Despite years of development, the finance industry has failed to showcase a working application of the blockchain technology. Experts believe that banks may have overlooked the most important concept of the technology: decentralization.
The formation of the R3 consortium and the increasing interests from major multi-billion dollar banks have led blockchain to become an international phenomenon.
Large financial institutions and government agencies rushed to implement the technology in various areas of their operations, specifically to optimize the settlement of financial transactions. Applying Blockchain on existing infrastructure
Banks for instance, have focused on applying the technology on their existing IT infrastructure and financial systems to process cross-border payments, settlement and clearance of assets to reduce cost and time dealt by both the bank and the customers.
Venture capital firms naturally followed the shift in trend, moving from traditional fintech to blockchain startups, with support from banks and government-backed organizations.
However, with hundreds of millions of dollars spent on the development of blockchain-based financial systems, the finance industry is yet to provide a working demonstration of the product . Why decentralization matters
The major reason behind the banks’ failure to deal with the blockchain technology is their ambition to create private blockchain networks that could run parallel to their existing applications. Which means, rather than utilizing the open and distributed network the blockchain technology can provide, the banks attempted to reinvent the technology for their own benefits.
Decentralization, the concept which the banks failed to address, is the backbone of the blockchain technology and is the element that makes a blockchain network valuable and robust.To date, the only really successful example of the blockchain technology has been Bitcoin, because of the Bitcoin network’s decentralized and transparent nature. Financial regulations The problem with the banks’ approach fundamentally is associated with the financial regulations and compliance they’re […]
