Page 153 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

DLT protocols, and experiment with decentralized applications without incurring the capital costs associated
with setting up their own networks. 47

3 Key uses of DLTs

3.1 Overview

In the DFS ecosystem, in the financial industry, and in business networks generally, data and information usually
flow through centralized, trust-based, third-party systems such as financial institutions, clearing houses, and
other mediators of existing institutional arrangements.

These transfers can be inefficient, slow, costly, and vulnerable to manipulation, fraud and misuse. Bilateral
48
and multilateral agreements are needed, which are typically recorded by the parties to the agreements in
49
different systems (ledgers). 50
As indicated above, a number of blockchains and DLTs have emerged in recent yearsthat aim to address these

issues. Each may have its own different use cases, offering benefits such as larger data capacities, transparency
of and access to the data on the blockchain, or different consensus methods.

3.2 Application of DLTs

Some of the applications using DLTs could include the following:

• remittances
• identity (ID) Systems
• electronic know your customer (eKYC) 51

• small medium enterprise (SME) finance
• digital rights management
• insurance contracts

• interoperability between banking and payment platforms
• clearing and settlement (C&S) 52
• shareholder voting 53

• credit provision

47 Gray, M (2015) Ethereum Blockchain as a Service Now on Azure, available at https:// goo. gl/ 2NttVV .
48 Lack of transparency, as well as susceptibility to corruption and fraud, can lead to disputes.
49 As transactions occur and data is transferred, the agreements and the data they individually control need to be synchronized.
Often though, the data will not match up because of duplication and discrepancies between ledger transactions, which results
in disputes, disagreements, increased settlement times, and the need for intermediaries (along with their associated overhead
costs).
50 See also IBM (2016) Blockchain Basics: Introduction to Business Ledgers, available at https:// goo. gl/ dajHbh .
51 This would, with current developments, be more applicable to identity systems rather than national identity systems. It can be
applied then to digital identity, with notes that certain attributes have been attested by certain authorities. The keys associated
with the identity, and the details of the attributes and the associated attestations, would be held in a separate secure identity
store, under the control of the individual. One of the attributes might be name – attested to by the national identity service. The
identity on the blockchain would be derived from that.
52 See Mills et al (2016) ibid.
53 ZDNET (2016) Why Ripples from this Estonian Blockchain Experiment may be Felt around the World, available at https:// goo. gl/
eaLf3G .

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