Blockchain has been a buzzword for some time, evoking a sense of mystery and magic for tech enthusiasts – or just plain confusion for the average Joe.
Despite the hype, it’s also received a fair amount of criticism – largely from those in the mainstream financial world who, due to their skepticism of cryptocurrency such as Bitcoin, have gone to bash its underlying technology.
Blockchain technology has also received flak from those who say it is too complicated to implement. And then there are the endless scams: startups promising to improve your life or business – or make you loads of money – all by using the magic of the blockchain.
Why wouldn’t you be skeptical?
But by just seeing blockchain for what it really is (multiple copies of a database), and by not hyping it up to be anything it’s not, it can still bring value to many things, be it to business, health, law enforcement or even the music industry, to name but a few.
The mainstream financial world is no exception.
Bollocks to Blockchain?
Previously banks were eager to distance themselves not only from cryptocurrencies but from blockchain technology as well. Now, they’re seeing the benefits of what it can bring to their companies.
As banks turn to such technology and third party blockchains, more and more projects will spring up. The key is finding the projects that work.
Projects such as the XAR Network, for example, which is already being noticed due to its immediacy, will likely bring value to the financial world in 2020. The XAR Network, a secure blockchain network for banks and financial companies and other stakeholders, revolves around the building of a framework on which developers can build decentralized financial ecosystems. Decentralized validation happens quickly on the XAR Network for a wide range of digital asset transactions.
Or Compound, which runs on the Ethereum blockchain and is being noticed for the sheer amount of crypto locked up in its automated system – which can generate returns for users comparable to interest. The open-source, autonomous protocol is built for developers to unlock a universe of new financial applications.
America’s largest bank, JPMorgan Chase, has always been outspoken about how non-fiat cryptocurrencies are bad (the company’s CEO, Jamie Dimon, has always slammed Bitcoin, anyway). But the investment bank looks favorably to the blockchain and last year it became one of the first major U.S. banks to create its own coin using the technology.
JPMorgan is not alone in its blockchain pursuits as New York-based Signature Bank had months before already created a token using the Ethereum platform, named Signet. To kick off 2020, Signature Bank announced it was working in partnership with blockchain-driven trust company, Prime Trust, in order to allow the company and their clients to utilize Signet to fund and settle their accounts in real-time.
And in a more dramatic announcement, China’s President Xi Jinping ended 2019 by making a speech heavily focusing on finance saying the country needs to “seize the opportunities” presented by blockchain. A senior official at the country’s foreign exchange regulator not long after commented that China would be expanding the scope of the State Administration of Foreign Exchange (SAFE) – its blockchain cross-border financing pilot platform.
The aim is to “gradually expand the scope of the pilot and the application scenarios of blockchain technology in cross-border financing and macro-prudential management,” Lu Lei, SAFE’s deputy head said.
When arguably the most powerful man in the world is making sure the country he runs – the world’s second-largest economy – and its financial institutions are implementing the blockchain, it is clear the technology is not to be laughed at.
The Year of Blockchain
Such moves show that the big players in the mainstream financial world are right to turn to the blockchain or third party blockchain projects to improve the running of their day-to-day operations. In fact, there are around 400 banks and financial institutions across the world that are now using, or looking to use, the blockchain.
What banks and financial institutions will need to be mindful of is projects that are at best incapable of improving their company or, at worst, are straight-up scams. Just like when dodgy ICOs were popping up at a frightening rate when the blockchain really was being hyped up, it is likely illegitimate fintech startups will continue to pop-up in 2020; promising the world to companies – but ultimately failing to deliver.
But what is certain is that blockchain is no longer just a fun buzzword – and 2020 will be an interesting year to see what the big players in finance end up doing with it.
Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.