A blockchain phenomenon is happening right in front of our eyes and it´s very hard not to marvel at the idea of being in the middle of the next big technological advancement.
Blockchain and cryptocurrencies remind me of the euphoria that engulfed technology at the onset of Twitter and Facebook. We are now seeing genuine acceptance from banks who are actively investing in the blockchain infrastructure. Just as in the Web 1.0 days, Bitcoin and other pioneer cryptos may not survive the increasing evolution of blockchain but blockchain as a technology is here to stay.
To put everything into context, here are some details:
- Citigroup has been looking at distributed ledger technology for the last few years and has amassed a skilled team that has constructed three blockchains and a test currency to run across them. By operating like a venture capital funder in the fintech space, Citi is able to achieve better results by speeding its capital injection capacity (This is one area that had previously slowed down banking innovation)
- LHV Bank is creating a financial services platform and money-transfer app that will utilize Bitcoin to facilitate transactions which will include an experimental bitcoin-based certificate of deposit.
- UBS has now opened up a blockchain Research Lab in London with the aim of experimenting with how blockchain can be adapted to process a wide range of financial transactions in a more efficient and cost-effective way.
- Santander is currently experimenting with blockchain and digital currencies through its Crypto 2.0 team. InnoVentures, which has a $100 million (£64 million) fintech investment fund has already funded 3 deals with two more 2 pending. One of the funded startups is working on blockchain technology.
- Nasdaq has confirmed that it will be using blockchain technology from US start-up Chain to underpin its new private share-trading market.
- Singapore Central Bank is funding a blockchain Record-keeping Project.
- ING, ABN Amro and Rabobank have been experimenting on blockchain since 2014.
And the list keeps growing. The attraction to blockchain is easy to understand since the modern financial system wasn´t designed for the digital age and has a lot of legacy issues.
Is this the beginning of an Internet of finance? The blockchain technology will fundamentally reduce costs and provide real-time service, so will banks insist on making it centralised? And will this run counter to the concept of blockchain?
While Twitter and Facebook have been credited with triggering the Arab revolution, it´s not bullish to predict that blockchain will revolutionize the current financial system.