First the mavericks and peer-to-peer enthusiasts embraced Bitcoin, now McKinsey calls for bank collaboration on Blockchain
Blockchain, the inseparable component of Bitcoin technology within which blocks are explored and mined, has become such a vast source of interest among fintech companies, banks and large scale venture capital investors that over the last year alone, record rounds of funding have been poured into its development. In one case, $116 million in funding was […]
Blockchain, the inseparable component of Bitcoin technology within which blocks are explored and mined, has become such a vast source of interest among fintech companies, banks and large scale venture capital investors that over the last year alone, record rounds of funding have been poured into its development.
In one case, $116 million in funding was provided to Bitcoin startup 21Inc, an amount that has never been preceded or matched since.
A far cry from the maverick and almost anarchistic nature of many Bitcoin proponents five years ago during the infant stages of virtual currency, when individuals with the intention of disrupting the traditional fiat system banded together and spoke often charismatically and controversially about how they could develop a system outside the system, almost as comrades, things have gone completely corporate.
McKinsey says banks must work together on Bitcoin tech
Global management and professional services company McKinsey has now become interested in studying the development of Bitcoin, and has very elevated hopes for Blockchain technology, as depicted by a report that the company has now issued on the matter.
The report, which carries the title “Beyond the Hype: Blockchains in Capital Markets” presents the argument that blockchain technology can “dramatically reshape” the entire financial markets industry globally.
This interest and study aligns with some of the Bitcoin industry’s senior figures, including that of Jaron Lukasiewicz, CEO of Coinsetter who explained to Andrew Saks-McLeod in New York in the summer:
“It is essential to understand how the Blockchain technology is competitive, and who is using it. There is growth in the remittance use these days, so it is slowly displacing Western Union and MoneyGram at sometimes similar rates, and can be even done at much less cost, a tenth, but no consumers really try that. Companies are also trying to rival Transferwise which is taking Bitcoin into direct competition with deliverable FX”
These early stages have now developed and large institutions are grasping the concept of using blockchain for many other fintech purposes, however due to its inseparability from Bitcoin and completely integral architecture, the byproduct is that Bitcoin by default has now been swept into the boardrooms of the major banks and consultancy firms.
McKinsey’s report states that to maximise the potential of blockchain in the institutional capital markets business, banks must learn to work collectively on this.
“The full potential of blockchain technology will only be realised through cooperation among market participants, regulators and technologists and this may take some time” – McKinsey report on blockchain in capital markets
The report also infers that the adoption of blockchain by mainstream financial services companies will take place in four separate stages. As Mr. Lukasiewicz rightly predicted back in the summer during the aforementioned conversation in New York, McKinsey concurs that the first stage will be the distributed ledger which should unite the legal entities of financial institutions, which will lead to the second stage in which it will replace manual processes at smaller banks.
Thirdly, blockchain should be able to convert inter-dealer dominated markets, and then lastly become widely available in public markets.
2016 indeed will be an interesting time for this remarkable technology, as it emerges from the wilderness of anarchy and firmly plants itself within the upper echelons of the infrastructure within major global institutions.
In this case, Silk Road has most certainly given way to Wall Street.