Blockchain evolution—from a primal description of Bitcoin in a 2008 white paper to the emerging enterprise version of DLT of today, with its built-in consistency, security and privacy—has been nothing less than dramatic. Early believers in DLT saw it as way to conduct transactions without banks or financial institutions, but the need for sound, controlled markets has overwhelmed that initial view. It has significant potential to simplify our complex world of opaque siloes of information, including the ability to encode policies, rules, and business logic within the software and mathematical rules of the platform. However, it’s long-term potential hinges on effective governance to guide the growth of DLT, to meet the highest requirements of the regulated industries, and to bring a risk management perspective to migrating critical processes onto the technology as it becomes ready.
Accenture and DTCC leaders discuss DLT governance.
Rob Palatnick of the DTCC and David Treat of Accenture discuss the potential of Distributed Ledger Technology implementation. See more.
The need for oversight and governance among the institutions that participate in the regulated financial industry is necessary if DLT is to continue to grow and be successfully adopted.
The original Bitcoin blockchain innovation was based on a public, permissionless network of untrusted parties. Yet for most industries, particularly financial services, the business rules, performance and scale requirements and most importantly regulatory rules and policies, do not align with the public and permissionless model. This drove an evolution of the original innovation resulting in the creation of “permissioned” DLT networks—private communities with well-defined controls and known members and membership criteria.
Network Governance Model:
DLT Governance Operating Model (DLT-GM)
Functionalities and considerations for each area:
Overall insight, decision-making from advisory bodies: Steering Committee, Functional Working Group, Technical Working Group and Change Management.
Aspects of onboarding a new network member, the interactions during that member’s participation (including nodes) and the steps to off-board a member.
Updates to node software can be automated, coordinating deployments to a common time. Real world implications make the change process more complex.
DLT’s value is the alignment to industry approved standards and distribution through smart contracts to every node upon approval.
Third party management
Coordinate outside interests in the DLT network including operating utility, network service providers and platform vendors.
An additional source of change enabled by the DLT ecosystem, is the opportunity for individual parties to collaborate on new, smart contract code.
Oversight of the core network management functions including: Operations, Cybersecurity, Environment, Continuity and Compliance.
Legal and Finance
Specifically to DLT, patent risk, vendor licensing and open source risk are key for networks, especially as they cross global borders.
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