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Global Financial Leaders to Invest More Than $1bn in Blockchain Projects in Next 1-2 Years

Bitcoin’s longevity has been discussed as much as its legitimacy but it is set to become the sixth largest global reserve currency by 2030, according to research from Magister Advisors.

The survey from the M&A advisors to the technology industry claims to prove the  strategic significance of bitcoin and the Blockchain technology underpinning it, calculating that more than a million bitcoin transactions are now taking place daily, in excess of 10 times publicly reported data.

To date, Blockchain and bitcoin have captured equal attention but Magister predicts that Blockchain is set to impact far wider aspects of business and consumer life.  It noted that the majority of bitcoin transactions are currently taking place in developing economies, reflecting the appeal of the robustness of the technology in economies where an estimated two billion adults do not have bank accounts and especially in markets where corruption is endemic in financial services.  

By contrast Magister expects an estimated $1 billion to be spent by the top hundred financial institutions on Blockchain-related projects over the next 24 months. These leading banks are said to have portfolios of 10-20 bitcoin-related projects underway.

Magister Advisors sees the initial use of Blockchain is to typically not replace core infrastructure activities such as wire transfers, but to complement them, often by storing ‘meta-data’ in areas such as settlement and clearing.  Yet it asserts that Blockchain’s potential is much greater, given what it says is the flexibility and robustness of the technology, ranging from property registries to security infrastructure to direct payments. 

“Blockchain is without question the most significant advancement in enterprise IT in a decade, on a par with big data and machine learning,” commented Jeremy Millar, partner at Magister Advisors who led the research. “What JAVA is to the Internet, Blockchain is to financial services. We have now reached a fork in the road with bitcoin and Blockchain.  Bitcoin has proven itself as an established currency.  Blockchain, more fundamentally, will become the default global standard distributed ledger for financial transactions…Blockchain technology will underpin a growing number of routine transactions globally as trust grows.” 

That said, Millar accepted that initially banks would likely be unwilling to remove the core infrastructure that handles the process of clearance and settlement. “Ironically bitcoin has attracted negative publicity over its short life because attempts to rig it have been flagged by the Blockchain technology that underpins it,” he added. “It’s the inherent ability of the Blockchain infrastructure to expose these attempts that have impacted perceptions when in fact it should shore them up. This self-regulating capability in Blockchain will lend itself to array of applications where corruption has hitherto been a problem.”

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