Since the dawning of the Blockchain era in recent years, many use cases for the disruptive technology have been considered, some revolutionary and some not so much. It is clear however, that some industries can hugely benefit from the technology, which has it roots in cryptocurrencies such as Bitcoin. For example the introduction of smart contracts, distributed storage and data protection are proving to be invaluable use cases to companies in the global financial industry and beyond.
According to Investopedia, a blockchain is a digitized, decentralized ledger. Immutable by nature, and incorruptable, it was valued as an means of accounting for previously easily hacked digital assets.
Recently, a published an article stated "Integrating the LEI into other entity verification methods, including solutions based on digital certificates and blockchain technology, will allow anyone to easily connect all records associated with an organization, and identify who owns whom. By becoming the common link, the LEI will provide certainty of identity in any online interaction, making it easier for everyone to participate in the global digital marketplace." Anyone who is familiar with the technology will know that this is not merely a buzzword, but in fact a potentially applicable use case for the LEI in coming years, and it is one that has echoed around the community for a while now with a vision to making the LEI more efficient.
That being said, potential cases for the Blockchain to be incorporated in the LEI system globally are merely speculative at this stage, but nevertheless an interesting topic worth exploring. For example, there are several sources currently within which LEI data is stored. When an entity is registered with an LOU, there is often a short waiting period before it appears on various search tools online. Given that the very nature of the LEI is that it is a digital product, all of the data is stored online between separate entities, and the information may not match at times, and may be inconsistent across search tools. It may be the case that all data can now become decentralised by way of a Blockchain, and any changes made on one system will auto correct on the others in real time.
By uploading new registrations to a Blockchain, Local Operating Units can rest in the knowledge that reconcilement would be agreed between all participants. Any further updates to LE-RD (Legal Entity Reference Data) would have to be fully corroborated by all participants before validation was permitted. This would result in increased efficiency, congruency and speed, from which the consumer of the LEI would benefit, such as Banks, Investors and the regulators themselves.
This use case is merely an initial introduction into one of the more obvious applications, however this may never occur, or if it does it may take an entirely different approach.
If you are familiar with this topic, and would like to share your ideas, please feel free to like, share, leave a comment or get in touch with a member of our team at firstname.lastname@example.org.
The views expressed in this blog belong to LEI Worldwide.