A Blockchain research arm of a bank in South Africa has said the technology could take up to 40% of banks’ revenue if it becomes a global standard.
Also read: Central Banks Indirectly Shape Bitcoin Disruption With Bad Policy
South Africa ‘Will End Up with a Blockchain’
Speaking at the Gordon Institute of Business Science Wednesday, Rand Merchant Bank’s (RMB) Farzam Ehsani said that blockchain “calls institutions to a new paradigm.”
Farzani, who heads RMB’s so-called Blockchain Initiative, spent several years researching the mechanisms behind traditional banking and disruptive technology. He spoke in tandem with Tanya Knowles, head of innovation and projects at Strate, South Africa’s Central Securities Depository. Knowles stated:
I do believe we will end up with a blockchain for financial markets in South Africa.
Ehsani meanwhile is naturally erring on the side of caution when it comes to Blockchain’s ability to eclipse the essential need for banks. Rather, like representatives of legacy institutions the world over, he identified use cases for the harmonization of blockchain and traditional finance.
According to Moneyweb, which covered the event, Ehsani believes central banks “could issue their own crypto-currencies via a blockchain, enabling them to monitor all transactions and allowing citizens to bank directly with them.”
Such ideas are already being actively considered in Russia, where the government has stated that Bitcoin and other decentralized cryptocurrencies not under its direct control would be banned once its own currency was issued.
“Not until cryptocurrencies emerge will the full potential of [Blockchain] be realized,” Ehsani previously wrote on Twitter in response to an article on the progress of fintech and digital payments in the Caribbean space.
Very significant. Not until central bank crypto currencies emerge will the full potential of #blockchain be realized https://t.co/9anZdNvsmu
— Farzam Ehsani (@farzamehsani) April 5, 2016
Accepting ‘Chain of Chains’
South Africa meanwhile has been somewhat conservative on the subject of virtual currencies.
The country’s Reserve Bank last put out a white paper outlining its position on the issue in December 2014, in which it described them as “a digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account and/or a store of value, but does not have legal tender status.”
Nonetheless, the appointment of South African entrepreneur Llew Claasen as CEO of the Bitcoin Foundation in June points to an increasing awareness of and participation in core blockchain innovation from the area.
Fellow Bitcoin Foundation board member Vinny Lingham, a long-time Bitcoin investor and South African national, noted in May that some form of “acceptance” would likely be necessary to accommodate banks’ reactions to cryptocurrency.
“The banking sector is investing heavily in what they call ‘Blockchain’, but specifically avoiding using Bitcoin. I personally think the tide will turn on this point, as soon as one of these projects get compromised, from a security perspective,” he wrote in a blog post.
[…] I think we have to accept that we will live in a world where there is a ‘chain of chains,’ all interlinked in some way. Bitcoin may not rule the finance world chains but it may act as an intermediary platform for settling across chains.
What do you think about Farzam Ehsani’s perspective? Let us know in the comments section below!
Images courtesy of themerkle.com, shutterstock, twitter.com, enca.com