But the blockchain technology still has some significant kinks to work out, according to technology experts in the financial advisory industry.
Aaron Klein, CEO of Riskalyze, a technology company that helps advisors assess clients’ risk tolerance, said he is “long-term optimistic, short-term pessimistic on blockchain.”
“Here is the challenge with blockchain today: It is handling 0.6 percent of the transactions that Visa’s credit card network is handling, and yet it’s getting slower by the minute,” Klein said. “We’re up to seven-minute transaction clearing times for bitcoin.”
Those delays come as the growth of the blockchain makes it so the decryption technology moves slower. Those transaction times are untenable for an industry that places a high value on speed, he said.
“It’s an interesting scaling problem. I feel confident that they will engineer some kind of solution to it,” Klein said. “At this point of the evolution of blockchain, the middleman is looking very good.”
Steve Durko, chief technology officer at TradePMR, a provider of brokerage and custody services for investment advisors, agreed.
“We’re not using blockchain right now. We’re watching it very closely,” Durko said. “We’re looking for opportunities to use it, but I need it to be a real benefit.”
James Dowd, managing director at North Capital, a financial technology firm and broker-dealer, said his firm has already found that opportunity and started implementing it seven months ago.
North Capital is using blockchain technology for the offering transaction, settlement, custody and clearing of exempt securities, which are not offered on the public markets.