Blockchain technology is one of the emerging technologies that have the potential to change the world for the better as we move deeper into the digital era. Even if it hasn’t reached mass adoption yet, there are many use cases of blockchain that makes it king the world of trust and immutability. The decentralized nature of the blockchain scares some governments away from this tech they should be learning about. They are afraid of anything they cannot control. Even with the stern opposition the industry is getting on different levels, there are still those who believe in blockchain and implementing it.
Of all the known use cases of blockchain technology, data collection, tracking and payment settlements are the most practical. This is why banks and other financial institutions are starting to utilize the technology. On Monday, the Hongkong and Shanghai Banking Corporation announced that it successfully settled forex transactions worth $250 billion on its blockchain last year alone. This is one of many use cases of the technology that will help it gain mass adoption.
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HSBC announced that since February, it has settled more than three million forex trades and processed payments worth up to $150,000 through blockchain technology. Even if HSBC said the blockchain-settled payments represented a small portion of the total payments processed, the figure is still rather significant. It marks a milestone in the journey of blockchain technology into mainstream finance. Keep in mind that the traditional financial institutions are still reluctant to use blockchain technology irrespective of all the advertised benefits. So, it’s a big deal for a well known traditional financial institution like HSBC to use the technology.
About Blockchain Technology
About Blockchain Technology
The blockchain is a shared ledger that can settle processed transactions within minutes. It was introduced as the technology behind the world’s first cryptocurrency, Bitcoin. While Bitcoin and other cryptocurrencies are the most common use cases for blockchain technology, they are not the only use cases in existence. Because blockchain technology is centralized, there is no need for things like third party control or verification. Also, entries that are made on the blockchain cannot be reversed under regular circumstances.
Over the past ten years, billions of dollars have been invested into the technology. However, the complexity of blockchain-based systems has made mainstream adoption slower than it should be. The good thing is that banks and other financial institutions have been able to use blockchain technology to significantly reduce costs during settlement processing. It has also been used to establish trust within a broken system.
Many banks with solid use cases haven’t been able to move forward from the testing phase to the implementation phase. This is partly because the cost of integrating blockchain technology is high even if it will reduce cost long-term. Another reason why traditional financial institutions have been reluctant is that there is still a lot of regulatory uncertainty as far as blockchain technology is concerned. Many are weighing the risk of disrupting the already existing system trying to figure out if blockchain technology is worth it.
HSBC is one of the few banks that have moved ahead to the implementation stage. The organization says that its blockchain has been used to automate many manual processes and reduce their reliance on external technologies. It has also reduced the risks of delays and errors.