Why Blockchain is a paradigm shift that matters?
The internet has changed every aspect of our lives. However, it is the internet of information where copies of music, videos, and other content can be copied and distributed globally in seconds with little control.
This paradigm does not work for Assets, which must be unique, controlled, audited and not replicated. Imagine if your car loan could be copied 10 times and sold to multiple buyers.
It’s called financial fraud.
Blockchain is the technology that underpins the internet of value, with protocols, processes and other infrastructure that creates a single authentic original Asset that cannot be replicated. This shift to Blockchain technology is highly disruptive of the current infrastructure, processes and legal structures. This is a paradigm shift creating a once in a lifetime opportunity to reinvent how trillions of dollars of Secondary Market Assets will be managed over their life-cycle, with profound implications for all market participants.
Why the shift will be so profound?
As secondary market migrates to the Blockchain, every participant will be affected- from originators, to loan servicers, asset managers, regulators, auditors, trustees, custodians, attorneys, and other service providers.
Here’s why: Blockchain will replace the current ad hoc, just in time, deal process to move and store Secondary Market Assets with systematic processes that will be set up once and then operate with minimum effort for all deals going forward.
If service providers don’t get integrated into these early Blockchain implementations and process flows, they risk being cut out of all future deals. In essence, consortium’s will be formed among a group of tech savvy service providers who integrate data flows and audit histories with APIs on a Blockchain enabled platform for Secondary Market Assets.
- Investors will benefit from lower transaction costs, more transparency and greater liquidity for Assets.
- Originators will get better execution, lower secondary market costs and improved pricing on their Assets.
- Regulators will have greater transparency and automated proof of compliance.
Those service providers that embrace the Blockchain paradigm shift will gain a significant competitive advantage over those that stick to the old models.