Distributed Ledger Technology (DLT) is a type of database that is decentralised in nature, eliminating the need for an intermediary to process, validate or authenticate transactions.
"The blockchain is suited for applications where it is important to know the history of ownership and transfer of value but there is no trusted central party or reliance on a central party is too costly."
Use Cases of DLT
Trade Finance
Blockchain eases the existing pain points of buyers, sellers and financial institutions while opening the ecosystem to new non-traditional players.
Cross-Border Payments
Blockchain can transfer payment across currencies almost instantly for a fraction of today’s cost and provide access to the unbanked in remote areas.
Digital Identity
Blockchain can create an auditable source of information shared and verified across a network of organisations (e.g., KYC compliance).
Clearing and Settlement
Blockchain shows promise to drive efficiency in the clearing and settlement process of digital assets through the use of coloured coins.
Provenance
Blockchain offers an immutable and irreversible source of information that can track the true ownership of a product across the supply chain.
Multi-Party Aggregation
Blockchain can be used as a shared master data repository for common industry information allowing members to query the data.
Record-Keeping
Blockchain provide a method for collectively recording and notarising any type of data, whose meaning can be financial orotherwise.
Re-insurance
Contractual terms and obligations can be programmed directly into the blockchain, maximising adherence (e.g., final contract, signatures, claims & premiums processing).
MAS Initiatives
Project Ubin
A collaboration project between MAS and the financial industry on exploring the use of DLT for clearing and settlement of payments and securities.
Global CBDC Challenge
The Global CBDC Challenge organised by MAS, in partnership with IMF, World Bank, ADB, UNCDF, UNHC, UNDP and OECD, seeks innovative retail CBDC solutions to enhance payment efficiencies and promote financial inclusion.
Wholesale Cross-Border Payments
A wholesale cross-border payment and settlement experiment using Central Bank Digital Currency (CBDC) by Monetary Authority of Singapore(MAS) and Banque de France (BdF).
Blockchain 101
Blockchain for Cryptocurrency
The first widespread adoption of blockchain technology was in Bitcoin, where its decentralised nature meant that it was resistant to censorship and manipulation by any single party or entity.
Blockchain and Smart Contracts
The next big evolution was in the use of Smart Contracts in Ethereum, where self-executing and self-enforcing contracts perform pre-defined actions faithfully, without the need for a trusted central party.
Private and Permissioned Distributed Ledger Technology
The next wave saw the development of new platforms with other "blockchain-inspired" means of achieving a distributed ledger, fulfilling enterprise requirements for performance, scalability, privacy and finality.
Benefits of DLT
Disintermediate
In a peer-to-peer model, every peer in the network is a server and client, thus eliminating the middlemen in processes between users.
Enables the facilitation of transactions without a central, privileged third party even in the absence of trust.
Secured by Cryptography
Public key cryptography is a method for verifying digital identity with a high degree of confidence, enabled by the use of private and public keys.
Allows for increased security and protection of data and identity in the system.
Smart Contracts & Oracles
Smart Contracts are virtual agreements encoded on the DLT that can be automatically reconciled based on logical conditions.
Enables the secure automation of complex, logical agreements and the business processes using data gathered by Oracles.
Immutable
Data on the DLT is immutable, and is thus resistant to double-spending, fraud, censorship and hacking efforts.
Creates a more secure, transparent network and creates new avenues for regulators.
Real-time Settlement
DLT allows for near real-time settlement of transactions, removing friction and reducing risk.
Enables transactions to be made in near real-time between users on the network.
Trustless
DLT is based on cryptographic proof, allowing any two parties to transact directly with each other without a trusted third party.
Allows two or more trustless parties to transact directly with each other.