Speaker: Dave Sutter – Fluent
Blockchain technology is not revolutionary. It’s all about how the enterprises will use it – that’s the real revolution.
Surge in Blockchain Technology Investment
Over the last 18 months, the investment in Blockchain technology by financial institutions has surged. The Bank of England dubbed it “the internet of finance”. This technology is expected, and is already beginning to become a game changer for the financial technology.
He referred to blockchain as “hot sauce”. Some people believe that if you use hot sauce in every food, it will make it taste better. But the reality is that blockchain, similar to hot sauce, is not a solution for every challenge.
Explaining why blockchain technology will be important in the future is kind of like asking the same question about internet in 1995. We know for sure that it will shape the financial industry in the future, but it’s hard to see yet how and to what extent.
Once banks understood the potential in blockchain, and especially the perils of not getting involved in that technology, they started investing an enormous number of funds into BC startups. Our financial systems are antiquated.
They have not kept pace with globalization and the new financial tools. There is no such thing as a global payments system. SWIFT is merely a global messaging system that settles payment by an outdated mechanism of messaging. This process is very slow and costly. It’s basically a system of tens of thousands of bilateral agreements.
The increasing emphasis on compliance, with KYC as an example, means that transparency is the name of the game now. Privacy as we know it is over. The financial industry is becoming more and more transparent, and blockchain technology, with its features and advantages, provides you with the tools to do that.
The BC technology offers 5 main advantages:
– Instant settlement and clearing
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– Automated contract enforcement (‘Smart contracts’)
– Custodianship (P2P)
– Auditing and reporting (forensic audit trail)
– Security (immutability, tokenization)
– Capital markets – Exchanges moving to BC technology
– Payments – Settling money transfers and other types of finance
– Financial services – trade and supply chain finance
– Security / Compliance – new ways of combating fraud and identifying users.