The European Union has published a new report highlighting how traditional finance services can be enhanced with permissionless blockchains. The report notes that blockchain technology represents a significant innovation in governance and can create open and neutral infrastructure suitable for a wide range of financial protocols.
‘What began with Bitcoin, which established a new alternative asset class, soon facilitated further innovation and led to the emergence of ecosystems driven by smart contract-based financial protocols,’ the researchers said.
‘Initially, these protocols operated in an unregulated space, fostering rapid innovation and the development of novel concepts. However, as these protocols grew and matured, they attracted interest from both the private and public sectors, leading various organisations to experiment with blockchain technology.’
While governments and businesses have been experimenting with closed blockchain ecosystems for several years, the researchers note that the success of decentralised finance (DeFi) and features such as composability and atomicity led many organisations to recognise that this technology’s true potential is realised only when the blockchain functions as a broadly shared ledger.
‘Composability, atomicity, liquidity, and economic security all generate strong network effects, pushing towards a dominant base layer, and creating an ecosystem that could be compared to a platform economy,’ the group said.
‘Dominant platforms can be efficient and enable new use cases. In financial services, they can enhance interoperability, reduce settlement and reconciliation costs, and allow for conditional transactions that might otherwise be impossible or impractical.’
However, such platforms also present various risks, the researchers cautioned. If controlled by a single entity or a small, homogeneous group of organisations, these entities may act as gatekeepers, implementing unilateral rule changes or leveraging their position to extract excessive economic rent, thereby creating hold-up problems.
‘Such concerns are common across economic platforms but are exacerbated by the extensive scope of these ledgers. A centralised, unified base layer used for currency transfers, asset issuance, financial protocol deployment and execution, and potentially even some form of digital identity, would pose significant governance challenges.’
BSV blockchain – Built for enterprises and governments
The BSV blockchain stands out from other public blockchains by being vastly more scalable and efficient. Its low transaction fees enable companies to manage a high volume of transactions and data without the concern of network congestion.
Additionally, the BSV blockchain’s stable protocol and fixed block size offer a dependable and predictable environment, crucial for enterprise-level applications. Its emphasis on data management and security allows businesses to store, manage, and verify large amounts of data transparently and immutably. Additionally, its dedication to regulatory compliance and industry standards builds trust and provides legal certainty.
The BSV blockchain is a public blockchain designed for enterprise-level applications, offering:
- Global Public Network: Nodes distributed worldwide ensure redundancy and resilience.
- Permissioned capabilities on a permissionless blockchain: Overlay Services allow governments, central banks, and enterprises to create dedicated business environments without hindering self-determination and national sovereignty.
- Proof-of-work (PoW): A proven consensus mechanism demonstrating effectiveness for over 15 years.
- Unbounded scalability: Demonstrated sustained throughput of one million transactions per second (1Mtps) through the Teranode proof of scalability.
- Low transaction costs: High efficiency leads to minimal fees, making it economically viable for large-scale applications.
- Energy efficiency: High transaction throughput reduces energy consumption per transaction, resulting in a low CO₂ footprint.
