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How Banks Are Harnessing the Power of Blockchain
3 mainstream use cases of blockchain in the banking industry
Since the invention of Bitcoin, banks have not been very receptive to blockchain technology. This is due to the fact that the most commonly known application of blockchain is cryptocurrencies. Since cryptocurrencies are volatile in nature and are designed to operate outside of banking regulations, banks and central banks have been taking a cautious approach to it, and in some cases, advised against blockchain entirely. However, this perception is starting to change. Blockchain is here to stay, it is already mainstream. Banks around the globe have started to realize that blockchain is far more than cryptocurrencies and they have started to harness its true power.
The pandemic has given rise to blockchain initiatives globally and the banking sector is leading the way with over 29% of spending on blockchain projects. In the last year alone, the total spending on blockchain projects by banks has doubled and the value is expected to increase to 12.4B by 2022, which is 3x more than 2020. Following are 3 of the most prominent blockchain applications in banking:
- Central Bank Digital Currencies (CBDC)
- Cross-border transfers/payments
- International trade
