While the crypto industry is going down toward destruction, financial firms are silently working on blockchain-based products to solve real-life problems for customers in silence. Blockchain technology has shown huge potential over the years and is now in high demand among several industries. There are several financial firms that have launched a variety of services and products utilizing the Decentralized Ledger Technology.
Many high-scale crypto products lack practical applications, which these financial firms provide in their products and services. Some of the blockchain-based solutions are active on equities, mortgages, bonds, repo markets, structured products, annuities, life insurance, and healthcare claims. The best part is that these are not just test projects, but real products that real businesses are using. These are not only making the businesses successful with growing databases but also generating millions of dollars in annual revenue.
Digital Assets and Tokenization
While cryptocurrencies were the first major output of blockchain technology, the financial service industry didn’t take time to realize the true potential of the technology in transforming several industries. To utilize the technology, financial enterprises started investing in new projects and looking for new opportunities. Therefore, with crypto, digital assets started receiving recognition parallel to cryptocurrencies.
Some of the early digital asset projects that were an absolute success were “bonds”, and for several reasons, they turned out to be conducive to tokenization. Thereafter, the industry leaders could reveal the true potential of the technology in funds, collaterals TC derivatives, and real estate. In the BFSI, real estate, and other asset classes, the potential of decentralized ledger technology is huge. Mainly because it not only includes tokenization but also digitizes the entire life cycle of the asset class.
High Network Effects
Since blockchain technology is cost-saving, it has attracted resources and attractions of dealers, banks, and the remaining sell side. However, the buyer side is slower to sign on, which is normal and understandable. The sell-side enterprises can look for opportunities to receive instant benefits from blockchain-based applications in internal functions and operations or from other applications. However, for the buy side, some of the major advantages of the new technology platforms take place when the systems start to attract users to build the network effects.
Some of the successful use cases of blockchain technology are the ones that deliver considerable and immediate advantages to untimely users. Every day, trillions of dollars worth of securities are traded every day in the worldwide repo market. These transactions are extremely complicated, which makes them vulnerable to failures, disputes, and errors. The distributed ledger technology can help to streamline and simplify the trades by computerizing the primary securities in a repo transaction by transferring ownership with the help of smart contracts.
The development teams are utilizing a similar approach with blockchain technology applications throughout the financial service industry, and other asset classes. These firms are applying the technology carefully by solving particular problems and getting rid of the efficiencies, with the hope that they can develop value to attract clients.
Other than the front-page sagas of celebrities in the crypto industry, the application might not be attractive, but it guarantees success. Moreover, even if the crypto breaks, the teams will deliver progress and transform the financial services. Although it is only the beginning, blockchain technology will be as overpowering as Transfer Control protocol, relational database technology, Internet Protocol, and maybe even the internet.