The official definition of the DTL, according to the Investopedia, is a database that is consensually shared and synchronized across multiple sites, institutions and geographies. Now, this is quite difficult to understand for a novice, so I will try to break it down in simple English. It is frankly a ledger that we use in accounts but it is a database that is decentralized and shared between parties who are willing to transact and share information with each other. This ledger/ framework basically works on trust factor. There is no need to have a third party intermediary to check any manipulation that may creep in the system. This all is of course technologically driven. See, going by the blog’s name and my educational background, I will be discussing here, the financial and business applications of the technology. I will be also discussing the projects that are being implemented or developed by the organisation all around the world. However, I will not be talking about the technology in depth per-se.
There are number of organisations that are investing in the technology and are trying to understand the implications of the same. I think it is eminent here to explain you all that there are lots of benefits of adapting such a technology. Some of the important ones I am explain it, which are as follows:
1. The transactions done on the DTL is quite frankly more transparent. All the transactions done on the blockchain, which is a form a distributed ledger is consensus driven, which means all the parties on the platform have to give a consent to that transaction. The transaction once done is very difficult to alter as all the past records of that transaction have to be changed.
2. The doing away with the central third party to authenticate a particular transaction is also quite a revolutionary development. This basically means that the ‘cut’ or commission that various third parties charge can be done away with.
3. The introduction of smart contracts which are basically similar to on paper business contracts which we see in day-to-day life, but which here in this case contains pre-defined business instructions that get executed automatically with the use of artificial intelligence.
4. Some of the projects based on the DLT also are focusing on supply chain management which is also an important application of the technology.
See, I can go with the list of these advantages of this technology which lot of experts point out can be as great as internet 2.0. But the main idea behind the post is to make people aware about the application as well the the projects that are being deployed by the organisations under the domain. I will mainly be talking about the open source projects that are being implemented by the Linux Foundation- The hyper-ledger. It is an open source non-profit community managing different projects and collaborating with different stakeholders in bringing such nascent projects like Hyperledger sawtooth, Hyperledger Burrow, Hyperledger Iroha, Hyperledger sawtooth, etc. I would highly recommend that you read about these projects online.
BUSINESS APPLICATIONS
The above image shows us the business applications which can be easily done better with the blockchain per se. (taken from google images)The technology has been in nascent stage and lots of developments are taking place but we have to consider one important point. The investing public should not be recklessly invest in any and all the blockchain startups that are coming up in the market.
The main applications that are being seen using DTL is mainly improving the supply chain management, sending of cross border remittances, providing peer to peer lending/borrowing, platform for issues of ICOs (which are alike IPOs but these are initial coin offerings which unlike equity shares does not give the right to vote), coin exchanges etc. The business applications that are mentioned can be integrated on the same business model of the existing companies or new business models can be formed around these ideas.
But before all that, let’s talk about one of the most important applications that we see of blockchain- the cryptocurrencies. The cryptos, what they are commonly called are digital tokens that can be used for transactions. The most famous cryptocoin that was making headlines almost every single day, recently, was Bitcoin. The market cap of the coin is roughly $100 billion currently. Arguably, these digital coins will take the place of fiat currency that we see today. The coins not existing physically confuse people or lay man but we have to understand the far reaching impact these coins can take place.
Recently JP Morgan which is one of the largest investment banks in the world introduced its own coin. This is quite contradictory to the statements made by the the CEO Jamie Dimon. He was totally against the cryptocurrency Bitcoin. Now his own bank launching a digital coin called JPM coin, which currently has been launched for payments on the blockchain. So it has quite a narrow application with regard to the crypto universe per se. The JPM is not money per se but it is just a token which is equivalent to a dollar which can be held by the depositors of the bank which can be send on the blockchain and can be redeemed for the equivalent amounts (of the JPM held).
Surprisingly, the JP Morgan’s stance on blockchain is quite encouraging. They believe in the potential of blockchain technology and they are also supportive of the cryptocurrencies as long they are properly controlled and regulated. According to their official website, JPM can yield benefits of for blockchain by reducing clients’ counter party and settlement risk and thus enabling value transfer. Moreover, JPM coin is currently only for institutional customers of the bank so we as individually sitting in the country can understand this technology and improve ourselves in learning about such an interesting tech which can actually help and improve the efficiency of the businesses.
See, what my analysis says that right now the application for JPM in the blockchain world is not quite broad. It is only talking about transfers and might foray into cross border transactions. But the application of cryptos is quite larger that that. The JPM coin certainly gives quite an encouraging turn to the blockchain universe, making it a more reliable and valid technology. This surely quite an interesting dynamic for entrepreneurs who are trying to inculcate that technology and for wanna be entrepreneurs who are in process of taking advantage of the same.
The bank has also given its heads up to the blockchain technology by launching its own blockchain Inter bank Information Network which is on the same lines but currently it is focusing on transferring of information within corresponding banks unlike blockchain.
This is an important case in point as another executive of the same bank, Co-President of the bank Daniel Pinto stated that cryptocurrencies have a role to play in the future and even confirmed that the bank is looking into the bitcoin space.