Welcome to the world of Blockchain and Cryptocurrency. Why Are So Many Banks Adopting Blockchain Technology? (IBM)By Nathan Reiff | January 18, 2017 What shake the Wall Street recently, was when someone like the Depository Trust and Clearing Corporation (DTCC) announced that they would replace a central database with new technology modelled after Bitcoin. The DTCC charts and reports most trades of stocks and bonds that occur in the U.S., and many derivatives trades as well. DTCC indicated that IBM (IBM) would head up the project.
According to Grand View Research, a San Francisco-based market research and forecasting company. “Blockchain technology is one of the most promising upcoming technological trends in the information technology domain. Not only does the technology hold the ability to disrupt the way the financial sector often works but it will also have ramifications on many other industries including consumer goods, technology, and media and telecom, among others..”
Recently, the Australian Securities Exchange announced that the exchange had intentions to move Australia’s settlement and clearing systems on the blockchain platform.”
Major factors that will drive the success of the blockchain market are the willingness of the banking, financial services and insurance sectors to accept what it calls “crypto currencies among others” and the future rate of merchant adoption. This is happening now.
Blockchain expert Alex Tapscott, co-author of the book Blockchain Revolution recently gave Bitcoin Magazine his prediction for the blockchain market.
“Major central bank will live test a digital fiat currency and once it works very well, this will lead to broader adoption,” he said. “Additionally, large banks will begin shifting large amounts of OTC [over-the-counter] transactions to real-time settlement on private distributed ledgers. Look for JPMorgan, Goldman Sachs, Barclays and Santander to lead the charge. And companies large and small and in every industry will begin developing a blockchain strategy, hiring key IT talent and launching pilots.”
According to Bai Shuo, former chief engineer of the Shanghai Stock Exchange and director of the technology committee for the ChinaLedger Alliance:
Wanxiang Blockchain Labs, a Shanghai-based non-profit research institution which hosted the first Global Blockchain Summit in Shanghai, is to lead an alliance of 11 regional commodity exchanges, equity exchanges and financial asset exchanges with the aim of creating “an open source blockchain protocol that developers can further build upon in the future”
The Internet Securities Commission of the Securities Association of China (SAC), an industrial self-regulatory body supervised by the China Securities Regulatory Commission, will act in an advisory capacity with prominent members of the blockchain community, including Jeff Garzik of Bloq, Vitalik Buterin, founder of Ethereum, Tim Swanson from R3 and Anthony Di Iorio, co-founder of Ethereum, acting as advisors.
ChinaLedger will research and develop methods to build “Internet of Everything” applications for organizations in a way that complies with China’s unique regulatory environment. The market is estimated to be worth $15 trillion by 2025 according to a Cisco report published in 2013.
The aim is to adapt and develop existing blockchain technology to the needs of Chinese businesses and set standards across the industry to ensure regulatory compliance in an environment where regulators are very positive, open and interested in blockchain technology.
It is China’s answer to the rapidly moving blockchain scene, using a structure comparable to the Linux Foundation with an open source model intended to grow China’s blockchain development community and willing to co-operate with any local or global organization.
Jeff Yang, a former developer at IBM now running a start-up focusing on smart contract templates deployable on both Ethereum and Hyperledger, told Bitcoin Magazine that “Blockchain is becoming hot in China” and regulators are “welcoming” of blockchain invention, but there is a lack of “real code dev force.”
Yang said he is working with a top local Chinese bank, which is interested in using blockchain technology for “real scenarios” such as “interest rate swaps” and is creating a presentation introducing Blockchain’s use cases for a number of banking executives.”
Globally, major IT companies, such as Intel, IBM and Cisco, have created a consortium, Hyperledger, with the aim of developing and maintaining an open source protocol for the use of smart contracts in a permissioned way for industrial use.
Meanwhile, R3 recently announced Corda, a blockchain-based protocol for financial applications which is soon to be open sourced. They are now joined by ChinaLedger in what seems to be a global race to utilize the applications of this still very new invention, with a trio of giant banks, huge IT companies and lean startups vying for market share and talent. ( Source : China Joins the Blockchain Race With ChinaLedger AllianceMay 2, 2016, by Andrew Quentson)
The convergence of Blockchain and Financial Services will bring together payments and financial services leader and entrepreneurs driving the blockchain movement forward with applications that will disrupt the Financial Services in the following sectors :
1) Capital Markets : Trade Clearing, Clearing & Reconciliation
2) Payments : Cross Border Transaction & Remittances
3) Insurance : Emerging P2P Insurance Applications
4) Digital Assets : Security & Risk Management Sharing
The following case study of Postal Saving Bank of China presented at Blockchain Expo 23/24
Postal Saving Bank of China reports success in blockchain based platform
The Postal Savings Bank of China (PSBC) has successfully conducted more than one hundred business transactions on its blockchain-based platform, the company has announced. The asset custody system, which was developed with IBM using the Hyperledger Fabric, went live in October 2016. The transactions, which involved buying and selling of bonds, were completed during a two-month trial operation after completion of a Design Thinking workshop and joint development work with IBM.
During the trial, the system demonstrated blockchain’s ability to help streamline the traditionally complex credit verification process and manage risk, helping financial institutions operate more securely and efficiently. The asset custody is one of PSBC’s core businesses, which represents an approximately four trillion Chinese Yuan (£475bn) business.
The process involves multiple parties, including financial institutions, clients, asset custodians, asset managers and investment advisors and auditors. Each transaction involves the settlement of large sums of money and multiple participants exchanging data, each with its own information system and often relying on verification systems such as telephone, fax and mail, potentially creating delays, discrepancies and risk with reporting between entities.
PSBC’s blockchain system allows sharing of information by multiple parties in real-time. It eliminates repeated credit verifications, reducing the operation process by about 60%-80% and helps make information exchanges more efficient.
The smart contract and consensus mechanism integrates investment compliance verification regulations into the blockchain, and ensures that transactions are completed after contracts are satisfied and a consensus is reached. The immutability and encryption built into the blockchain ensures that account information remains secure while allowing the quick sharing of necessary information by transaction participants. (Source : Blockchain Expo London Olympia 23/24, 2017 )
The future of blockchain & cryptocurrency is evolving rapidly, we must be ready for it!