A History of Financial Innovation.
A recurring criticism of distributed ledger technology is that it is a solution in search of a problem. In fact, over the past decade, thousands of tokens have been created, many with no clear economic purpose. This criticism carries weight because, historically, real financial innovation has never occurred in this way. For thousands of years, new instruments have emerged to meet specific societal and commercial needs. They were designed to solve real problems, and in doing so, they reshaped the financial system and the world.
The first great financial innovation was standardisation. Beginning with silver weight systems in Mesopotamia and later with coinage, standardisation created a universal measure of value. As trade expanded, the cost and risk of moving precious metals led Florentine bankers to invent bills of exchange, allowing value to move on paper and enabling long-distance commerce at scale.
As trade routes stretched across continents, a new problem emerged: trust. Merchants could not rely on the solvency of distant buyers. The letter of credit solved this by inserting the reputation of a bank into the transaction. Sellers no longer depended on counterparties but on the guarantee of institutions. Trust itself became transferable, and global trade flourished.
Over time, the question of trust shifted from what was traded to how ownership was recorded. For centuries, bearer certificates conferred title through possession, but at scale they proved fragile and vulnerable to loss, theft, or destruction. From the 1980s, markets shifted towards dematerialised securities, recorded electronically in centralised registries. Efficiency improved, but new frictions emerged: fragmented custodial chains, reconciliation delays, and limited cross-border mobility. The same problems now reappear in distributed ledger systems, where isolated networks and brittle cross-chain bridges recreate the very fragmentation they sought to replace.
The pursuit of efficiency has revealed a deeper paradox: standardisation is the foundation of trust, yet when pursued in isolation through competing data models, protocols, and registries, it fragments markets and erodes the very trust it was meant to secure. What once provided a common foundation for exchange has splintered into rival rulebooks and technologies, each asserting authority over how value is held and transferred. The languages of settlement have multiplied, and trust, once rooted in shared standards, has become dispersed across systems that no longer communicate.
Novat is designed to re-establish trust through standardisation. It restores the qualities once associated with bearer instruments but in a form fully compatible with both dematerialised and natively digital markets. It establishes a common, programmable layer for representing obligations and coordinating settlement across fragmented systems, creating a shared foundation of trust in an otherwise disconnected financial landscape.
Read more about the Novat, and download the white paper, here.