Blockchain officially confirmed as slower and more expensive
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MAY 29, 2019 By: Izabella Kaminska
Hat tip to Joe Weisenthal at Bloomberg for flagging the following shocker from the Bundesbank on Wednesday (our emphasis):

A trial project using blockchain to transfer and settle securities and cash proved more costly and less speedy than the traditional way, Germany’s central bank president said.
The experiment, launched by the Bundesbank together with Deutsche Boerse in 2016, concluded late last year that the prototype “in principle fulfilled all basic regulatory features for financial transactions.” Yet while advocates of distributed ledger technology say it has the potential to be cheaper and faster than current settlement mechanisms, Jens Weidmann said the Bundesbank project did not bear those out.
For context, here's FT Alphaville, March 19, 2015:

For one, we’re not convinced blockchain can ever be successfully delinked from a coupon or token pay-off component without compromising the security of the system. Second, we’re not convinced the economics of blockchain work out for anything but a few high-intensity use cases. Third, blockchain is always going to be more expensive than a central clearer because a multiple of agents have to do the processing job rather than just one, which makes it a premium clearing service — especially if delinked from an equity coupon — not a cheaper one.
And here's FT Alphaville quoting Axel Pierron of Opimas back on November 22, 2017:

Even in markets where “blockchain” hype may help to implement standardised operating systems, such as FX, it’s worth asking just how disruptive it will be in the long term, especially on the cost savings front.
If it’s more update than paradigm shift, the blockchain investor market could be disappointed.
To wit, Pierron believes predictions that blockchain will reduce IT and infrastructure spending by up to 30 per cent may be overdone. For the most part, these estimates assume blockchain will see current back-office systems replaced with ledger-based alternatives. Whether this actually reduces costs, however, will depend on the interoperability of the systems at large.
And here's FT Alphaville citing Martin Walker, Director for Banking and Finance, Center for Evidence-Based Management, in April 13, 2018:

Distributed ledger tech is “inherently slower” than that used in all the fast paced liquid markets like FX, equities, government bonds. But the legal mechanism where settlement happens at the same time as the trade is too fast for markets used to settling trades on a time delay.
Here are some Tweets.

The only blockchain models I think have potential r ones that understand the increased cost of "trustless" multilateral clearing.

— Izabella Kaminska (@izakaminska) March 11, 2015
@dominic_w if u r saying there's gonna b a lot more fintech, i dont doubt that, but it wont b blockchain that wins out, coz its inefficient

— Izabella Kaminska (@izakaminska) January 8, 2015
Here's some blurb about our view on blockchain in a City debate.

Here's some stuff from Martin Walker (and FT Alphaville)'s testimony to the UK Treasury Select Committee hearing on cryptoassets in September 2018:

In their written evidence to the Committee, Ms Kaminska and Mr Walker acknowledged that “a very wide range of claims have been made […] about the potential benefits of applying blockchain […] technologies in the financial services sector.”61 However, they argued that in most cases, “how blockchain [would] specifically solve problems or generally make things better [is] not explained.”62 40. In discussing examples of the wider application of blockchain to the financial services sector, Ms Kaminska and Mr Walker noted that many of these do not deploy cryptoassets, restrict the number of participants on the ledger and have “a central body […] responsible for maintenance of the ledger and […] granting access to it.”63 They added that, in many cases, these examples were “so different from the original blockchain, it becomes meaningless to refer to it as blockchain.”6
And here's an extract for a freelance piece Alphaville did for the Berlin Biennale catalogue for artist Simon Denny.

. . . it’s not at all clear whether private blockchains can improve on the costs or efficiencies of the current system. Nor is there any reason to believe a blockchain will be any more successful at introducing a single rule kit of industry standards than regulators or governments have been to date. To the contrary, there’s every risk we end up with a system of competing cartel networks that can’t get along. Or on the off chance that they do, even in such a highly standardised, synchronised, and interoperable an environment, the predictability of the system exposes it to entirely new types of cyber security risk, which have not yet been conceived or accounted for by anyone. Last, it underestimates the challenge of capturing the entire financial system in one transparent ledger by ignoring the continuing incentive for parallel “off grid” banking networks to spring up in informal environments (like babysitting clubs) and in jurisdictions which offer safe harbour to dark networks and the black market.
And just to conclude, here's some more from the Bundesbank:

“The blockchain solutions did not fare better in every way: the process took a bit longer and resulted in relatively high computational costs,” Weidmann said in Frankfurt on Wednesday. “Similar experiences have been made elsewhere in the financial sector. Despite numerous tests of blockchain-based prototypes, a real breakthrough in application is missing so far.”