Up Next in Capital Markets
The key insight from the attack on the DAO is that fully open and decentralized systems are not a viable path for financial markets. However, this does not mean all decentralized systems will fail - permissioned systems, with known participants and a central player acting as a coordinator, remain an attractive choice for capital markets architecture.
What the Attack on the DAO Means for Banks
As sexy as decentralized systems and automation are these days, human involvement is still necessary in many areas.
In a recent report, Morgan Stanley highlights that the primary use in the short term for Blockchain will be to alleviate inefficiencies in the capital markets (e.g., Post-trade settlement). Their argument that "unpermissioned" systems, like that of Bitcoin, are not a realistic future is likely correct as the centrality of the financial sector means the regulatory risks would be too substantial.
Morgan Stanley on Blockchain
Global Insight: Blockchain in Banking: Disruptive Threat or Tool?