Blockchain: What's crypto got to do with it?

One of the most promising areas for blockchain technology is finance. The largest investment banks have largely avoided cryptocurrencies. But many are quietly working to integrate blockchain technology into company trading and other businesses. Investment banks help the economy function, linking buyers and sellers of securities and loaning money to companies. But the systems these trades run on are often outdated, antiquated systems. Blockchain technology should be able to help Wall Street’s biggest firms to run faster, less costly, and more efficient systems. Goldman Sachs is already trading bonds and other debt securities for clients on blockchain-based networks such as Ethereum, and the bank is building its own blockchain-based trading platform. Goldman Sachs arranged a $100 million two-year bond issue for EIB last year, which was registered in France and handled on the Ethereum network. This type of bond sale would normally take five days to settle; however, it only took an hour.

JP Morgan

JPMorgan’s Onyx platform, the world's first blockchain-based platform for wholesale payment transactions, launched in 2020. By using smart contracts and JPM Coin, a digitised version of the U.S. dollar, Onyx repo trades settle in real-time
instead of overnight, reducing settlement risk and manual processing. The intraday repo application has so far facilitated the movement of $300bn in trades, completing about $1bn in transactions a day. It can also be used by other banks: Goldman, BNP Paribas and others have been using it to trade repos. Last year, JP Morgan successfully executed its first-ever cross-border transaction using decentralised finance (DeFi) on a public blockchain. This was the first time that a major bank had tokenised deposits on a public blockchain, a huge milestone for the industry.

Industrial and Commercial Bank of China

The world’s largest bank ($4.3 trillion in AUM) has 40 blockchain applications, which last year processed more than $48bn worth of transactions for local governments and industries including construction and transportation. One of its most inventive apps ‘Icago’ rewards its users when they use energy-efficient transportation. The company also plans to use blockchain to securitise carbon emissions that will in turn be sold as bonds to companies trying to cut carbon reduction requirements. Outside of finance, companies are adopting blockchain technology across health care, government, retail, energy, telecommunications, manufacturing, insurance, and transport. Below are some other interesting use cases.

Oracle

As more people switch to EVs, demand for cobalt which is used in EV batteries is rocketing. Most of the world’s cobalt supply is currently sourced from the Democratic Republic of Congo, where there are a number of concerns over human rights issues. Oracle has built a platform using blockchain to trace the source of high-risk area raw materials like cobalt. Many of the world’s largest EV makers have signed up already.

Samsung Group

Although Samsung is more famous for its electronics, the company is also using a blockchain-based loan platform to make it easier for small and medium-sized companies to request government loans. This process used to be very lengthy and complicated, requiring at least three in-person visits to the organisation to carry out application and review procedures.

Samsung’s use of blockchain enables application information to be shared in real-time, redefining the loan process by improving speed, flexibility, transparency, and security.

Walmart

Walmart is using blockchain technology to track the movement of goods through its supply chain, with the goal of increasing transparency and improving food safety. In 2020, the FDA announced manufacturers and retailers would be responsible for tracking foods along the supply chain that pose a risk in order to identify and dispose of contaminated items more rapidly. Blockchain reduces the time it takes to find the data on specific food items from 7 days to 2.2 seconds.

A.P. Moller—Maersk

The Danish shipping giant is using blockchain technology to track the movement of cargo through its supply chain, with the goal of increasing efficiency and reducing costs. Its adoption of blockchain technology saves the company vast amounts of time and paperwork when tracking containers as they move through global ports. For example, its client Puma can now track a specific container in a matter of seconds, rather than the hours it used to take.

Tencent

Tencent developing is developing a ‘one-stop blockchain’ platform, Tencent Cloud Blockchain. Provinces including Hainan, Guangdong and Beijing use it already for issuing electronic bills for items such as health care and transportation.

Boeing

Boeing is partnering with Canada’s TrustFlight and developer RaceRocks to build a digital aircraft record system that helps airlines keep up with required maintenance. The majority of current systems that record and manage aircraft maintenance are paper-based or operator-specific solutions that usually are unable to communicate with one another, meaning data has to be manually input and transferred. Through its use of blockchain technology, the company envisages a global airworthiness records platform, which could save 25% in maintenance costs—worth billions annually across the industry.

Investing in the innovation of Blockchain Technology

We are firm believers in the power of a thematic approach, allowing investors to capture a diversified yet targeted exposure to companies at the forefront of blockchain innovation, without having to bet on the eventual winners.

References to specific companies should not be construed as a recommendation to buy or sell shares or other financial instruments issued by those companies, and neither should they be assumed profitable.