Efficiencies resulting from DLT can add up to some serious cost savings. DLT systems make it possible for businesses and banks to streamline internal operations, dramatically reducing the expense, mistakes, and delays caused by traditional methods for reconciliation of records.
The widespread adoption of DLT will bring enormous cost savings in three areas, advocates say:
1.Electronic ledgers are much cheaper to maintain than traditional accounting systems; the employee headcount in back offices can be greatly reduced.
2.Nearly fully automated DLT systems result in far fewer errors and the elimination of repetitive confirmation steps.
3.Minimizing the processing delay also means less capital being held against the risks of pending transactions.
In addition, some smaller number of millions will be saved by shrinking the amount of capital that broker/dealers are required to put up to back unsettled, outstanding trades. Greater transparency and ease of auditing should lead to savings in anti-money laundering regulatory compliance costs, too.
Investing in Blockchains
Investors interested in getting on the blockchain technology bandwagon will find it is now easier than ever to do so. In 2015, the venture capital concern Digital Currency Group launched, intending to build what it refers to as "the largest early-stage investment portfolio in the digital currency and blockchain ecosystem." Additionally, according to a report published by the American Software-as-a-Service (SaaS) company NASDAQ Private Market, the amount of venture capital being funneled into cryptocurrency-using firms was anticipated to exceed $1 billion. Companies have even become so interested in the technology that many have begun to play around with the idea of creating their own private blockchains.
Nevertheless, blockchain startups are not without challenges. Among the most significant is the fact that most consumers simply do not understand the extremely complicated concept of blockchain technology. In order to overcome this challenge, companies will need to find ways to precisely explain what they do in easily understandable language – and how they intend to deal with issues like secure online transactions and consumer privacy.
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