There’s been plenty of ink devoted to the meteoric rise and precipitous fall that’s taken place in the cryptocurrency market in 2018. Opinions on the topic are a dime a dozen, but the one consensus seems to be that nobody’s sure where the bottom will ultimately turn out to be. For those invested in individual cryptocurrencies, it’s been nothing short of a disaster. For the broader investment market, however, there’s a silver lining: the blockchain.
For the uninitiated, the blockchain is the distributed, encrypted digital ledger technology that makes cryptocurrencies tick. It’s turning out to be the most valuable takeaway of the whole cryptocurrency rollercoaster ride, as it’s proving to be infinitely adaptable for almost every business use case imaginable. It’s already being used to track and authenticate diamonds, reduce costs in global supply chains, and even to create a proof-of-insurance system.
The one place that blockchain technology hasn’t made a visible splash is in the industry for which it was created in the first place: finance. That’s largely due to the conservative nature of the global financial industry, but it seems like progress is starting to happen. To understand what’s going on and where the changes will appear going forward, here’s a look at three mainstream finance industry blockchain applications that are online (or coming online) right now.
Real-Time Bank Transfers
Recently, New York-based Signature Bank won approval from regulators to launch a real-time payment settlement platform based on blockchain technology. The platform, known as Signet, will allow real-time money transfers between the bank’s commercial clients, starting immediately. The key value proposition of the platform is that the system will operate 24 hours per day, 365 days per year, which allows far more financial flexibility than current systems. That alone is worth the price of admission for users of the system, but the benefits don’t stop there. Making transfers via the Signet platform also enables said transfers to occur in a peer-to-peer fashion, eliminating the middleman. That means that there will be no transaction fees to speak of, making the system a free and valuable tool for any company with access to it.
Stock Exchange Platforms
Modern investors have gotten used to using a variety of platforms to buy and trade stocks online in the past few decades, but beyond that, global stock markets haven’t exactly been known for digital innovation. That’s all about to change, however, as the Australian Securities Exchange (ASX) has committed to switching over to a new blockchain-based post-trade system by the end of 2020. It will be replacing a system, known as CHESS, which has been in place for over 25 years. The new system is being built by New York fintech firm Digital Asset and is expected to introduce no less than 50 new features that will help to lower costs and speed up settlements by allowing for pre-matching of transactions earlier in the process compared to today’s methods.
When the cryptocurrency wave first began, the security and flexibility of the blockchain made clear that it might be the eventual successor to the current credit card processing industry. While scalability issues have prevented that from happening (so far), that didn’t stop credit card giant MasterCard from taking steps to defend their territory. They started by creating a blockchain bases system that allows for cross-border payments between businesses using fiat currency, instead of crypto-tokens. They didn’t stop there, however. Since their first foray into blockchain technology, MasterCard has been continuing research and has filed for a patent on another blockchain system that would allow anonymous transactions between parties – which represents a fulfillment of one of the original key value propositions of cryptocurrencies themselves.
Given these developments, it’s becoming clear that the global financial industry is starting to come around on the promise of blockchain technology. That represents a pretty big shift in an industry that’s not known for embracing change or moving quickly even when it does. If the above-mentioned blockchain solutions take off, it could signal the beginnings of a whole new wave of blockchain adoption all around the world of finance, which would benefit both the industry itself, as well as all of its many customers – and would be a major win for the crypto space, even as the losses there continue to mount.