What is Riva’s position?

Since early 2016 Riva have invested resource to understand the current technology available and how it might be applied within the Asset Management Industry. We have also undertaken the development of use cases around how Riva`s TA software could take advantage of and integrate with blockchain technology. We are actively identifying use cases which we believe have a real business need for change and would benefit from the use of the technology.

We have also participated in group discussions, seminars, conferences and webinars on Blockchain and have been talking to number of leading experts within the burgeoning Blockchain industry, discussing use cases and canvasing opinions on where the technology may take us. From a Riva perspective doing nothing is not an option.

What is Blockchain?

Blockchain’s or Distributed Ledger Technology (`DLT`) ascendency since its early adoption as the underlying technology supporting Bitcoin has been compared by many commentators to the early days of the Internet. There is understandably a lot of hype around the technology and this has attracted significant speculative investment during the past few years. Where there is excessive hype however, there is also outright dismissal by some when it comes to Blockchain`s future adoption. The current reality is likely to be somewhere in the middle with many companies taking the view that doing nothing within the Blockchain space is not an option.

The concept of a blockchain was pioneered under the pseudonym Satoshi Nakamoto in a paper written in 2008 and this was developed into Bitcoin, a peer-to-peer digital currency, which allows transactions to take place without requiring trust between participants, or any intermediary.

Blockchain allows transactions and exchange of data, without a trusted third-party and instead relies on cryptographic proof and agreement between all parties on the state of one or more shared ledgers. Any updates to the ledger must be agreed following a clear set of rules, that are designed such that it is impossible to `cheat`. It therefore promotes accountability, transparency and ultimately trust.

Two types of blockchain exist, public and private. Cryptocurrencies, such as Bitcoin, use public blockchains, which anyone can participate in, and all data is available for any participant to view. Private, or permissioned blockchains allow much finer control, with restrictions available on parties able to participate, agree on and view data within the ledger. For example, in a private blockchain, it would be possible for only parties A and B to view data about transactions between themselves, but party A would be unable to see any deals between party B and party C.

The ledger therefore provides an immutable, auditable record of events. It cannot be falsified and automatic processing can minimise or even eliminate the risk for human error, whilst promoting simpler settlement and clearing processes. Costs savings, new revenue opportunities and value added capabilities could also be realised with blockchain`s adoption.

However there are also many hurdles to overcome such as regulatory adoption, industry standardisation, scalability and the inevitable integration and implementation challenges. Ultimately Blockchain will bring many benefits but caution should be exercised. It should not be considered as a cure all within the Asset Management industry but should be as part of a technology `tool box`.