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Alternative Market Briefing

BCG says Blockchain's application for most trading has likely been over-hyped

Friday, August 17, 2018

Laxman Pai, Opalesque Asia:

Is blockchain technology suited for commodities trading? A report by Management consulting firm Boston Consulting Group (BCG) says its application for most trading is exaggerated and can't fix everything - at least for now!

The report says that commodity firms and banks have been diving into blockchain pilot schemes over the last two years and implementing the distributed ledger technology (DLT), but the new technology's application for most trading has likely been over-hyped.

Blockchain, originally the platform behind cryptocurrency Bitcoin, is viewed by some as a solution to inefficiencies, improving transparency and reducing to the risk of fraud, but its benefits for commodity trading applications have been exaggerated.

BCG argues that there is a strong argument for using blockchain, while taking stock of "significant drawbacks on several fronts." The report tackles both the "hype," but also many of the negative "misperceptions" that distort people's view of the technology.

The report says that senior executives need to carefully consider blockchain's benefits and drawbacks before they proceed. They should also consider ways to take advantage of the hype around this nascent technology: all this attention could prompt industry players to find even better ways to solve commodity trading's poor standardization and transparency.

For a blockchain-based solution to gain acceptance, most trades would have to be recorded accurately ......................

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