Author: Hu Yoshida, Chief Technology Officer, Hitachi Data Systems
A few weeks ago I attended the 2017 Blockchain for Finance Conference where a Hitachi Proof- of-Concept (POC) was being presented by Bank of Tokyo-Mitsubishi UFJ. I would describe Singapore as being one of the leading nations for blockchain activity, primarily due to the efforts of the government of Singapore and the Monetary Authority Singapore (MAS), which has established a sandbox for the use of fintech developers. The Bank of Tokyo-Mitsubishi UFJ POC was done in this sandbox.
While blockchain is most famously known as the technology behind crypto currencies like Bitcoin and Ether, there are a number of POCs that are beginning to show promise in other areas of the financial industry. Even when POCs fail, each POC helps to shape the future of various blockchain applications.
In Asia, crypto currencies are reaching fever pitch, with the value of Bitcoins in USD more than doubling since the beginning of 2017, to over $2500. In June of 2016 the New York Times reported that over 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools — and most flowed through just two of those companies.
Bitcoin received a boost in recognition with the recent “Wanna Cry” ransomware attack, which demanded payment in Bitcoin. Nearly everyone I talked to in Singapore knew some relative or friend who has already made a fortune in Bitcoin. However, the New York Times reported that Bitcoin is being out performed by another cryptocurrency, Ether, which has risen 4500% since the beginning of the year with a total worth of 82% as much as all the Bitcoin in the world. Ether is another cryptocurrency that is based on a block chain distributed computing technology called Ethereum.
Although the rampant speculation in Bitcoin and Ether sounds like a pyramid scheme and a currency for criminal activities, there are many other applications of the basic technology, which could drive more beneficial social innovation. Blockchain acts like a distributed ledger where all transactions are properly conducted and recorded without the bottleneck of a central ledger.
· Blockchain can shorten the settlement of funds transfer from days to minutes, for earlier release of funds, reduction of risk, and reduction of processing fees.
· It could be used for a distributed cloud where no one vendor controls all of your online assets.
· Blockchain technologies could make tracking and managing digital identities both secure and efficient, resulting in seamless sign-on and reduced fraud.
· Programmable digitized contracts can be entered on the blockchain as variables and statements that can automatically release funds using the blockchain network as the executor, rather than trusting a single central authority.
· Blockchain may even solve the problem of “Fake News” !
Hitachi is an active participant in the open source Hyperledger consortium, an umbrella project of open source blockchains and related tools, started in December 2015 by the Linux Foundation, to support the collaborative development of cross-industry, blockchain-based distributed ledgers.