Blockchain technology is a revolutionary breakthrough that is transforming the world. The tech enthusiasts define this technical innovation of the virtual world having a wide range of applications as “web 3.0”. “The semantic web” or “web 3.0” is a distributed, decentralized transformation of the www (World Wide Web). That incorporates blockchain, AI and other similar technologies. The effect of the technological disruption is predicted to be especially significant in the Financial Services industry.
Can blockchain and CBDCs redefine banking?
Leaders of the world’s largest banks stated during a global financial conference in Hong Kong that technologies like blockchain and central bank digital currencies (CBDC) are redefining the future of banking and the way we transact.1
At a panel discussion at the Global Financial Leaders’ Investment Summit. Senior executives from JP Morgan, BlackRock, HSBC, and Standard Chartered discussed how the fintech industry is reshaping the banking industry. President and Chief Operating Officer of JP Morgan, Daniel Pinto said, cryptocurrencies are at the “beginning of the journey,” and will undoubtedly become more and more integrated into the financial sector. According to Pinto, the various uses of blockchain are becoming more apparent, and the most difficult challenge for institutions is managing security issues related to public blockchain networks.
President of BlackRock Rob Kapito also stated, “Digital assets and blockchain is an ecosystem that is really starting to pick up pace … I do believe that [these] technologies will become increasingly important for portfolio managers and asset allocation.”
What is driving the momentum of interest?
Fundamentally, the interest remains the continuing need to increase efficiency and reduce operational risk. NFTS, DeFi, and tokenization of digital assets are popular buzzwords that have gained significant media attention. Because of their emerging technology, making transactions efficient, faster, and immutable.The stalwarts like JP Morgan Bank, Citigroup, and Goldman Sachs are already investing in the blockchain technology to operate more efficiently, lower risk, and achieve more with less.
How can blockchain technology improve the fund raising process for startups?
Blockchain technology has tremendous potential to transform the business landscape, and it’s not just limited to operational implications. It’s time we delve deeper into how this revolutionary technology can change the way we do business. The current state of available liquidity is not favorable, particularly for early-stage startups. This has led to a growing consensus that blockchain technology will soon become a critical enabler for accessing capital or funds.
Traditionally, startups would seek funding from angel investors, then move on to venture capitalists, and finally aim for an initial public offering (IPO) on a stock exchange. However, this process involved several intermediaries, such as investment bankers, exchange operators, auditors, attorneys, and crowdfunding websites. The result was a complex and time-consuming process that could delay the growth and success of the startup.
Blockchain technology, on the other hand, allows a company of any size to raise funds through global distributed share offerings in a peer-to-peer way. Blockchain-based crowdfunding and lending platforms allow individuals to invest directly in projects and businesses they believe in.
Tokenization of assets in blockchain allows the investors to easily invest in the business and provides liquidity, Smart contracts can be used to automate certain aspects of fundraising. Without a doubt this new funding mechanism has helped blockchain early-stage companies struggling to find the resources they need to get off the ground.
Blockchain technology in supporting underfunded small businesses.
Similarly, when Dianrong.com, one of China’s largest peer-to-peer (P2P) lending companies, partnered with Taiwan’s Foxconn Technology Group to expand supply chain finance (SCF) on the mainland, it supported 40 million underfunded small businesses. Mainland banks found success thanks to blockchain technology, which helped them cut costs, evaluate reputation, and identify the right clientele.
Moreover, blockchain companies raised millions through initial coin offering (ICO). There are many new platforms to make investing in ICOs and manage digital assets. Among the biggest investors in blockchain are Goldman Sachs, NASDAQ, Inc., and Intercontinental Exchange, the American holding company that dominates New York Stock Exchange, IPO and listing business.
Hong Kong’s Adoption of Blockchain Technology:
Hong Kong’s aspiration to mainstream central bank digital currencies (CBDCs) to pave the way for global cross-border payments is very encouraging. Blockchain technology even streamlines the bond issuance process reducing the time and cost with high security and transparency. Hong Kong recently created history in the financial sector. With the adoption of blockchain technology by successfully tokenizing a $100 million green bond. Green bond was majorly issued to finance environmental initiatives in Hong Kong, such as green transportation, energy efficiency, and renewable energy enabling an eco-friendlier investment and a cleaner environment.
Lastly, gaming will be a crucial driver of blockchain culture. Gamers are already exposed to many online transactions using digital currencies, which prepares them to engage in blockchain-based games. With over 2.5 billion video game players the ability for growth in blockchain gaming is very convincing as the market is already so large.
Conclusion; Unlocking Blockchain’s Potential for Businesses.
In conclusion, blockchain facilitates investment and trading opportunities by enabling interoperability between blockchain networks. But blockchain-based funding is still in its early stages; however, it allows for more granular control over how funds are allocated. Using smart contracts, investors can specify exactly how their funds should be used and under what conditions. This level of transparency and control helps to reduce the risk of fraud or mismanagement, as all transactions are recorded on the blockchain and are transparent to all participants.
Blockchain could upend several complex intermediate functions and unlock new opportunities for innovation and entrepreneurship. To underscore the advantages of the disruptive technology, Blockstation stands out as a game-changer. As a member of TurtleBay’s advisory partner network, their blockchain platform offers market-ready solutions that prioritize security and compliance, increasing market confidence and revolutionizing the blockchain industry.
Overall, the potential benefits of blockchain technology for businesses are vast, and we’re only just scratching the surface. As technology continues to evolve and mature, we can expect to see even more exciting developments in the near future.
Check out our podcast on blockchain and other relevant topics at FSOKX Podcast.