Know More: Blockchain - Overview, Tech, Application Areas & Use Cases

Blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole. – Bob Greifeld, Chief Executive of NASDAQ

In financial markets there’s always a mechanism to correct an attack. In a blockchain there is no mechanism to correct it — people have to accept it.- Robert Sams, founder and chief executive of London-based Clearmatics.

Blockchain technology has the ability to optimize the global infrastructure to deal with global issues in this space much more efficiently than current systems. – Marwan Forzley, Founder of Align Commerce

Everyone is talking about blockchain, the new technology in the FinTech Industry. The concept of blockchain has energized the financial services industry globally. The concept has already brought a disruption in the financial industry. LTP brings to you the overview, technology, application areas and use cases of blockchain.

What is blockchain?

Source: Dupress

A blockchain is a public ledger of all bitcoin transactions that have ever been executed. A block is the current part of a blockchain which records some or all of the recent transactions, and once completed, goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. Blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block. To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Meanwhile, blocks, are like individual bank statements. The full copy of the blockchain has records of every bitcoin transaction ever executed. It can thus provide insight about facts like how much value belonged to a particular address at any point in the past. Some developers have begun looking at the creation of other different blockchains as they do not believe on depending on a single blockchain. Parallel blockchains and sidechains allow for tradeoffs and improved scalability using alternative, completely independent blockchains, thus, allowing for more innovation.

To give an example of the blockchain concept, we found out about a product called Gyft, an online platform for gift cards where you can buy, sell and redeem gift cards. It is a partnership between 44-year-old merchant acquirer/processor/FinTech firm First Data and blockchain infrastructure provider Chain to offer gift cards for SMBs using blockchain. The product will be rolled out soon and will become a solid example of blockchain-based innovation that has nothing to do with bitcoin. Why does it make sense? A majority of the SMBs don’t have gift card programs and therefore, POS installed at SMBs don’t accept them. It is costly to offer a gift card program and difficult to see the immediate benefits. It’s basically postponed gratification for a retailer, but large retailers understand it very well and have gift cards acceptance. Blockchain allows Gyft to offer a great gift card solution to SMB customers.

Benefits of blockchain technology as specified byForbesare:

  1. As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.

  2. All the transactions made are authorized by miners, which makes the transactions immutable and prevent it from the threat of hacking.

  3. Blockchain technology discards the need of any third-party or central authority for peer-to-peer transactions.

  4. Decentralization of the technology.

Banks and other financial institutions have also been active in investing (time and/or money) in this space. The following are some of the banks and other FIs who have shown intent on blockchain. The below timeline depicts the announcements by different FIs and their partners (if any) along with the potential use cases they are exploring.

Deutsche Bank:

The bank has said that it has been exploring various use cases of blockchain in areas like payments and settlement of fiat currencies, asset registries, enforcement and clearing derivative contracts, regulatory reporting, KYC, AML registries, improving post-trade processing services, etc. It has been experimenting on these technologies at their innovation labs in London, Berlin and Silicon Valley (July 2015).

NASDAQ:

The stock exchange firm initially revealed (May 2015) that they were planning to use blockchain as an enterprise-wide technology to enhance their capabilities on the NASDAQ Private Market Platform. The NASDAQ Private Market Platform is a new initiative launched in January 2014, to enable pre-IPO trading among private companies. It has also said that they would leverage the Open Assets Protocol, a colored coin concept, to build their private exchange platform. Later, in June 2015, it announced a partnership with Chain, a blockchain infrastructure provider for FIs and enterprises.

DBS Bank:

The bank organized a blockchain hackathon in Singapore in partnership with Coin Republic, a Singapore-based bitcoin company & Startupbootcamp FinTech. (May 2015)

BitX, Blockstrap and Colu provided the APIs for the two-day hackathon series. The winners were Omnichain (first place, an investment platform for emerging markets), Nubank (second place, provides banking for the unbanked) and BlockIntel (third place, a transaction security platform).

EBA:

Euro Banking Association (EBA) has released a report (in May 2015) talking about the implications of crypto-technologies from the perspective of transaction banking and payment professionals in the coming one to three years. It has noted that these technologies could be leveraged by banks to reduce governance and audit costs, to provide better products and faster time to market.

US Federal Reserve:

Federal Reserve is reportedly working with IBM on developing a new digital payment system tied to blockchain. (Mar 2015)

SCB:

In a post on LinkedIn, Anju Patwardhan, Chief Innovation Officer of Standard Chartered Bank, said that blockchain could be leveraged to cut costs and improve the transparency of financial transactions. (July 2015)

There have also been reports that derivatives companies CME Group, Deutsche Boerse, clearing houses DTCC (depository trust & clearing corporation) and EuroCCP are working on projects around the use of blockchain in areas such as clearing. Also, there has been news that money transfer service provider Western Union could possibly look into Ripple technology to understand blockchain.

Below is a brief of banks experimenting with blockchain that we have previously reported:

Fidor Bank:

The bank has partnered with Kraken to provide a digital currency exchange in EU, and with Bitcoin.de, a P2P BTC trading platform in Germany. It later partnered with Ripple Labs to provide money transfer services.

LHV Bank:

Reported to have started working on blockchain technology in June 2014. They developed an app based on colored coins called Cuber Wallet in June 2015. They also have partnerships with Coinbase & Coinfloor and are experimenting on digital security with blockchain.

CBW Bank, Cross River Bank:

Partnered with Ripple Labs to build risk management system and provide lower cost remittance servi ...

MOST POPULAR

To read this article, create a free account

Already a member? Log in


Annual Subscription

12-month access to 10,000+ insights, research reports, a database of 13,000+ FinTech companies, and a live global community.

$26/mo

TRY FREE FOR 7 DAYS

SKIP TRIAL

instant access to reports and global community along with donation to COVID-19 fund.

Quarterly Subscription

12-month access to 10,000+ insights, research reports, a database of 13,000+ FinTech companies, and a live global community.

$49/mo

TRY FREE FOR 7 DAYS

SKIP TRIAL

instant access to reports and global community

--------------- Reasons to buy ---------------

Understand the “Why” Behind the “What”

MEDICI offers data-driven, original, unique, and forward-thinking content to understand the “why” behind the “what”

10,000+ insights, 100+ research reports, and 1,000+ videos based on data, collected and processed by top-in-class researchers with over seven years of experience in the financial service industry.

Actionable Insights

We do not stop at the data; we analyze it and extrapolate actionable insights that shape and forecast market trends. All of our pieces are neutral, authentic, and unique – this means that you can’t read them anywhere else!

Data Visualization

We do also care about design. It’s why our infographics are the most-used ones in company reports and the most shared ones on social media.

Growing Proprietary Database of 13,000+ FinTech Companies

We have one of the largest databases with more than 13,000 company profiles listed across 60+ verticals! The database contains primary data collected in two ways:

Through our Global Listening Engine – a proprietary algorithm able to extrapolate and collect data across numerous sources

Directly from FinTechs – thanks to the onboarding flow through which companies can list themselves on the most used database for venture capital in the industry

Join the Largest Global FinTech Community

You will be added to our private WhatsApp Channel with more than 200 FinTech leaders across the globe, where we engage in discussions around various financial services topics daily. After a few clicks, you’ll get to know the whole community, including the MEDICI team – you can ask questions, suggest topics, and get behind-the-scenes insights

Q&A

What is MEDICI Inner Circle™?

MEDICI Inner Circle™ is the membership you need to freely access all MEDICI content, which includes insights, research reports, videos, startup knowledgebase, and the members-only community for live engagement.

What topics do you cover?

We cover more than 60+ sub-segments in FinTech – but we do not stop there; we also cover topics beyond FinTech, such as InsurTech, RegTech, PropTech, WealthTech, BankTech, AgriTech, and the enabling technologies enabling innovation such as AI, Blockchain, etc.

What do I get if I buy the membership? Is there a difference between being a free subscriber and being a member?

By becoming a member, you will unlock all the content on our website. A free subscriber gets access to only 5% of what we publish on the web-site. Paid members also get preferred access to our live events, and exclusive access to the members-only community for live digital engagement.

Do you have a discounted plan for students?

Yes. Please write to us at innercircle@goMEDICI.com.

Do you have an enterprise plan for corporates or groups?

Yes. Please write to us at innercircle@goMEDICI.com.

Do you offer refunds?

We offer a 7-day free trial during which you can access all of our data, insights, and analyses. You can cancel the subscription any time before the end of the free trial period. However, we do not offer refunds.

Unlock this article by signing up for MEDICI Inner Circle

--------------- OR ---------------