[Vc_row] [Vc_column] [Vc_column_text] Article edited by Enrico Camerinelli
These days, financial institutions are spending time and resources to find out how much business they can get by adopting the blockchain technology. This bank-side attention may not correspond to similar interests on the part of companies. Nor is it clear whether this can create business opportunities similar to both parties.
The article suggests four possible scenarios for using blockchain:
- Banco-centric Scenario: Banks will use distributed ledger solutions for inter-bank and intra-bank operations, keeping the technology totally transparent to business users.
- Bank-Enterprise Scenario: it becomes necessary to involve the company, so you need to devote more time to education and understanding of what technology can bring to businesses instead of focusing on the development of technologies and solutions to use Exclusive of Banks.
- Company-Company Scenario: Companies will start working on block chain projects without the need for assistance from the banks.
- Machine-Machine Scenario: Block chain remains completely transparent to "human" business users and will be implemented to develop solutions related to the IoT (Internet of Things) domain.
This article focuses on the first scenario, possibly postponing to subsequent articles the treatment of the remaining.
The block chain for banks
Banks are particularly attracted by the prospects that this potentially disruptive and revolutionary technology will lead to the whole sector. By operating on the block chain infrastructure, transactions are executed quickly, transparently, and accessible, replacing inefficient "command and control" tasks with more agile and simultaneous operations based on shared consensus and distributed Guaranteed by the blockchain protocol.
If these principles are saved, the banks glimpse the practical possibility of improving their computer infrastructure, performing transactions more efficiently, and ultimately reducing internal costs by removing unnecessary hub-and-spoke applications (centre-periphery). Banks want to play with block chain paper to accelerate the settlement of payments, streamline stock operations, improve their core banking and manage identities more securely. Currently all operations are centralized and still handled manually, which must be rationalized to make them efficient and reduce their costs.
Regulatory and regulatory pressures put banks under additional stress (and costs) to cope with an even more significant threat: the risk of being disintermediate from non-bank financial operators, and therefore not subject to the same stringent Controls and rules. This condition confers unregulated operators an unequal competitive advantage in the eyes of banks, because it allows them — without being subject to too many constraints — to adapt and offer economical and personalized solutions to the ever-changing Market demand. That's when the features offered by block chain with their own distributed ledger have a valid help. [/vc_column_text] [Vc_raw_html] JTVCaHVic3BvdCUyMHR5cGUlM0RjdGElMjBwb3J0YWwlM0Q0NzY0MzcwJTIwaWQlM0Q1MWM0NzNmNi0wZGFlLTRmMjktODMyMS1iMGE2ZmUyYzZiOGIlNUQ = [/vc_raw_html] [Vc_column_text]
Blockchain and financial transactions
Blockchain and Bitcoin are very often considered one, and this perception — albeit erroneous — actually poses a problem to the banks: The Bitcoin is based on the principle that currency exchange is irreversible and does not require financial intermediaries. The financial transactions, on the contrary, are reversible in the long term (for example, those linked to credit cards are reversible up to three/six months) and even when they seem immediate, they are actually regulated (by clearing and liquidation) and It takes at least two or three days for them to cross the systems of counterparties and central banks before they get compensated. The entire settlement system is burdened by significant costs and deductions. In a world where information instantly moves virtually at no cost, these stratified and complex processes are inefficient, costly and inadequate.
The validation of a Bitcoin transaction coincides with its compensation and liquidation. It is a definitive and non-reversible transaction, similar in many ways to a cash transaction. When you receive Bitcoins, you are sure that anyone who has sent them has possession. It is also certain that the transfer via block chain is effective, immediate and irreversible. The prospect of Bitcoin transactions via block chain that invade the financial services market poses a threat to banks, just in that area of payments that banks are trying so hard to regain. It is a fact that supporters of block chain applications consider a "ripe fruit to seize" the clearing and settlement transactions in themselves slow and bulky. Instead of the obsolete business model of the corresponding bank, money transfers could be made with the instantaneous transfer of bitcoins issued and secured by bank groups and exchanged on an automated clearing and settlement circuit.
To a private block chain?
However, the extreme volatility that they are subject does not make Bitcoins an ideal payment tool. However, the main relevance of block chain technology lies in the ability to transfer ownership of a "digital token" associated with a variety of goods and rights traded in the physical world: stocks, bonds, real estate, cargo slips, letters of Credit and property securities. The token, which exists only thanks to blockchain, acquires intrinsic value for its usefulness in the digital world and is transferable but not duplicable. While the bitcoin is the digital token best known because the first issued, it is obviously possible to imagine applications where the token is linked to the value of a fiat currency, creating a block chain completely different — and much more stable — than that used to Swap bitcoins.
Because tokens (also referred to as cryptoassets) potentially allow consumers to avoid banking brokerage, it appears increasingly obvious that banks want to divert attention away from cryptoassets by focusing on the infrastructure Blockchain, which they can better control. The hype that big banks are making around block chain seems to be part of a long-term strategy to attack the bitcoins and play defensively by assuming the "ownership" and block chain control.
This control is made possible, however, only if block chain becomes private, so that the shared confidence levels guaranteed by the proof-of-work algorithms are replaced by a consensus with closed groups of trusted parties, i.e. the banks themselves. These private block chain projects are nowhere near the same as the original block chain concept, designed to be shared by everyone. Once again, permits-based block chain will be subject to centralized control by the banks. This makes it not very different from a very common centralized messaging network. So the question is whether block chain is an exclusively banking business. What happens if others want to have an active part in blockchain?
The performance limits of the current block chain consensus protocols (e.g., proof-of-work) are intrinsic to the exceptional level of security required of a decentralized and distributed infrastructure. Banks must avoid the temptation to "privatize" blockchains as a solution to remove the complexities and (current) inefficiencies of these protocols. Instead, they should work to find efficient algorithms that guarantee better operational performance on infrastructures that have the most distributed and decentralized consensus possible. If not bitcoin block chain will be some other. Certainly not a private block chain. [/vc_column_text] [Vc_raw_html] JTVCaHVic3BvdCUyMHR5cGUlM0RjdGElMjBwb3J0YWwlM0Q0NzY0MzcwJTIwaWQlM0RmMjUyNzZmMi1iN2Y3LTRiOGYtOTM2Ni04ZTQ4ODIxODYyMTclNUQ = [/vc_raw_html] [/vc_column] [/vc_row]