Major Global Banks Leading “The Year of Blockchains”

This year can already be called the “year of blockchains” — as opposed to 2018, which was the “year of the ICO”. The main drivers of promoting blockchain are now global banks, which until recently held a conservative and skeptical position about the new technology.

The blockchain ideology of Satoshi Nakamoto has always been positioned as a technology that allows people to carry out financial services without banks. But it is the banking sector leading the way applying blockchain in the real economy.

Banks and banking associations have been studying, testing and even using the blockchain for a few years already. Back in 2016, Barclays announced a 500% reduction in the time for conducting cross-border currency payments on the blockchain. Canadian banks have joined in a consortium for the effective use of blockchain technologies.

Credit Suisse has tested the blockchain as a technology for issuing syndicated loans. BNY Mellon, Santander, Deutsche Bank and dozens of other majors talked about the potential benefits of the technology for the financial sector, and in 2016 CoinsBank, headquartered in Scotland, announced the creation of the first bank on the blockchain.

The ICO “boom” endangered this progress by major banks in adopting blockchain technologies.

For example, Chief Executive Officer of JPMorgan Jamie Dimon repeatedly declared the crypto industry a “fraud” and that enthusiasts were “stupid”.

However, only 18 months after such scathing comments, both Mr Dimon and JPMorgan have changed their tune by releasing the bank’s own cryptocurrency.

Prior to the recent release of JPMorgan’s stablecoin, HSBC, which is Europe’s largest bank, shared its view on the real potential of the blockchain in banking. HSBC has transferred foreign currency transactions to the blockchain, which has reduced costs by 25%.

One bank, one operation — and a turnover of $ 250 billion on the Ethereum blockchain, on which the Corda banking platform and JVM smart contracts are based.

By the way, the JPMorgan digital coin — JPM Coin — is also released on Ethereum, namely on the so-called private Ethereum-blockchain Quorum. After JPMorgan’s leap, 75 of the world’s largest banks followed suit, including Société Générale, Santander, Australian ANZ and Royal Bank of Canada.

It is not yet possible to estimate the volume of transactions that JPMorgan is transferring to the blockchain. But seeing as JP Morgan’s has assets under custody of $23.5 trillion, the use of JPM Coin by just a few of its behemoth clients will a huge impact and massively unsettle the current international payments de facto monopolist SWIFT.

The ICO Boom of 2017 and 2018, when blockchain startups collectively managed to attract $13.7 billion, looks decidedly modest in comparison to JP Morgan’s balance sheet. And it is obvious that the basic rules for regulating the blockchain industry will now be dictated by much larger players, among whom a serious competitive struggle for the market of interbank payments is unfolding right now.

For example, at least 300 financial organizations, including a number of large Japanese banks, are cooperating with Ripple project, whose XRP token was designed as a means for conducting instant interbank transactions with minimum commission. JPMorgan’s token copies XRP functionality and has won two titles at once: “SWIFT killer” and “Ripple killer”.

For the blockchain industry, these titanic struggles are positive because the technology is being adopted by more and more new real sectors of the economy. Simultaneously with banking blockchains, such technologies are rapidly developing in the logistics, retail and automotive markets. Blockchain timidly but persistently makes its way into the fields of education, health care, state and municipal government. All these processes open up huge possibilities for ICO startups, which morphed to survive the ICO boom and ICO crash, but will remain substantially the same: blockchain as a technology to increase the efficiency of almost any process.

It’s your choice how you get reliable information about this nascent digital industry. In blockchain, there are many events to gain different perspectives: huge conferences, mass hackathons, small meetings. But once a year or more often, all the stars gather at Coinsbank’s Blockchain Cruise, where they discuss key issues in an informal setting, argue or, on the contrary, come to an agreement, make deals and grow their global networks.

Major Global Banks Leading “The Year of Blockchains” was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.