Blockchain, the underlying technology that drives digital currencies has the ability to perform much more than just acting as a cryptographic transaction facilitator. Blockchain developers continue to innovate with the technology, discovering new use cases for many different industries and sectors.
After a slow start, the financial industry is a sector where Blockchain seems to be gaining a lot of traction judging by the numbers of financial service providers investigating how to integrate digital currencies and Blockchain into their existing ecosystems.
According to a recent report, HSBC was able to put the blockchain technology to good use when it completed its first letter of credit transaction with the yuan, via a blockchain-based platform. Interestingly the Chinese financial powerhouse collaborated with eight banks including BNP Paribas and Standard Chartered to develop the Voltron trade finance platform, once again demonstrating China’s openness and willingness to innovate with Blockchain.
With China taking the lead with what could ultimately be a commercially viable model for global banking Ajay Sharma, HSBC’s head of global trade and receivables finance for Asia-Pacific, said “clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed.” By using the new platform the exchange of the electronic documents was completed in 24 hours, compared to the typical five to 10 days for conventional document exchange, the bank said.
Blockchain technology holds a lot of promise for the financial sector, especially with the fantastic features that it brings to systems, including decentralization, immutability, transparency, quick transactions, seamless cross-border transactions, cryptographic security, etc. When integrated into the traditional financial system, it paves the way for more innovative processes within the industry, and invariably enhances effectiveness, efficiency, and productivity.
Interestingly a lot of financial institutions that opposed the use of digital currencies at first have begun to see ways that it can be integrated into their operations, as can be seen with big names such as J.P Morgan investing billions in Blockchain and their own digital currency. It is indicative of the fact that the mass adoption of cryptocurrency may be closer than expected, and soon, crypto may be just as important as your fiat currency and credit/debit cards.
HSBC’s use of a blockchain platform for cross-border transactions is a sign of greater things to come regarding the use of digital currencies both within and outside of the financial industry and will naturally attract more financial institutions into the blockchain space which can only be a good thing. For more news on the great innovation coming out of China, make sure you read the Dragon Blog, available by clicking here every day.