Blockchain Operations Simplified for Finance Firms
This primer offers an understanding of blockchain operations for any traditional finance firm considering blockchain products. Focusing on Ethereum blockchain operations, it follows the evolution of decentralized apps from proof-of-work to proof-of-stake, the reasons for the shift, and some of the new risks created by the advent and growth of large staking pools.
The shift to proof-of-stake has mitigated one major risk of cryptocurrencies by reducing the amount of energy required, but it has introduced other challenges. The decentralized nature of Ethereum serves to keep the blockchain democratic and prevent undue influence by any one large player. However, the increasing interdependency of decentralized apps and emergence of a service sector dominated by a few large players raises concerns and introduces some systemic risk.
Despite this, increased scalability offers an opportunity for financial firms looking to leverage blockchain and defi tools, as they gain greater traction within the traditional financial system.