An overview of the latest blockchain developments
Juahui Li, London 30/10/18
KCL FinTech Society, Kings College London
According to research conducted by APK, Blockchain Technology, Genome Sequencing, Artificial Intelligence, Robotics and Energy Storage will be key drivers of prosperity in the global economy in the coming years. Given that Bitcoin is down more than 80% from its all-time high in just one-year time, can Blockchain Technology still be considered such a pivotal position along with the other four well-known sectors, which are currently changing our lives? It is important to recognize that the role Blockchain Technology is playing involves far more than just cryptocurrencies. It has the potential to reform money and financial markets and largely improve efficiencies.
As we know, banks are the pillar of the financial markets. One of its core functions is payment transaction, while the emergence and prosperity of new payment rivals posed a threat to banks’ business. For example, UK-based TransferWise, utilizing technology to offer lower service fees, has over 4 million customers and transfers more than £3bn in payments per month. In the circumstance, Blockchain Technology seems to be a panacea for banks to deal with the high service fees and inefficiencies. By September 2018, more than 75 banks had joined the Interbank Information Network (IIN), which was set up by JPMorgan, Royal Bank of Canada and New Zealand Banking Group Limited (ANZ) in 2017. Using Blockchain Technology, banks can significantly improve the efficiency and further enhance the customer experience. Especially in global payments, even simple cross-border payments need to go through a chain of three to four banks because banks can only send the payment directly to the correspondent bank. The payment may be held up for weeks because of missing or defective transaction instructions, additional compliance checks or faulty addresses. Because in such conditions, banks have to send inquiries back through the payment chain, bank by bank, to someone who processes the information to resolve the issues and then send it back along the same route. By utilizing Blockchain Technology, IIN enables banks to avoid multiple layers of communication and simplifies verification process. The idea is that by building a mutually-assessible ledger across banks, IIN will reduce the number of participants who are responsible for delivering inquiries. Furthermore, Blockchain Technology can bring confidentiality, speed and enhanced security to the global payment system.
Emma Loftus, Head of Global Payments and FX, J.P. Morgan Treasury Services, said, “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”. To some extent, Blockchain Technology is promoted by economic globalization, and in turn underpins economic globalization.
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