Many bankers love blockchain for its potential to maximize efficiency and productivity while slashing costs and security risks. But the crypto-currencies, such as the (in)famous bitcoin, tied to it? Not so much—at least not across the board. While giving the thumbs up to distributed ledger technology for its advantages in areas such as trade finance, industry leaders are maintaining a wary eye on cryptos, due to disadvantages such as volatility.
Blockchain—a cryptographic, decentralized distributed ledger system—is gaining acceptance and prestige as its multiple advantages, such as immutability, become clear, even to normally cautious financial organisations. But it isn’t all smooth sailing. Especially in Europe, some of the new data and privacy regulations clash head-on with blockchain and its attendant crypto-currencies. Can the technology overcome these hurdles and continue on its path toward broad, industry-wide adoption?
During 2017, a few fortunate investors have made a lot of money very quickly on their investment in crypto-currencies, an asset class that did not exist just eight short years ago. But as with other rapidly evolving assets, that often seem too good to be true, the potential soaring profits of crypto-currencies are offset by the risks of crushing losses. “Investor beware” is the name of the crypto game!
On 12 June 2017, a blockchain-based company called Bancor raised approximately $153 million in ether (the coin of the cryptocurrency Ethereum) in just less than three hours by way of an initial coin offering (ICO).
Blockchain, the decentralized ledger that supports today’s burgeoning cryptocurrencies, has become so useful that it can no longer be ignored by today’s financial institutions. From cutting costs to reducing risks, this indomitable digital technology has moved way beyond bitcoin to becoming an indispensable ally to the bank that wants to most securely and efficiently fulfill its role of tracking, storing and transferring value.
On November 21, Zimbabwe’s President Robert Mugabe resigned, ending his 37-year rule of the southern African nation. The resignation followed an intervention by the country’s military after Mugabe sacked his vice president, Emmerson Mnangagwa
“The creatures looked outside from pig to man, and from man to pig, and from pig to man again, but already it was impossible to say which was which.” So ends George Orwell’s Animal Farm – a novel all about the danger of becoming that which you set out to oppose.
The cryptocurrency craze has been in full flow during 2017. Bitcoin seems to be setting record highs with every passing week. Initial coin offerings (ICOs) are turning traditional capital-raising on its head.
Many financial firms have regarded the new online currency bitcoin with at best skepticism, and yet others are not only embracing the innovation but actively employing it, developing disruptive business models that take advantage of its unique properties, forging into new frontiers that may in retrospect rival the introduction of the Internet 20 years ago.
The last 12 months or so have seen blockchain finally emerge from the shadows of bitcoin—with much of the attention having definitively shifted away from the digital currency and onto the technology of the ledger underpinning it.