest from large companies:

“Three years ago, I talked to some Exxon Mobil executives. And a year ago they started looking at the blockchain.”

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