What impact does Wall Street's investment in blockchain technology have on the Bitcoin ecosystem?

Blythe Masters' blockchain startup project, Digital Asset Holdings, has been widely followed by the traditional financial industry, the Bitcoin industry, and the blockchain industry. It is reported that Blythe Masters is raising funds for her blockchain project, which may further attract huge investments from Wall Street. What impact will this have on blockchain technology and the Bitcoin market?

Scott Bambacigno is the Vice President and Head of Global Sales at Alphapoint, a financial technology company that enables digital currency transactions and provides institutions with blockchain solutions for storing, tracking and trading digital assets.

Scott made it clear that Wall Street is looking at blockchain technology (not Bitcoin blockchain technology) for its potential to solve real problems. Wall Street is evaluating blockchain technology's ability to cut costs compared to traditional databases. He said:

I personally am optimistic about the Bitcoin blockchain, but I don’t know if it can meet the needs of Wall Street. Some people believe that when it comes to specific business applications, multiple blockchain solutions may be needed.”

As for whether this development is good for the Bitcoin ecosystem, Scott said:

“I think it’s good, and it’s a good thing for Bitcoin. But we shouldn’t over-interpret this and blindly estimate Wall Street’s enthusiasm for Bitcoin blockchain technology.”

Wall Street’s current interest in private blockchains

Jonathan Chester is the founder and chairman of Bitwage, the most widely used Bitcoin payroll service provider.

Jonathan says:

Wall Street is interested in private blockchains. It makes sense, if you look at international payment services today, they are terrible.

He further explained:

“Currently, banks can’t just send money directly to each other via email because there’s no way to trust the sender. Do they have the money? Did they actually send the money? A bank account is linked to another account called a ‘correspondent account’, and the bank account that sends the funds sends the funds to a bank account that is linked to it to receive the funds. Since not all banks have their own correspondent accounts, they go through intermediaries, each of which charges a fee and takes longer.”

Chester believes that private blockchains cannot solve the problem of banks due to the international restrictions of tokens. He said that tokens on private blockchains cannot be used as a settlement mechanism between countries. For example, a US bank can borrow money from the US Federal Reserve Bank, send the funds to the Bank of China through the blockchain, and when the settlement is made, the tokens (the funds exist in the form of tokens on the blockchain) are directly converted into local currency. Chester said this still does not solve the trust problem mentioned above, and may cause the US bank to privately create Chinese currency, which raises political issues.

Wall Street values ​​cost reduction the most

Why Wall Street invests in private blockchains, Jonathan said:

“Well, it turns out that there is a third problem when it comes to international transactions, and that is the fact that when funds are moved between correspondent accounts, banks have no way of seeing the arrival of funds unless they are in their own accounts. Therefore, when funds are lost (which happens all the time, but as users we only see transaction delays) it is troublesome, time-consuming and labor-intensive, and very costly. By utilizing a private blockchain, while the settlement mechanism is not improved, the same transparency as the Bitcoin blockchain can be achieved. For banks, this means that banks can track the movement of funds as they move through the circulation process, significantly reducing the cost of lost funds.

Finally, it is towards the Bitcoin blockchain

When asked what impact this development has on the Bitcoin market, he said:

"This may not affect the Bitcoin market immediately. But in the long run, this impact will slowly show up. Startups and small companies may not be able to access private blockchains created directly by Wall Street, so they will use public blockchains. In fact, the Bitcoin blockchain is the most secure and most supported blockchain. It has received more than $1 billion in investment and has a market value of $6.5 billion. Given the better settlement mechanism of the Bitcoin blockchain, startups working with the Bitcoin blockchain will provide first-class services and challenge the status of banks. However, banks are also actively exploring blockchain technology and adapting to the challenges of blockchain technology, so they may look for better settlement mechanisms to compete with startups, or acquire these startups. Either way, banks have already participated in the development of blockchain technology. From these signs, I think the Bitcoin market will continue to develop.

Original article: http://cointelegraph.com/news/116035/expert-explanation-of-wall-streets-blockchain-investment-and-its-impact-on-bitcoin
By Iyke Aru
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information (http://www.8btc.com/wall-street-blockchain-impact)