ISSA survey detects increasing shift towards public blockchains

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A survey by the International Security Services Association (ISSA) asked custodian banks, investment banks, Central Securities Depositories, and other institutions about their blockchain and digital assets realization journey.

This year’s survey revealed several interesting findings, including:

Shift towards the usage of public blockchains, wherein of the 359 survey respondents, 5% more reported using public blockchains compared to last year.

39% of respondents have blockchain deployments in production. That’s up 7% compared to last year’s numbers.

Interest in blockchain increased by 45% and 40% among asset managers and wealth managers, respectively.

One of the major reported motivators for using digital ledger technology was liquidity. 13% of investment banks, 9% of custodians, and 6% of CSDs focused on this. Other motivations included cost savings, learning, and new revenues.

82% of asset classes are looking to move across to public blockchains

According to the survey, 67% of blockchain project activity centers on the top asset classes, including bonds, stablecoins, private debt, FX payments, mutual funds, equities, and private equity. Tokenization is a major factor across most asset classes.

Interestingly, the survey detected a 5% increase in usage of public blockchains YoY. Almost all respondents said they were using public blockchains for most asset classes, except for futures/options, commodities, and mutual funds, all of which moved towards private blockchains.

The majority of respondents reported that they want to move assets to public blockchains, but the vast majority of blockchains are still private.

Opinion: institutions are catching on slowly but surely

From the content of the ISSA report, we can see that interest in digital ledger and blockchain technology remains robust among institutions. Asset managers, banks, and others are cottoning on to how this technology can help them solve problems and innovate. The recent chaos in ‘crypto’ has done nothing to dampen their enthusiasm.

The survey results also show that an increasing number of them are discovering that public blockchains are superior to private ones. A 5% jump in a year is not small, and increasingly, those in charge of running experiments across all asset classes are expressing the desire to move to public blockchains while keeping access to applications permissioned.

What’s causing the shift toward public blockchains? The survey doesn’t go into great detail on this, but we can hazard an educated guess: most of the cost savings and other benefits like traceability and audibility are lost when we use multiple private blockchains rather than one scalable public blockchain. Those involved in blockchain/DLT experiments will likely realize the limitations of the systems they operate on and the benefits of public ledgers.

When the rest figure out the same thing, which is inevitable, we can predict the next realization; that most public blockchains are technically incapable of scaling to the levels required to make applications work as desired, and their fees are prohibitive. When that realization occurs, it should lead to increased interest and activity on the BSV blockchain—the only public ledger capable of scaling to enterprise and government levels today.

CoinGeek Conversations with Giovanni Franzese: It’s time for corporates to turn to public blockchain solutions