Experts explain Wall Street's blockchain investments and their impact on Bitcoin

Blythe Master's new blockchain startup is set to receive a large investment from Wall Street this year. What does this mean for blockchain technology and how much impact will it have on the Bitcoin market?

At the beginning of the new year, the Bitcoin community is filled with joy because Wall Street will invest in blockchain. Cyberspace is full of speculation, how much impact will this investment have on Bitcoin? Cointelegraph interviewed various experts to seek clear answers to Blythe and his partners’ purpose of this move, and to examine whether this investment is indeed worthy of everyone’s attention as the attention of the Bitcoin market.
This investment is not all invested in Bitcoin blockchain

Scott Bambacigno is the Vice President and Global Sales Manager at Alphapoint, a financial technology company that facilitates digital currency transactions and provides institutions with blockchain-based solutions such as storage, tracking and trading of digital assets.

Scott made it clear that Wall Street is not investing in Bitcoin blockchain technology yet, and their current investment is just to understand the capabilities of blockchain. He said that Wall Street is evaluating the cost-saving capabilities of blockchain technology compared to old databases. He continued:

“The bitcoin blockchain can do some things very well, but it’s not clear to me that it can do all the things that Wall Street needs, so maybe we need more than one blockchain solution for each specific business use case.”
When asked whether this development is positive for Bitcoin, Scott said:

“Yes, this is great news for Bitcoin, but please don’t misinterpret this and think that more Wall Street money will be pouring into Bitcoin or the Bitcoin blockchain any time soon.”

Wall Street's current interest is in private blockchains

Jonathan Chester is the founder and president of Bitwage, the largest Bitcoin payroll provider by users and volume.

Experts explain Wall Street's blockchain investments and their impact on Bitcoin

Jonathan said that he felt he knew where Wall Street's interests were and what Wall Street actually wanted. Here are his original words:

“Wall Street is very interested in private blockchains, which makes sense when you look behind the scenes at what’s happening with services like international payments. And let me tell you, they’re in a mess here.”
He further explained:

"Currently, banks cannot send cash to each other by mail because there is no way to trust the sender. Did they have the cash in the first place? Did they actually send the money? However, banks open accounts with each other, called corresponding accounts, and cash transfers between banks are actually funds transferred from the sender's account to the recipient's corresponding account opened at the sender. Since not all banks have corresponding accounts with each other, banks send money from one country to another through a maze of corresponding accounts, each intermediary charges some fees and delays the transaction."
Mr. Chester insisted that private blockchains would not solve the problem of banks due to the limitations of their tokens between countries. He said that private blockchain tokens could be used as a clearing mechanism between countries, for example, a bank in the United States borrows from the Federal Reserve and then remits money to a bank in China through the blockchain, and then the money is settled directly in tokens and converted into local currency. He found that the trust issue of whether funds are placed on the blockchain is still unresolved, and a US bank would not be very effective in creating Chinese currency, which involves political aspects and governments need to reach a consensus, which may take a long time.
This investment is just about cutting costs

Speaking of the main reasons why Wall Street invests in private blockchains, Jonathan said:

“Well, actually, there is a third problem with international transactions. Since the funds are moving between counterpart accounts, banks have no way of knowing where the funds are going unless they reach their own accounts. When banks lose the funds (which happens all the time, and the average user just sees a delay in the transaction), it causes costs to go up because it is expensive to find the funds in time and manpower. By leveraging a private blockchain, even though you don’t have an improved clearing mechanism, you still get the transparent record of the Bitcoin blockchain. This means that banks can now track the whereabouts of transaction funds, which greatly reduces the loss and delay of funds.”
In the future, it will completely become the Bitcoin blockchain

When we asked him what impact this investment would have on the Bitcoin market, he said: "It is very likely that this investment will not have an immediate impact on the Bitcoin market. But in the long run, it will have an impact. Startups and small businesses will most likely not directly connect to the private blockchains created by Wall Street, but will turn to public blockchains. Since the Bitcoin blockchain is the most secure and most invested public blockchain, with more than $1 billion in investment and a market capacity of about $6.5 billion, startups are likely to turn to the Bitcoin blockchain. With better clearing mechanisms, startups that work with the Bitcoin blockchain will provide better services, thereby challenging the position of banks. As for banks, it will be easier to accept blockchain technology, and they will look for better clearing mechanisms to compete with startups or acquire these companies. In any way, banks will invest in the Bitcoin blockchain, or other public blockchains with better liquidity. When all this happens, I think the Bitcoin market will rise."