Viability of public blockchains in the financial services sector

Abstract

Blockchain technology has significant potential in developing the financial services sector. Although blockchains are often undifferentiated in contemporary discussion, they are, in fact, divided into three types: public, private and consortium. Thus far, the financial services sector has focused on developing private and consortium blockchains while eschewing the innovative aspects of blockchain present in the public blockchain. Through a literature review this thesis will examine the validity of the issues leading to such a decision, suggest ways that the public blockchain could potentially innovate the financial services sector and discuss the future of public blockchains in the financial services sector.

This thesis found that while the current reservations regarding public blockchain implementation are valid, new public blockchain research and solutions are increasingly rendering these reservations obsolete. In addition, public blockchains contain inherent advantages such as incorruptibility, transparency, reduction of intermediaries and increasing financial market participation over their more private counterparts. Although public blockchains represent a threat to the financial services sector’s existing revenue model, the improvements in public blockchain technology will present unique opportunities that will at least have to be considered by companies in the sector. In the meantime it seems that symbiotic private-public and consortium-public blockchain solutions will be adopted in the near future.