Johan Toll discusses blockchain as a tool to create trust between all network participants
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5 questions from Johan Toll, Vice President & Head of Digital Assets, Nasdaq Market Technology
- How is your company applying blockchain/ exploring digital assets?
Nasdaq Market Technology has used blockchain technology since 2014 to drive innovation in the capital markets and beyond. During this time, Nasdaq has gone from experimentation, pilots and proof-of-concepts to launching fully functioning products and complete blockchain based solutions for marketplaces. In the past years, Nasdaq Market Technology has increased its focus on products for digital assets and settlement solutions to replace complicated manual processes using DLT to simplify communication between participants in a marketplace.
Earlier this year, Nasdaq launched its Digital Assets Suite, a technology product suite that facilitates the creation of robust and scalable markets for digital assets with the security, resilience and transparency needed to manage demands from institutional and retail investors, as well as regulatory authorities. Implemented with an enterprise blockchain platform, the Digital Assets Suite is designed to specifically support the full transaction lifecycle of digital assets and tokenized markets, from issuance of native and asset-backed tokens, through trading, settlement and custody of assets and funds.
Over the last few years, Nasdaq Market Technology has been bringing our solutions across the trade lifecycle into the digital assets space to conduct low-latency, highly scalable and available trading, and to monitor markets for potential instances of abuse to strengthen integrity. Both traditional exchanges and start-up marketplaces have been vocal about the huge potential in both tokenized assets and adopting blockchain technology.
- What were the biggest challenges, &/or benefits, in using blockchain technology?
There are multiple benefits to using blockchain technology, as well as challenges in driving the innovation and adoption rate for blockchain based solutions forward. A blockchain connects market participants in a fully digitalized and immutable way, facilitating frictionless transactions between the participants. There’s an agreed format for interacting, workflow or process, and all participants on the platform or network follow the same rules. You can’t cheat, double spend, or remove any agreed transactions. Ultimately, the technology is there to create trust between all network participants.
- What is your company’s roadmap for the rest of 2020 and what should we expect to see from your team in the next 12 months?
In the coming months, we believe we will see both existing and start-up exchanges look more seriously into robust, exchange-grade systems that can evolve transparency and security standards aligned with their capital markets counterparts in order to grow liquidity and attract widespread investment from all types of investors. As a technology provider to the capital markets and beyond, we will continue to explore use cases across industries that will benefit from adopting blockchain based solutions.
- How are you seeing the rate of adoption of crypto assets in the last couple of months?
Five aspects need to be aligned to institutionalize digital assets. The technology needs to be mature enough. We need to identify valid business cases where real problems can be solved. The projects must be funded properly. The regulators need to be on board. Finally, market participants need to be prepared for the transformation.
We are past the proof-of-concept stage, and the prototypes have been built. Generally, market participants feel comfortable with the technology behind digital assets, they’re confident that it’s mature enough, and they’re preparing to be part of the transformation. The discussions have already shifted from innovation centers to the business owners, who want to solve problems using modern technologies such as cloud, machine intelligence and blockchain, and they have the money to do it.
A couple of use cases are starting to gain traction in the market. Incumbent players – exchanges and financial institutions – see an opportunity to automate and digitalize manual processes in the bilateral OTC markets. There’s also a use case for building new marketplaces in healthcare, shipping, insurance and logistics to trade and track existing or novel asset classes efficiently. By creating a digital representation of the assets, they can be tracked through their entire life cycle from inception and issuance to trading, settlement and delivery.
In addition, many regulators across Europe, Asia and the U.S. are now well-equipped to understand these changes. We see several ongoing projects where national exchanges or start-ups work closely with their regulators as they seek to implement blockchain technology with innovative new products and services on top.
- Who is your hero/mentor in this space: what lessons have you learned from them and how have you applied them in your career?
I continuously make sure that I stay informed, and learn from and be inspired by technologists and innovators in the blockchain and digital assets space. Learning from other trailblazers across our own industry and in other parts of the world is how we can continue to evolve and understand how DLT and smart contracts can benefit the world and the financial ecosystem. Since this is still considered quite a novel space, I make sure to get inspiration from a lot of different people – technologists, researchers, business executives, you name it. One person I’ve followed a long time is Richard G Brown, now CTO at R3, who started writing about blockchain and smart contracts very early on.
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