Blockchain is often linked to cryptocurrencies such as bitcoin. However, a trend is emerging where companies such as Mastercard are demonstrating different uses of blockchain. This trend should remind us that blockchain is a lot bigger than bitcoin.
Blockchain’s touted security explains why it draws the attention of payments giants such as Mastercard. Mastercard’s most recent patent application to the US Patent and Trademark Office describes a blockchain-based database that is capable of processing payments instantly. Specifically, the blockchain database would maintain an ongoing record of transactions, ensuring payments are made and received and preventing fraud. The database would also record account profiles of parties involved and their account balances.
Mastercard is also using blockchain to improve B2B transactions. Last month in a press release, Mastercard opened access via an API to its blockchain tools in the B2B space.
Following this blockchain trend, Allianz has implemented a blockchain prototype that connects to Citigroup’s API to disperse payments. This insurtech trial program is built on blockchain and distributed ledger technology. The security of blockchain-based payments boosts efficiency in the insurance claim process.
Similarly, JPMorgan Chase & Co is developing Quorum, which uses blockchain technology to track payments and execute smart contracts via distributed ledgers. Support of blockchain is not the same as support of bitcoin. While bitcoin is part of blockchain technology, blockchain has much more to offer. So, while JPMorgan chief Jamie Dimon is no fan of bitcoin, the company recognizes the divergent potential of blockchain.
Twelve months ago, blockchain was still relatively unknown and those who understood its potential were few and far between. Now, blockchain innovation is a legitimate endeavour for many. Trust may eventually shift from single institutions such as banks or corporates to technologies companies with decentralised software. Still, blockchain networks will not be widely deployed soon, but announcements such as the one made by Mastercard signal that blockchain has potential greater than bitcoin and possibly still greater than what we imagine.
By Grace Appleford, Research Analyst for Holland FinTech.]]>