Banks collaborate to create digital dollars using blockchain technology
Traditional financial entities like banks haven’t quite bought into the disruptive capabilities of blockchain technology, but a recent partnership with US banks shows that the tide may be turning sooner rather than later.
It’s human nature to simply avoid change, and with blockchain technology already bringing disruption to the traditional financial structure, it’s easy to see why adoption would be difficult. But more and more traditional financial players are warming up to the idea of using blockchain to improve their core business or make their current services more efficient.
Ideas have been tossed around about digital currencies that could mimic the dollar via central banks’ digital currency offerings. As mentioned, a collaboration of banks is taking this a step further with a pilot strategy for a digital dollar.
“A group of banking institutions — including HBSC, Mastercard and Wells Fargo — announced on Tuesday (November 15) the launch of a proof-of-concept digital money platform called the Regulated Liability Network (RLN),” a Decrypt article reported, noting the fallout from the crypto exchange FTX collapse that rocked the crypto markets recently.
The collaboration comes after the aforementioned FTX disaster, with lawmakers calling for more regulation in the crypto market. This could be a step towards the direction where digital currencies merge with the regulatory infrastructure of the federal government.
“Members of the US banking and payments community are involved in this [proof-of-concept] is excited to work with the New York Innovation Center (NYIC) which is part of the Federal Reserve Bank of New York,” the group said in a statement.
An ETF with an eye for growth
While the FTX collapse may have cast a negative light on cryptocurrencies, the bank collaboration shows that there is indeed some potential to be extracted from blockchain technology. In this case, there exists a growth opportunity wrapped in an exchange-traded fund (ETF) via Global X Blockchain ETF (BKCH).
The fund seeks to provide investment results that are generally consistent with the price and return performance of the Solactive Blockchain Index. The index is designed to provide exposure to companies that are positioned to benefit from further advancements in blockchain technology.
Global X notes that the global blockchain market was valued at nearly $5 billion in 2021, with forecasts suggesting it could grow over 10x to more than $67 billion by 2026. This gives investors global exposure to markets where adoption can occur faster than second.
More and more companies around the world are seeing how blockchain technology can make their core business more efficient and secure. As such, the reach of blockchain goes beyond the realm of merely serving as the underlying technology for cryptocurrencies.
“This topic is bigger than just cryptocurrency,” Global X noted on its product website. “BKCH invests accordingly, with global exposure across multiple sectors and industries.”
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