https://www.iotworldtoday.com/wp-content/themes/ioti_child/assets/images/logo/footer-logo.png
  • Home
  • News
    • Back
    • IoT World 2020 News
  • Strategy
  • Special Reports
  • Galleries
  • Business Resources
    • Back
    • Webinars
    • White Papers
    • Industry Perspectives
    • Featured Vendors
  • Other Content
    • Back
    • IoT World 2020 News
    • Q&As
    • Case Studies
    • Features
    • How-to
    • Opinion
    • Video / Podcasts
  • More
    • Back
    • About Us
    • Contact
    • Advertise
    • Strategic Partners
  • IOT World Events
    • Back
    • Internet of Things World: San Jose
    • IoT World 2020 News
Iot World Today
  • NEWSLETTER
  • Home
  • News
    • Back
    • IoT World 2020 News
  • Strategy
  • Special Reports
  • Galleries
  • Business Resources
    • Back
    • Webinars
    • White Papers
    • Industry Perspectives
    • Featured Vendors
  • Other Content
    • Back
    • IoT World 2020 News
    • Q&As
    • Case Studies
    • Features
    • How-to
    • Opinion
    • Video / Podcasts
  • More
    • Back
    • About Us
    • Contact
    • Advertise
    • Strategic Partners
  • IOT World Events
    • Back
    • Internet of Things World: San Jose
    • IoT World 2020 News
  • newsletter
  • IIoT
  • Cities
  • Energy
  • Homes/Buildings
  • Transportation/Logistics
  • Connected Health Care
  • Retail
  • AI
  • Architecture
  • Engineering/Development
  • Security
ioti.com

Security


Image of stack of coins

Industries Are Now Taking Blockchain Seriously in Finance & Beyond

Inititially viewed with suspicion by financial institutions, blockchain is now beginning to be taken seriously and has applications far beyond finance.
  • Written by Heather McKensie
  • 8th June 2017

Having initially viewed virtual currencies with deep suspicion, the financial industry is now seriously investigating the potential of the underlying blockchain, or distributed ledger technologies.

The main characteristics of the technology: distributed, near real-time, immutable and digitized, are of particular interest to financial institutions. Blockchain's potential is being investigated across a wide variety of financial services including trade finance, corporate actions processing, cross-border payments and securities trading.

The Euro Banking Association (EBA) says “distributed consensus ledgers” make it possible to jointly create, evolve and keep track of one repository of transactions or other successive events over a shared network. It thinks blockchain has wider potential than cryptocurrencies such as bitcoin alone, defining four application categories: currencies, asset registries, application stacks and asset-centric technologies. At present, financial regulations and legacy technology are hindering the banking industry in adopting blockchain technology in the first three categories.

However, in the field of asset-centric technologies, more headway is being made, with Namecoin, Ripple and Stellar gaining the most attention. These technologies focus on the exchange of digital representations of existing assets, such as currencies, stocks and bonds, in combination with a shared ledger, but not on a public ledger. Trust is organized between participants directly, rather than through a blockchain and mining as is the case with bitcoin.

Participants on the network commit to “publishing” digital assets on the network in various denominations such as USD, RMB, gold, bitcoins. At the same time, some of the participants are responsible for converting these assets, acting as gateways by bridging the gap between the physical and virtual worlds. In order to exchange one digital asset for another, a market maker is required and the EBA believes market makers will most likely be larger financial institutions, for example FX trading houses.

Building on this idea, exclusive exchange agreements between nodes of such networks can be created. The payment services provider (PSP) can then be safe in the knowledge that it is participating in a network with trusted partners and is not exposed to “unscrupulous” third parties.

Asset-centric technologies have another very appealing feature for financial institutions: they enable greater efficiencies in areas such as FX remittances, documentary trade, transactions between PSPs and asset servicing. Vendors are already developing software that can support banks to take advantage of asset-centric technologies.

An early adopter of asset-centric technologies is Germany's Fidor Bank, which in July 2016 was acquired by France's Groupe BPCE. Fidor implemented Ripple Labs technology in order to offer customers instant euro/USD FX transactions at low cost. Under the scheme, Fidor has a trust relationship with a US-based PSP. FX traders are third-party members of Fidor's network, enabling Fidor to transact only with trusted parties in any FX transaction that is required. In Germany, digital assets are defined as accounting units. This has enabled Fidor Bank to partner with Ripple and receive substantially lower FX costs.

Cross-border payments

Blockchain also has a potentially significant market in cross-border payments, of which global remittances reached $583 billion last year. Earthport operates its own distributed ledger service, which ties Ripple's near-time potential to Earthport's cross-border payments service, which focuses on making international payments using local automated clearing houses for clearing. With the addition of distributed ledger technology, Earthport says it can go to “nearly instant” payment. Rather than remittance transactions settling the following day, they can be settled within minutes.

The transparency and decentralized ledger of blockchain have the potential to hold positive reputational aspects for financial institutions, such as a scenario in which a bank or other financial provider wishes to provide transparency to a counterparty of a trade, a regulator or a prospective partner or client.

Identity validation is one application of this transparency scenario. Sharing basic identity information with a specific party would not disclose one's identity to the entire world but can instil confidence in a specific party or individual who might otherwise not trust a given financial provider or counterparty.

Blockchain beyond banking

Blockchain's potential is also being examined outside of financial services in the insurance, energy and healthcare and public sector arenas. In the insurance industry, early investigations have tended to focus on internal applications and improving efficiency. London-based Everledger, for example, is a permanent ledger for diamond certification and related transaction history. It has been developed to help tackle the estimated £2 billion cost of fraudulent claims in the diamond industry, by providing a record of each diamond and enabling merchants to detect if a diamond has been stolen.

In the energy industry, blockchain has the potential to track the flow of electrons in a distributed grid. In future electrical systems billions of end points such as microgrids, solar systems, smart appliances, in-field distributed computing and energy management software, will interact with each other. Blockchain technology could provide a secure system that can verify instantaneous, autonomous transactions across the nodes as market conditions change. It is early days in the industry but those involved believe it has huge potential.

The healthcare industry is looking at how it can use blockchains in a number of ways: to transport medical records from provider to provider and build networks and how health data can be used to incentivise people to be healthier by building reward systems around healthy behaviour using IoT devices. Gem Health, for example, is a blockchain network for the global community of companies and individuals in the healthcare industry. Blockchain technology addresses the trade-off between personalised care and operational costs by connecting the ecosystem to a universal infrastructure. Shared infrastructure allows the company to create global standards without compromising privacy and security.

Using distributed ledger technologies can help governments with a range of activities including issuing passports, land registries and delivering benefits. Estonia has made significant progress in applying blockchain to the public sector. It is building a “digital society”, combining a national ID card system and blockchain. The government collects information on citizens which is auditable and cannot be manipulated in any way.

Jessie Cheng, vice-chair of the Payments Subcommittee of the American Bar Association’s Uniform Commercial Code Committee believes the internet of things cannot be fully realised unless the limitations of existing payments networks are addressed. Devices, such as the Apple Watch or Google Glass, rely on traditional methods of payments such as bank accounts or payments cards.

She cites work by Ripple on an Interledger Protocol, as the start of an era in which money can be moved as seamlessly as information. The Protocol addresses the problems of moving money between payments systems. Connectors compete to provide the best rates and speed. The protocol can scale to handle unlimited payment volume, simply by adding more connectors and ledgers. Composing connectors into chains enables payments between any ledgers and give small or new payment systems the same network effects as the most established systems. This can make every item of value spendable anywhere — from currencies to commodities, computing resources and social credit costly, if it is possible at all.

Download our IoT Security Insights report >>

Tags: Article IIoT/Manufacturing Security Technologies Vertical Industries

Related


  • IoT security
    IoT Device Security: Risk Assessment, Hygiene Are Key
    As devices and data proliferate at the edge of the network, IT pros have encountered new challenges in securing enterprise IT systems.
  • Drone Technology Extends Reach of Mobile IoT
    Drones are expanding the reach of mobile IoT and can be a low-cost and less dangerous way to address issues in the field.
  • Industrial IoT platform
    Industry 4.0 Embraces 5G As Need for Real-Time Manufacturing Data Mounts
    Lacroix Electronics factory is testing 5G technology to fuel real-time manufacturing data and create an Industry 4.0 factory of the future.
  • Enterprises Embrace Ecosystems for Smart Manufacturing Success
    Enterprises have come to embrace an ‘ecosystem’ approach to manufacturing—which is about more than vendor partnerships.

Leave a comment Cancel reply

-or-

Log in with your IoT World Today account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Content

  • Tactics for Successfully Selling IoT Technologies
  • 5G in Manufacturing Shows Promise, but Rollouts Are Incremental
  • Argent Case Study
  • Using IoT for Safety Is a Priority for Many Industrial Firms

News

View all

Private LTE Market Projected to Grow to $13 Billion

12th January 2021

IoT World Announces 2021 IoT World Advisory Board

9th December 2020

White Papers

View all

Smart and Flexible Automotive and Tire Production

20th December 2020

Unlock the Potential of Digital Transformation in Oil & Gas

15th December 2020

Special Reports

View all

Cybersecurity Protection Increasingly Depends on Machine Learning

28th October 2020

Webinars

View all

From Insights to Action: Best Practices for Implementing Connected Device Security

15th December 2020

Real Cyber Threats and Best Practices Cyber Security Strategy and Solutions for Smart Manufacturing

1st December 2020

Galleries

View all

Top IoT Trends to Watch in 2020

26th January 2020

Five of the Most Promising Digital Health Technologies

14th January 2020

Industry Perspectives

View all

IoT Spending Holds Firm — Tempered by Dose of ‘IoT Pragmatism’

1st December 2020

The Great IoT Connectivity Lockdown

11th May 2020

Events

View all

IoT at the Edge

17th March 2021

Embedded IoT World 2021

28th April 2021 - 29th April 2021

IoT World 2021

2nd November 2021 - 4th November 2021

Twitter

IoTWorldToday, IoTWorldSeries

Protecting Your Network Against Ripple20 Vulnerabilities dlvr.it/RrJhpD https://t.co/Q2xe5hoy4U

25th January 2021
IoTWorldToday, IoTWorldSeries

The DOD turned to #kubernetes #containers for #IoTdevelopment to brace for rapid change. dlvr.it/RqzsLz https://t.co/t8W7coEdZN

20th January 2021
IoTWorldToday, IoTWorldSeries

Food for thought: Food and Beverage Industry eBook @ROKAutomation dlvr.it/Rqz00T https://t.co/Z3y18vuozF

20th January 2021
IoTWorldToday, IoTWorldSeries

Facility of the Future dlvr.it/Rqyzvm https://t.co/ytpsOUTtGP

20th January 2021
IoTWorldToday, IoTWorldSeries

A new day in automotive production #digitalmanufacturingsolutions @ROKAutomation dlvr.it/RqyrNS https://t.co/yxPFrBZGVg

20th January 2021
IoTWorldToday, IoTWorldSeries

Unlock the potential of digital transformation in Oil & Gas @ROKAutomation dlvr.it/RqyrBV https://t.co/kzHcGjf2OK

20th January 2021
IoTWorldToday, IoTWorldSeries

.@Airbus’s #datdriven #digitaltransformation focused on getting its existing data in order rather than just gatheri… twitter.com/i/web/status/1…

19th January 2021
IoTWorldToday, IoTWorldSeries

#EdgeNLP enables devices to do much more #NLP locally that better approximates human conversation.… twitter.com/i/web/status/1…

19th January 2021

Newsletter

Sign up for IoT World Today newsletters: vertical industry coverage on Tuesdays and horizontal tech coverage on Thursdays.

Special Reports

Our Special Reports take an in-depth look at key topics within the IoT space. Download our latest reports.

Business Resources

Find the latest white papers and other resources from selected vendors.

Media Kit and Advertising

Want to reach our audience? Access our media kit.

DISCOVER MORE FROM INFORMA TECH

  • IoT World Series
  • Channel Futures
  • RISC-V
  • Dark Reading
  • ITPro Today
  • Web Hosting Talk

WORKING WITH US

  • Contact
  • About Us
  • Advertise
  • Login/Register

FOLLOW IoT World Today ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X