Blockchain’s first major use was as the technology behind Bitcoin, the popular digital cryptocurrency. Blockchain quickly moved to power other digital currencies. But it took some time for it to be used in more mainstream applications. Now, however, the wave of innovation sparked by Bitcoin is moving quickly into other areas of the economy.
Blockchain offers great speed and security improvements over other tools used to track digital assets. The finance industry is at the precipice of a blockchain revolution. We are barely scratching the surface in blockchain applications. Industries as diverse as digital security, logistics management and the budding legal marijuana industry can use blockchain.
Blockchain Research and Implementation at the Big Banks
JPMorgan Chase CEO Jamie Dimon famously called Bitcoin a fraud but acknowledged the value in the underlying technology. Chase and other major banks are working on blockchain-related initiatives. For example, more than 75 banks have joined JPMorgan’s Interbank Information Network. This network uses blockchain to track global payments.
American Express is also active in blockchain. The Membership Rewards program behind many popular Amex cards offers opportunities to redeem points for purchases at third-party retailers. In some cases, those purchases are tracked by blockchain.
We can expect more projects from top American financial companies with blockchain driving the backend system.
Improved Fundraising System
An initial coin offering, or ICO, is a fundraising method similar to the traditional stock market IPO (initial public offering). With ICO, blockchain tracks ownership of digital “coins” representing shares of ownership.
At its StartEngine Summit, crowdfunding leader StartEngine brings together experts in the quickly evolving ICO system. These are experts from legal, finance and technology fields.
Because of the lack of regulations, ICOs are like the Wild West compared to the steady hand of Wall Street. But they offer new and exciting opportunities to build and grow companies faster than ever before.
With those new opportunities come new risks and challenges. So keep your eyes on the news to see what happens as the Securities and Exchange Commission (SEC), Federal Reserve and other government regulators exercise their power in the ICO marketplace.
More Invisible Blockchain Uses in Digital Security
Part of the power of blockchain is the ability to track ownership of digital assets with a level of anonymity. The distributed ledger is nearly impossible to hack or manipulate. It also offers improved speed and efficiency compared to the security methods employed by many businesses.
Blockchain may soon appear in your bank account, brokerage account and other parts of your finances without your knowledge. Just as blockchain tracks every digital coin in the cryptocurrency markets, it can track dollars, shares, bonds and other assets in your financial accounts.
The same protections could eventually extend to digital rights management for movie and music files on your computer, distributed website hosting and logistics. In some industries, those features could come in handy in the physical world.
For example, in the nascent marijuana industry in Colorado, producers and sellers are required to track every seed and every ounce of the product from inception to sale. Blockchain could come into play as a digital infrastructure to track these products around the state.
In the shipping industry, blockchain can power tracking and ownership changes as items move through the shipping chain. Whatever your FOB (“Free on Board,” a shipping term for when ownership changes hands), blockchain can help clarify ownership and location at any given moment.
A Shift From Cryptocurrencies to Major Market Uses
Digital currencies are recognized as having great potential. However, the inherent anonymity makes them a safe haven for fraud and illegal activity. Include the “investment” losses from cryptocurrency speculators, and you can see why most people steer clear of this complex marketplace.
However, blockchain could power the entire NASDAQ just as easily as it powers Bitcoin. It could become the engine behind the New York Stock Exchange or any other stock or commodities exchange in the world.
In the near future, we will likely see blockchain running in the background behind more assets. The financial markets are the most logical place to see the blockchain revolution. But like self-driving cars, it will take time for everyone to warm up to and adopt this technology.