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.
Up Next in Capital Markets
What it is: "The Lean Startup" author Eric Ries has unveiled plans to build a new stock exchange called The Long-Term Stock Exchange (LTSE) to incentivize long-term thinking. Ries and his team are in early talks with the Securities andExchange Commission and plan to file a draft application later this year. LTSE's three key reforms are (1) reconstructing executive pay so that it's not tied to short-term stock performance, (2) encouraging companies andinvestors to share more information, such as R&D spending and (3) redesigning investor voting rights.Why it's important: According to Ries, the frantic pressure to meet quarterly targets of traditional stock exchanges means that "going public will mean the end of your ability to innovate." LTSE could profoundly improve our ability to efficiently allocate the world's human, capital and natural resources. And by incentivizing long-term strategic planning, LTSE could help public companies stay in business longer.Spotted by Alex Shahery
Silicon Valley's Audacious Plan to Create a New Stock Exchange
The author of "The Lean Startup" and his team are in early talks with the Securities and Exchange Commission
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?