Odaily Frontline | Nasdaq and Citigroup shelved cooperation projects, how is the blockchain answer sheet of large companies performing?

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2019-07-16 21:53 (UTC+8)

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Looking at the 33 projects that have been announced over the past 4 years, at least a dozen involving large banks, exchanges and technology companies have failed to make it out of beta.

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Looking at the 33 projects that have been announced over the past 4 years, at least a dozen involving large banks, exchanges and technology companies have failed to make it out of beta.

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, by Anna Irrera and John McCrankOdaily Translator |”。

Two years ago, Nasdaq Inc and Citigroup announced the launch of a new blockchain system they said would improve the efficiency of payments for private securities transactions. Nasdaq CEO Adena Friedman called it "the

Milestones in the global financial industry

But the companies held back on the project because, while it worked in testing, the costs of fully adopting the system outweighed the benefits, according to a person familiar with the matter.

The source added that blockchain is "just a shiny mirage" and that its mass adoption may still "take a while."

In a joint statement, the two companies had said the pilot was a success and they were open to collaborating on other projects. In fact, the two companies do have other projects in the works.

Big companies’ blockchain projects are not going well

Companies including banks, large retailers and technology providers are investing billions of dollars to find uses for blockchain. Just last month, Facebook unveiled plans for its virtual currency and blockchain payment system.

But a review of the 33 major corporate blockchain projects announced over the past four years, and interviews with more than a dozen executives from those projects, reveals that the technology has yet to deliver on its promise.

At least a dozen projects involving major banks, exchanges and technology firms have failed to make it out of beta, while those that have completed beta have failed to see widespread adoption.

Regulatory hurdles often slow execution, some executives said. The scrutiny is likely to only continue to mount after Facebook's plans faced a backlash from regulators and politicians around the world.

The excitement surrounding Wall Street's initial interest in blockchain is giving way to pragmatism, as companies realize it may take years for the technology to really take off.

"It's a transformation of the market. It's not a big bang. It may be three to seven years before major projects have a significant impact," said Hyder Jaffrey, head of strategic investments at UBS AG investment bank.

UBS backed a project called the Utility Settlement Coin (USC), a digital cash system for financial transactions, which is expected to be commercialized next year after more than five years of work.

Rhomaios Ram is the principal involved in the said project on behalf of another entity. But for the system to transform, Ram said, other market processes will need to move to a blockchain-based system. Now people have realized that this is a long-distance journey, not a short-term thing.

Technology Promise and Investment Boom

Blockchain technology was created about 10 years ago to track bitcoin transactions. As cryptocurrencies became more mainstream as bitcoin prices skyrocketed and plummeted in 2013, consultants, analysts and other supporters began to say the underlying technology behind cryptocurrencies could be transformative, especially for the financial industry. Word. It could help settle transactions instantly, speed up international payments and eliminate the need for costly intermediaries, potentially saving the industry tens of billions of dollars, they said.

Next comes investment. Research and advisory firm Greenwich Associates estimates that the capital markets and banking industry allocated $1.7 billion to blockchain initiatives last year, a 70 percent increase from 2016. According to research firm IDC, blockchain investment across industries is expected to reach $12.4 billion by 2022.

Some big companies flocked in. About 1,500 IBM employees are engaged in the research and development of this new technology and apply it to many different fields. In an ad released at this year's Oscars, IBM called for the use of blockchain technology to "help reduce poverty."

The system for issuing private shares that IBM is developing with the London Stock Exchange Group Plc has not gone beyond testing. But at the same time, a trade finance platform jointly developed by a number of banks and IBM has been commercialized.

"I certainly think there's a certain level of hype around blockchain," IBM managing director Marie Wieck said.

Business Benefits and Prospects

But Wieck and other industry executives also said they remain bullish on the technology's promise and that their companies will continue to invest in it. "The business benefits of blockchain are clear to me," Wieck said.

John Whelan, head of digital investment banking at Banco Santander SA, said blockchain projects need to work simultaneously in three areas: technology, requirements, and compliance.

“Those who got involved early on with blockchain may not realize that all three parts have to evolve at the same time,” Whelan said. Santander has been involved in a number of blockchain projects, including the utility settlement currency mentioned above. (USC).

Around the time the partnership with Citi was announced in 2017, Nasdaq also began testing a proxy voting system in Estonia that would automate a lengthy manual process.