A flurry of interests has been generated globally backed by some significant developments, which have been set to shape the future of Blockchain economy. On the contrary, the obsession of media with Bitcoin, as well as the mystery surrounding the founder of this concept, who goes by the name of Satoshi Nakamoto (whose real identity is currently unknown) has masked the real benefits offered by Blockchain. The technology is expected to completely reshape financial services, with its ability to lower the cost of many commercial activities to near-zero.
Blockchain technology is commonly referred to as a public ledger, atop a crypto-network that is known as Ethereum that is the prime focus in the fine tech market that is based on highest investment. It is the software that power and regulates the cryptocurrency Bitcoin at the same time. In simple terms, it records ownership of Bitcoin (virtual currency or substitute of money) and related transactions, which take place between two entities.
Ethereum is the most advanced platform that is used for creating large public Blockchains. Ethereum was designed to bring about flexibility in existing design of the Bitcoin Blockchain. The previous model was rigid and compelled the users of the application to build another layer of coding on top of Bitcoins for the extraction of the right functionality.
Financial service organizations are competing to harness the power of the Bitcoin infrastructure with the aim of achieving cost advantages. This technology could prove to be fruitful for some of the world’s biggest banks. Advantages of the technology include operations on a decentralized network, process integrity, highly validated records on a well-distributed network, longevity, and reliability & availability. Overall, the improved fraudulent protection, rapid speed of trading systems, and high transparency delivered by Blockchain are some of the key outcomes being considered by banks for investing in this technology. For instance, in 2015, 42 of the world’s leading banks got together as part of the ‘R3 Project’ to develop common standards for Blockchain usage in the global financial markets. Outlier Ventures Ltd (a specialist research & commercial arm to the venture platform that tracks over 30 Blockchain use cases) estimated that there would be 1,000 Blockchain start-up companies using different technologies by the end of July 2016. An interesting twist is that the Outlier also predicts that 70 percent of those start-up companies would fail within a few years.
The technology hosts some use cases, including ownership of modules in app development, digital content storage and delivery, points based value transfer for ride sharing, digitalization of documentation, decentralized patient record management, digitalization of assets and improvement of anti-counterfeit measures, among others. Financial industry-specific use cases include smart contracts, crypto-currencies, trade finances, capital markets, and much more.
The range of use cases has attracted global IT giants to make usage of this technology. IBM Corporation had come up with a Blockchain strategy for delivering its cloud-based business solutions. The firm has a multi-year plan to incorporate its existing assets, such as IBM zSystems, Watson, and Bluemix Garage into a Blockchain-as-a-service (BaaS) strategy. Citibank has created Citicoin, a crypto-currency that is being tested internally.
The other competitors, active in this space, include BitCasino, BTCrow, Block Trust, BitGo, GoCoin, Factom, Tierion, Appliedblockchain, and Synereo. These firms follow different growth strategies, primarily partnerships, and collaborations with complementary firms. In November 2015, Visa Europe announced a collaboration with Ephiphyte, a provider of Blockchain based software, to provide a solution for immediate monetary transactions. The companies are also launching new platforms in this space to capture new markets. In October 2015, Nasdaq unveiled its new Blockchain based platform that facilitates sharing, transfers, and sales via its private markets. During the same time, Visa, in collaboration with DocuSign, unveiled a prototype of the connected automobile, having an app built into its dashboard that is based on Bitcoin Blockchain technology. This technology is expected to revolutionize the car leasing process by digitalization of the whole process, from configuring the lease, insurance and other expenses like parking and tolls, to digitally signing and paying for the car itself.
Blockchain, is thus in itself, a way of verifying the accuracy of data and has the larger number of unexplored applications, which we are only beginning to understand.