These decentralized, unalterable records of transactions are easier to understand when you see one in use by something like the Brooklyn Microgrid.
Some microgrid members have solar electricity panels on their roofs; some don’t. A household without panels can buy excess power generated by panels from households that have them. A price is agreed to. Blockchain software records the amount of electricity produced, who produced it, who bought it, and the amount and date of payments. The electric company isn’t involved beyond renting space on its wires to move the power from one household to the other.
The implications are limitless, which is one reason why everyone from Walmart to county land registries are building blockchains.
Seven global financial houses, including Merrill Lynch and the National Bank of Abu Dhabi, use the blockchain-based cryptocurrency Ripple to settle payments across currencies and transfer money internationally. ATB Financial, owned by the province of Alberta in Canada, reports using Ripple to transfer money to an account in another country in less than five seconds. By conventional means, the transaction could have taken as long as seven days to gather necessary consents and signatures. In an earlier blockchain test, the Bank of America reports similar speed in finalizing an international letter of credit.
This isn’t an isolated case. Last November, a consortium of 11 major financial houses – including JPMorgan Chase, Credit Suisse and the Canada Pension Plan Investment Board – successfully completed an experiment making complex equity swaps and handling the attendant “paperwork” through a blockchain crafted by Axoni, a start-up that several financial institutions invest in.
The motive isn’t just customer convenience. It’s estimated that almost half of financial institutions are victims of white-collar crimes each year. Much of those crimes crop up amid paper-shuffling among houses processing transactions.
TREND FORECAST: Trading paper and fax machines for blockchains will turn billions in losses each year into new profits.