ASTRI was commissioned by the Fintech Facilitation Office (FFO) of the Hong Kong Monetary Authority (HKMA) to conduct a research project on Distributed Ledger Technology (DLT). The project led to the “Whitepaper on Distributed Ledger Technology” which documented the R&D findings. DLT, commonly known as Blockchain, is an innovative technology that has significant application benefits. The project’s key objectives have been to carry out an open-minded, in-depth examination of the technology and to identify possible applications of DLT in financial services by engaging in proof-of-concept work. Published in November 2016, the whitepaper aimed to provide the FinTech industry of Hong Kong with a comprehensive introduction to the technology. It also helps the sector in understanding how the technology could be deployed as an innovative solution to enhance and secure business operations while fulfilling regulatory compliance.
DLT is an innovative technology that offers several benefits such as transparency, resiliency, auditability, and cryptography-enabled security. It is a vibrant technology that has seen prolific R&D work and a widening scope of applications.
The paper presents a comprehensive study of DLT, especially on its key benefits, risks, and potential applications. It addresses security enforcement and regulatory compliance issues. It also demonstrates how DLT can bring in viable, valuable FinTech applications, with initial findings of three proof-of-concept exercises – mortgage loan application, trade finance, and digital identity management.
The paper was enriched by valuable contributions from experts in academic banking sectors, as well as by a few groups specialising in DLT. The paper may be downloaded from the HKMA website.
As DLT continues to evolve, ASTRI will continue its R&D effort in this area and its applications.
A property transaction DLT system demonstrating ledger resiliency with transactions automatically replicated in multiple locations. In the diagram above, The transaction recording Alice selling the property to Bob is securely recorded in multiple banks and Land Registry.
Demonstration of Hash operation which converts data of any size to fixed size unique values, regardless of how minor the data differ from each other.
Proof-of-concept: A DLT-enabled property valuation where the DLT system serves as a secure ledger system shared by multiple banks and surveyors.