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Breaking down financial silos: How blockchain unifies money, securities and commodities
JP Morgan Digital Asset Leader (NASDAQ: JPM) and Citi (NASDAQ: C) recently discussed the current innovation and limitations of digital currencies, blockchain technology, and bank accounts.
Omar Farooq, head of Onyx at JPMorgan, identified assets living in different silos as a key challenge. “One of the macro limits are the silos. So money is in a silo, securities are in a silo, commodities (are in a silo). You can just go through the asset classes, everything lives in its own silo. And those silos don’t easily communicate with each other. That is why much of the resolution may take a day or two or more,” Farooq She said.
Farooq also highlighted how JPM Coin transactions have exploded since they introduced programmability in 2023. He said transactions have increased at least 10x and possibly up to 100x. He noted that most of them were small, casual transactions, giving the example of an industrial printer that gets paid every time it prints.
So, programmability and interoperability are clearly in demand, and the world’s largest banks and asset managers are starting to see the vision. But can the current crop of blockchains deliver?
The original Bitcoin protocol can make the dream come true
The main problem with popular blockchains like Ethereum AND Avalanche, which allow programmability, have scaling limitations. Despite nearly a decade of promises from the Ethereum camp, the blockchain can still only process 20 transactions per second and rates fluctuate wildly.
Paying a $30 transaction fee obviously kills the use case of paying an industrial printer every time it prints, and 20 transactions per second isn’t enough to handle even a minor payment system, let alone all the transactions of the world. Programmability is truly revolutionary, but it’s no good if the blockchains that offer it aren’t scalable.
So, what is the solution? So far the institutions have addressed themselves blockchain with private permission such as JPMorgan’s Hyperledger Besu or Ethereum, which can perform up to 10,000 transactions per second. This reintroduces the problem of everything living in silos, in this case, on different blockchains.
Multiple chains and level two solutions or side chains mean longer settlement times, using bridges with security vulnerabilities moving digital assets between chains and reintroducing multiple sets of books. The whole point of blockchain technology is the speed of settlement, near-total security and global transparency.
What is needed is a blockchain that can scale unlimitedly and has all the security of Proof of Work (PoW) as a consensus mechanismand has programmability as a feature. Today, only the BSV blockchain can provide what we need. That’s why companies like IBM (NASDAQ: IBM) they collaborated Gate2Chain AND SmartLedger Solutions to build on it.
The BSV blockchain currently executes 100,000 transactions per second, with millions per second in testing. Commissions amount to 1/1,000 of a cent on average and thanks to the powerful Bitcoin Script, programmable transactions of all types are possible. Founder of sCrypt Xiaohui Liu showed how smart contracts work on the BSV blockchain.
If the vision involves infinite transactions on a scalable and verifiable ledger, smart contracts and programmable money, true peer-to-peer transactions, super-fast settlements and asset interoperability, it must all happen on a single blockchain. So far, only the BSV blockchain is adapting to meet demand.
Watch: Demonstrating the Power of Blockchain Technology with the nChain Web3 Event App
New to blockchain? Check it out on CoinGeek Blockchain for Beginners section, the definitive resource guide to learn more about blockchain technology.