Decentralized Financial Intermediation Beyond Blockchains

32 Pages Posted: 21 Jun 2016 Last revised: 23 Sep 2018

See all articles by Fabio Massacci

Fabio Massacci

DISI - University of Trento

Chan-Nam Ngo

University of Trento

Julian M. Williams

Durham Business School

Date Written: June 13, 2016


Blockchains and Byzantine Fault Tolerance form the basis of decentralized currencies and ledgers such as Bitcoin, Ripple, ZeroCash, and Ethereum. A large slate of literature has focused on the currency aspects (e.g. anonymity, independence from central banks, etc.). We argue that, as-far-as Distributed Payment Transactions Networks (PTNs) are concerned, there are other, possibly more interesting, properties. This paper provides a systematic review of both traditional PTNs and their analogues in decentralized ledgers and associates different technological features to the corresponding business and financial requirements. We provide a conceptual classification of the key properties (value creation, payment promise, transaction fulfillment, and value preservation). We map existing (distributed) PTNs into the classification showing different alternatives are possible. Furthermore, the ideas behind distributed ledgers can be extended beyond payments and contracts. We illustrate the idea of derivatives-contracts-as-programs that are marked to market (or an account that is margined) automatically by computations run on, and whose ownership transitions are recorded, in a distributed payment network.

Keywords: Blockchain, Byzantine Fault Tolerance, Distributed Payment Transaction Network, Smart Contract, Derivative Contracts as Programs

JEL Classification: E42, G13, G23, L86, O33

Suggested Citation

Massacci, Fabio and Ngo, Chan-Nam and Williams, Julian M., Decentralized Financial Intermediation Beyond Blockchains (June 13, 2016). Available at SSRN: or

Fabio Massacci

DISI - University of Trento ( email )

Via Sommarive 9
Trento, Trento 38123


Chan-Nam Ngo (Contact Author)

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152

Julian M. Williams

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

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