by Diana Ngo
Research and advisory firm Aite Group has released a new study on blockchain technology in capital markets. Among its findings, the report states that global investment into blockchain technology reached US$180 million this year, with financial institutions contributing US$75 million. By 2019, banks will quintuple investment into the technology, which Aite Group estimates will reach US$400 million.
According to Gabriel Wang, research associate at Aite Group and author of the ‘Blockchain Players in Capital Markets: Where Are the Pioneers Headed?‘ report, banks and financial institutions’ desire to reduce regulatory compliance costs and improve operational efficiency have led them to explore the possibilities enabled by blockchain tech, which is believed to have the potential to achieve better transparency, ensure better security, mitigate risk and cut operational costs.
Ben Knieff, senior analyst at Aite Group and author of the separate report ‘Blockchain: What Is It Good For? Absolutely Something,’ interviewed over 20 firms leveraging blockchain tech. His findings suggest that blockchain tech, which represents a radical shift from centralized, proprietary systems to more standardized, distributed and secure systems, has the potential to change, “well, everything.”
“Bitcoin has been the most visible application of the blockchain, but it and other cryptocurrencies are a tiny fraction of the technology’s potential applications,” Knieff, said in a statement. “Many technical details and variations signify different implementations, all of which could mean potentially disruptive applications for these technologies.”
Highlighting the blockchain craze, several initiatives launched this year to explore the technology’s possible applications. Notably, the R3 blockchain consortium launched in September, consisting of a collaboration of 42 of the world’s largest banks including Citi, JP Morgan, Goldman Sachs and UBS, aiming at developing blockchain technology for the financial services industry.
Another initiative is called the Hyperledger project, a cross-industry collaborative open source project overseen by the Linux Foundation that brings together financial services companies and major tech firms including IBM, Intel, Cisco, London Stock Exchange Group, and Blythe Masters’ blockchain firm Digital Asset Holdings.
Unveiled last week, the Hyperledger project seeks to develop an enterprise grade, open source distributed ledger framework that would support business transactions.
According to the Linux Foundation’s executive director Jim Zemlin:
“As with any early-stage, highly-complex technology that demonstrates the ability to change the way we live our lives and conduct business, blockchain demands a cross-industry, open source collaboration to advance the technology for all.”