How big firms are buying into Blockchain
Unless you’ve been living under a rock these last few months, you’ll have noticed that blockchain technology has been gaining some traction.
[Google trends graph of blockchain prevelance]
If you haven’t caught wind of the hype, Reid Hoffman gives a thorough background on how the distributed ledger system gained popularity and its importance here.
2015 was the year the blockchain gained independence from its polarising big brother, bitcoin and has seemingly been welcomed into the mainstream, especially in financial services.
Blockchain by its construction is a decentralising force and through its utilisation promotes efficiencyand transparency – two characteristics missing from the
financial services industry; this has not gone unnoticed. The voices of the City of London, of Wall Street and of Silicon Valley have spoken: “we get it” and big players are piling money and manpower into research and development.
One such firm is R3CEV. A consortium comprising at the end of last year of 42 banks globally, R3CEV is working with its members to create proprietary solutions to cut across geographies and asset class, from equities exchange-traded derivatives. Elsewhere in financial services, Citigroup has developed its own currency, codename Citicoin, while its innovation arm, Citi Ventures invested heavily in Chain.com’s $30m equity funding round, along with Visa, Fiserve and Orange, among others.
Chain.com collaborated with Nasdaq to reveal a first-of-a kind blockchain-enabled platform, Nasdaq Linq, last October and celebrated the new year by successfully completing the issuance of its shares on the platform to an unnamed investor. Nasdaq’s and chain also collaborated with IDEO to create a human-centred user experience for the platform.
Hot on the heels of Nasdaq, Microsoft announced its partnership with Brooklyn-based startup ConsensYs to allow financial services firms to experiment with blockchain technology cheaply through their cloud-based Azure platform. The underlying technology is Ethereum, a decentralised platform running smart contracts that currently holds the accolade of 5th highest ever crowd-funding project at $18.5m. Microsoft offered customers of Azure the opportunity to experiment with Ethereum’s blockchain technology, lowering the barriers to entry by using templates provided by Microsoft.
Ethereum’s smart contracts open the door to micropayments, which adds another dimension to its potential use cases. IBM and Samsung unveiled their system ADEPT which combines three protocols: Ethereum (smart contracts), BitTorrent (file sharing) and TeleHash (peer-to-peer messaging). The ADEPT system documents the existence of what could be eventually billions of connected devices on a regional blockchain and executes smart contracts using Ethereum, while broadcasting the transactions using TeleHash, ultimately enabling these devices able to autonomously maintain themselves.
As the big money flies into this technology, and after the inevitable slump on the hype curve, I expect to see some serious developments in 2016. The genie is definitely not going back in the bottle.