When blockchain arrived more than a decade ago, the technology was considered a game changer in the finance industry. So far, it hasn’t been embraced as quickly as many had predicted.
However, change appears to be on the horizon as more financial institutions adopt the technology. A recent World Economic Forum report predicts that by 2027, 10 percent of the GDP will be stored in blockchains or blockchain-related technology. In addition, a PWC report predicts 77 percent of financial institutions will adopt some form of blockchain technology by the end of 2020.
“Unlike other traditional businesses, the banking and finance industries don’t need to introduce radical transformation to their processes for adopting blockchain technology,” notes blockchain expert Dr. Ahmed Banafa. “After it was successfully applied for the cryptocurrency, financial institutions begin seriously considering blockchain adoption for traditional banking operations.”
In Hong Kong, for example, 39 percent of last year’s new FinTech firms operate with distributed ledger technology (DLT). Blockchain now comprises the fastest-growing segment of the territory’s FinTech industry, with 22 of Hong Kong’s 57 newly launched fintech firms operating with DLT.
The boost is the result of the local government’s decision to create new policies to promote blockchain. Hong Kong’s treasury also explained that there was an increase in the usage of FinTech and blockchain technologies during the coronavirus breakout.
The U.S. also seems to be more open to embracing the technology, with the National Science Foundation, an independent agency of the federal government, announcing this week their plans to fund a blockchain initiative to make the U.S. dollar more like Bitcoin.
The protocol, KRNC, could eliminate the need for private cryptocurrencies as it allows existing electronic dollars to be retrofitted with new cryptographic features, including digital scarcity and smart contracts. The project’s chief scientist explained that KRNC aims to take the benefits of Bitcoin and add them to the money that’s already in people’s wallets. The blockchain also uses a new technology, Proof-of-Balance, which allows it to remain secure even if an adversary outspends all honest protocol participants.