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Banks don’t want to be weakest link in blockchain revolution

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While banks could reduce their costs, the gains could eventually shift to consumers who could benefit from quicker and cheaper services.”Any disruptive shock — be it technology, economic or political — tends to result in winners and losers, and blockchain is no different,” Colin Ellis, managing director for credit strategy at Moody’s, told AFP.”It could reduce costs for banks but at the same time could foster more competition that would put downward pressure on fees.”

A shared, encrypted “ledger” that cannot be manipulated, blockchains offer the promise of secure transactions that allow anyone to get an accurate accounting of money, property or other assets.

Much like it underpins trading in bitcoin and other cryptocurrencies, blockchain or so-called distributed ledger technology could also support trading of other assets, thus posing a risk to banks who earn hefty fees helping their clients trade currencies and other assets.

Key areas of financial services where blockchain could have an impact are the settlement and clearing of transactions.

But a recent report by Moody’s found that while blockchain technology could slashcross-border transaction costs for financial institutions, it would likely ramp up competition among banks.

Anish Mohammed, a cryptography expert and academic at Berlin University, told AFP that the losers would be those who failed to adapt to the latest technological trend.

“There will be winners and losers, the losers will be those who do not make any changes.”

The world’s biggest financial institutions are already experimenting with blockchain, although recent data indicates that they risk lagging behind other sectors in its use.

– ‘Cheaper and quicker’ – Two months ago, Dutch bank ING and its Swiss peer Credit Suisse successfully traded securities through a blockchain-style network.

The pair transmitted 25 million euros of bonds almost instantaneously. The deal would normally have taken one day or more.

Ellis believes that international transactions are an area where banks could cut their costs by using blockchain technology. Currently international bank transfers often take several days as several banks are often needed to act as intermediaries.

But a blockchain could eliminate the need for those intermediaries, thus speeding service and reducing costs.

Santander last month began using a blockchain to allow its retail customers in Spain, Britain, Brazil and Poland to complete international transfers the same or following day.

“One Pay FX uses blockchain-based technology to provide a fast, simple and secure way to transfer money internationally — offering value, transparency, and the trust and service customers expect from a bank like Santander,” the bank’s chief executive Ana Botin said at the launch of the service.

One Pay FX uses a blockchain service for banks developed by Ripple, a start up firm with offers a cryptocurrency with the same name.

Around $2.1 billion (1.8 billion euros) will be invested via blockchain globally in 2018, according to US-based consultancy IDC.

One third of that will represent the financial services industry, IDC said.

Other notable sectors using blockchain include distribution and services, retail and professional services, and manufacturing and resources.

“The technology is still at a relatively early stage” so “it is too soon to know what the final impact will be,” said Ellis.

“But it could ultimately make banking cheaper and quicker for consumers,” he concluded.

Blockchain

2019 Saw the End of Blockchain Tourism

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This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Marie Wieck is general manager at IBM Blockchain, where she focuses on driving ecosystem growth around the Hyperledger Project and delivering enterprise blockchain solutions.

In 2019, blockchain’s initial hype has evolved into enterprise platforms driving real digital transformation. Today, real-world use cases for permissioned networks, administered by trusted parties, are yielding benefits in industries including finance, food, global trade and healthcare. 

While entrepreneurs and businesses continue to propose novel blockchain concepts worth pursuing, blockchain is now ten years old, surely long enough to identify clear patterns about where it drives the most tangible business benefits. Indeed, we might even say that 2019 marked the end of blockchain tourism, a period when for many, blockchain pilots were less about critically examining and applying a new technology than they were about simply saying you had made the trip. We saw a shift from dabbling in blockchain for the sake of learning more about the technology for technology’s sake, to applying it to solve long-standing problems. 

So far, IBM has helped clients launch more than 100 networks that are now in production. The best use cases, in our view, take advantage of the technology’s novel properties, including the ability to track provenance, an increasingly important issue to consumers. 75 percent of consumers said they would consider changing to a brand that offered more product information in 2018, according to a Food Marketing Institute survey, up from just 39 percent in 2016. After making provenance information available in store using IBM Food Trust, the French retailer Carrefour found that customers spent as long as 90 seconds reading it. 

While hype surrounding crypto certainly helped drive consumer interest, funding, and innovation in the past, it has also perhaps overshadowed some of the hard business uses to which blockchain is uniquely suited. These advantages include immutability. Blockchain can readily digitize the paper processes once relied upon to share information up and down supply chains. In the longer term, the technology can even make it possible to exchange value between participants where an efficient market maker does not yet exist, for example with carbon credits or cross-border remittances, areas of commerce that have been devoid of clear rules and level playing fields for participants. In short, blockchain is best at tackling problems where there is a lack of traceability or a lack of digital economy.

WE HAVE SEEN MANY SUCCESSFUL BLOCKCHAIN PILOTS, BUT UNLESS NETWORK PARTICIPANTS FEEL COMFORTABLE USING IT TO COLLABORATE AND SHARE DATA AT SCALE, THE ADVANTAGES OF DISTRIBUTED LEDGERS WON’T MATERIALIZE. 

When these advantages have been exploited, blockchain-based businesses are already beginning to drive sales. Carrefour says it blockchain tracing system, which is accessible via consumer-facing QR codes, has  boosted sales of some products. Through shared data, companies like Carrefour can engender greater trust and collaboration between customers, employees and partners. 

Distributed ledgers present a dual challenge for companies, one that is arguably 20 percent technological and 80 percent governance. We have seen many successful blockchain pilots, but unless network participants feel comfortable using it to collaborate and share data at scale, the advantages of distributed ledgers won’t materialize.   

2019 also offered a clear roadmap for how these governance models should be structured to ensure adoption and growth. These principles must allow for global identity standards that aren’t limited to a single network or country. They must require permissioned, trusted access in a way that centers privacy. There should also be blockchain registries like Hacera Unbounded – almost like network ‘Yellow Pages’  – to identify the public entry points to enterprise networks, and participants must ensure open access to key data platforms via API. 

When applied, these principles have made it possible to scale blockchain networks rapidly. TradeLens, a solution co-developed by IBM and Maersk to digitize the global shipping industry, became commercially available only in December 2018. But thanks to its open standards and governance structure, the platform has rapidly recruited dozens  of ports, freight forwarders, customs offices and more. By July 2020 commitments from key global container operators will cover more than half of world’s container cargo.  

While the age of blockchain tourism may be mercifully over, the digital transformation it enables is still only just getting underway. Now that we have a base of successful implementations, we can begin to shift our focus to standards surrounding integration and interoperability.  

As we look ahead to 2020, key community efforts will help expand the business impact of blockchain. These include establishing trusted identity standards that apply across networks (and will also speed on-boarding and adoption, like those established by the Decentralized Identity Foundation and World Wide Web Consortium. Meanwhile, efforts like the Token Taxonomy Initiative are creating technical standards for the digitization of assets on blockchain data platforms. These complement the public and regulatory interest in new digital business models around asset-backed stablecoins and digital fiat currencies.  

Once we have a shared version of the truth based on shared data and common standards, entirely new business models become possible for companies and individuals. And while this vision may take much longer to come to pass than one supply chain or finance platform, its end goal — a truly circular, frictionless economy – will be greater than the sum of its parts. 


source:coindesk

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Never Mind Consumers, This Was a Year of Steady Infrastructural Progress

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This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Jake Brukhman is the founder and managing director of CoinFund.

After a partial recovery in the first half of 2019, the crypto markets were thrown to international government scrutiny and regulatory uncertainty mid-year, a phase marked by Facebook’s public launch of Libra in June. Far from the market recovery investors had hoped for following the 2018 crypto bear market, the blockchain space progressed in technological maturity while seemingly underperforming “crypto-focused” expectations. Nevertheless, digital assets have added 63% to their aggregate market capitalization so far in 2019 (as of writing in November). Even if 2019 wasn’t characterized by frothy speculative trading and dramatic highs as in previous years, it was a year of infrastructural progress.

Despite having operable smart contract blockchains like Ethereum in production, projects have struggled with product-market fit for decentralized applications in recent years. The industry might simply be too early. If we look back to how “mobile applications” progressed, they didn’t really solidify into a multi-billion dollar business until their infrastructure — smartphones like iPhone and mobile operating systems like Android — became extremely accessible, usable, and affordable. In the same way, blockchain infrastructure in the form of scalable blockchains, user-friendly wallet experiences, node and data services, and financial industry support for digital assets, might be a prerequisite to building decentralized applications at a rate which produces mainstream market fit. This kind of infrastructural progress was the subject of 2019.

Down in the lower layers of the decentralization stack, several second-generation smart contract platforms — notably Polkadot, Cosmos, Tezos, and NEAR — provided innovations in throughput, interoperability, network governance, and usability, and are challenging Ethereum’s market share and winding 2.0 roadmap. Additionally, Dapper Labs announced Flow, a base layer dedicated to mainstream-facing usability of games and their non-fungible tokens and digital assets, while simultaneously announcing a major partnership, NBA Top Shot. 

IF CRITICS LIKE NOURIEL ROUBINI COULD CLAIM UNCERTAIN SCALABILITY PROSPECTS FOR BLOCKCHAIN BEFORE, 2019 PROVED THEM WRONG. 

If critics like Nouriel Roubini could claim uncertain scalability prospects for blockchain before, 2019 proved them wrong. The next order of blockchain scalability magnitude is here. First, new base layers have become faster by virtue of employing advanced consensus algorithms, sharding, and parallelism. Coda, a cryptocurrency that uses zero-knowledge proofs to shrink the storage footprint of its blockchain, went into testnet and kicked off a new variety of base layer that can run on a mobile phone. Finally, a number of “layer 2” technologies — such as Connext’s state channels or Matter Labs’ ZK rollup technologies — have made progress in enabling fast payments and cheaper, scalable, and privacy-preserving smart contracts. At the same time, technologies like GEO Protocol have put an emphasis on cross-chain interoperability for instant exchange across distinct blockchains, networks, and even traditional fiat payment rails.

Much of the traction that does not come from exchanges or trading has been generated decidedly in infrastructure layers in 2019. Node infrastructure provider Blockdaemon, having recognized the market’s propensity to proliferate new decentralized networks, is generating revenue across an impressive 22 such networks today and continues to grow month over month. The Graph is serving over 400 public smart contract subgraphs, with request volume clocking millions of daily data queries. Meanwhile, 3Box’s self-sovereign identity and data solution is rapidly integrating across the Ethereum ecosystem, within wallets like MetaMask and many of the new user onboarding solutions, like Portis and Authereum, and even governance experiment MolochDAO. 

Blockchain’s road to mainstream adoption depends on institutional backing of businesses that support blockchain infrastructure and enable traditional investors both to capitalize and participate in digital asset networks. As such, the compliance levels of exchanges have been increasing to support institutional clients. Fidelity, ErisX, Ledger, and ICE have all launched digital asset custody products eyeing institutions who have custodial requirements and are considering digital asset exposure. Finally, more than 20 blockchain-focused analytics firms are on the market, and some have been gradually honing their offerings for enterprise-grade customers.

From legal DAO wrappers to fiat on-ramps to zero knowledge proof systems, the breadth of 2019’s infrastructural innovations doesn’t fit into a single article. But this improved infrastructure will power the next generation of blockchain products for investors, institutions, enterprises, and mainstream customers in 2020. As the lower levels of the blockchain technology stack mature, we’ll look back on 2019 as the start of the blockchain adoption journey.

source:coindesk

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Chinese Bank to Issue $2.8 Billion in Blockchain-Based Bonds

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It’s full speed ahead as far as China and blockchain technology is concerned, as the intersection between the innovative technology and the country’s financial space continues to grow. 

Earlier this month, local news source Sina Finance reported that the Bank of China has issued up to 20 billion yuan ($2.8 billion) in blockchain-based bonds for both micro and small enterprises across the country. The funds will be used to issue loans to these companies, thus helping them to expand their operation and scale.  

Applying Blockchain as the Government Wants It 

The development is in direct obedience to a directive by Chinese President Xi Jinping. In October, the president sent a massive bombshell across the crypto space, when he came out to support blockchain technology and spurred entities- whether public or private- to adopt the technology as well. 

As President Xi put it at the time, blockchain will be able to help the Chinese economy to grow, thus keeping the country on pace to achieve both technological and economic advancement. While a lot of agencies have answered the call and are adopting blockchain en masse, this is truly one of the adoption techniques that will see the vision of the president come to life. 

By being able to access loans, small and micro enterprises will be able to keep their operations optimal, accessing various markets for the resources they need. It’s blockchain-fueled economic growth at its fundamental level. 

China’s Crypto Nears Its Launch 

Of course, all of this is still leading up to the launch of digital currency by the Chinese government. Beijing has been rumored to be launching a cryptocurrency anytime soon, and reports are beginning to surface concerning what the asset could be like and how it could operate. 

Earlier this week, local news medium Caijing reported that the Peoples Bank of China- the country’s Central Bank- will be leading other major banks and economic participants in the country to conduct real-world tests of the asset

According to the report, the agencies will be testing the digital currency in the city of Shenzhen before the year winds to a close, and there is a possibility of expanding this to the province of Suzhou as well.  

On December 5, news source Global Times reported that Yang Wang, a senior research fellow with the Fintech Institute of Renmin University of China, had explained that the new national digital currency would be able to process up to 220,000 transactions in a second. While speaking on the potential of the asset to onboard billions of people in the first phase of its adoption, Wang reportedly made the estimate, adding that its mass adoption will be unstoppable once people begin to see the speed and superiority of the asset over other fiat currencies and digital assets. 

Although the estimate hasn’t been confirmed by anyone with access to the Chinese government, it will definitely make the Chinese asset more of a reliable option or making payments or transfers. Currently, Bitcoin and Facebook’s Libra stablecoin can process 4.6 and 1,000 transactions in a second. PayPal and VISA, two popular payment portals, can process 40,000 and 1,700 transactions, respectively. No one matches this transaction strength.  

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