Fintech giants diving into blockchain

Despite the recent turmoil in the crypto market, many of the world's largest financial institutions are looking at the underlying blockchain technology as the best way to build confidence with customers and one another.

Mastercard, for instance, has already surpassed 2 billion "tokenized" transactions per month, a 38% increase from the previous year. Tokenization refers to the process of replacing the 16-digit number on a credit card with a unique digital record for every transaction, without revealing the customer's identity in the form of a credit card number. This provides a more secure and fraud-proof transaction experience for users.

Mastercard is also working with banks and merchants to tokenize a variety of assets, including deposits, which will be tracked on multiple public and private blockchains. Michael Miebach, CEO of Mastercard, believes that tokenization can apply to anything, and he envisions a world where everything is tokenized and passed around in a safe fashion.

Many other traditional finances (TradFi) giants are following Mastercard's lead, embracing blockchain technology to create more secure and efficient payment systems. For instance, Goldman Sachs, JPMorgan, Fidelity, and BlackRock are among the companies listed in Forbes' 2023 Blockchain 50 list of billion-dollar companies using blockchain technology to solve real problems.

Goldman Sachs' CEO, David Solomon, is one of the industry leaders encouraging the use of blockchain technology under-regulated financial institutions. Solomon argues that under the guidance of regulated financial institutions, blockchain innovations can flourish. Matthew McDermott, the head of digital assets at Goldman Sachs, also sees huge commercial opportunities in blockchain technology. His team, for instance, underwrote a €100 million bond offering for the European Investment Bank in conjunction with Santander and Société Générale in just 60 seconds, demonstrating the efficiency of blockchain technology in financial markets.

Likewise, Fidelity, BNY Mellon, and JPMorgan are using blockchain technology to create more efficient and secure payment systems. These financial giants are seizing upon the crisis in crypto confidence by flooding social media feeds with advertisements for their new crypto offerings. In particular, Fidelity is promoting its soon-to-launch Fidelity Crypto, encouraging users to get on the early-access list to trade bitcoin and Ethereum.

Despite this interest in blockchain technology, there are worries among some crypto industry purists about the future of the technology. The article highlights the ongoing schism between Web3 evangelists, who support open-source, decentralized public blockchains, and big enterprises and totalitarian governments, who prefer private blockchains that offer more control. The failures of some private blockchain projects, such as Honeywell's project for buying and selling used aerospace parts and Maersk and IBM's TradeLens global shipping supply chain blockchain, have further fueled concerns about the future of blockchain technology.

Traditional financial institutions are embracing blockchain technology to solve real-world problems and create more secure and efficient payment systems. While some remain sceptical about the future of blockchain technology, the adoption of this technology by established financial institutions is a strong indication of the potential of this technology to transform the financial industry.