The last crypto bull market, spanning from approximately 2020 to 2022, saw many large financial services firms delving into blockchain technology. However, the market collapse, including the bankruptcy of firms like Three Arrows Capital and FTX, led blockchain technology to fade into the background. With crypto prices surging once again, it is an opportune time to revisit the corporate blockchain projects from the previous bull market to see where they stand now.
Blockchain technology is the decentralized database shared between multiple parties, either publicly viewable or restricted to certain parties. It operates using smart contracts, which automatically execute events and actions based on preset parameters. While blockchain technology enabled the rise of cryptocurrencies like Bitcoin and Ethereum, it can also be used for other purposes such as insurance and bond trading. Financial firms like JPMorgan Chase have harnessed blockchain technology despite CEO Jamie Dimon’s negative stance on independent cryptocurrencies.
While large banks remain interested in blockchain-based banking and payment solutions, many have opted to participate in consortiums and joint initiatives rather than pursuing proprietary projects. JPMorgan Chase has been a standout in this space, developing blockchain solutions like JPMCoin and Liink for cross-border payments. However, outside of a few exceptions like JPMorgan Chase, most banks seem to have halted their individual blockchain projects and shifted towards collaborative efforts to navigate regulatory challenges and encourage competition.
In the brokerage and trading sector, there is a continued interest and adoption of blockchain technology despite the crypto bear market. Brokerage firms are exploring blockchain to improve efficiency, reduce costs, and eliminate intermediaries. However, the insurance industry seems to have seen a decline in blockchain projects, with initiatives such as the B3i insurance blockchain ceasing operations. The slow adaptation of the insurance industry to new technology and the complex nature of insurance claims processing contribute to the lack of traction in blockchain use cases.
Similarly, in the real estate sector, there seems to be uncertainty surrounding blockchain technology. During the crypto bull market, there was much hype around how blockchain could revolutionize various elements of real estate transactions. However, it is challenging to find up-to-date information on the progress of blockchain projects launched by major real estate firms. Government initiatives to facilitate real estate transactions on a blockchain have also been announced, but their current status is unclear due to a lack of recent updates.
Overall, financial services is not a homogenous industry, and blockchain technology is only a priority in certain verticals. While the adoption of blockchain technology in banking and payments is progressing, the insurance and real estate sectors face challenges in embracing blockchain. The complexity and regulation in financial infrastructure suggest that the transition to shared blockchains will take time, with key components of financial markets moving gradually. Nevertheless, there is real interest and traction in certain areas of financial services, indicating that blockchain technology is more than just hype and speculation.
