The global financial industry is rapidly reaching a consensus on the benefits of private blockchains. Could this technology truly disrupt the current banking status-quo? Will it become the preferred payment platform for retail and consumers alike?

Ten years ago, when the Bitcoin network went live, Satoshi Nakamoto hard-coded a powerful message in the genesis block: “The Times 03/Jan/2009 Chancellor on the brink of second bailout for banks.”

The message was a direct reference to an article published in The Times about the government’s solution to the full-blown financial crisis at that time. Nakamoto wanted to offer an alternative to the current broken monetary system by setting up a revolutionary decentralized, trustless, and censorship-resistant payment method.

Most likely, Satoshi never thought that banks could actually embrace this new cryptographic system and implement it some ten years later.

Sure, the banks came up with a new name to differentiate themselves from the ‘crypto-anarchist’ and now call the blockchain Distributed Ledger Technology (DLT). DLT is part of the larger ‘fintech’ system that concentrates all IT innovations for the financial industry.

DLT is definitely not what Nakamoto had in mind. It’s not the traditional open-source, decentralized network; it’s actually controlled by a central entity, thus making it prone to censorship.

Does that make it inherently evil, though? Not necessarily. It may just be the spark that ignites the real use-cases for actual blockchain technology.

Will DLT Dethrone VisaNet And SWIFT?

Just recently, JPMorgan launched a fiat-backed digital coin which it dubbed JPM Coin, while IBM unveiled a global DLT-based payment network called World Wire.

Payment processing is a giant industry featuring a complicated maze of relationships between different parties. SWIFT is the most popular system invented in the 1970s linking more than 11,000 financial institutions in over 200 countries and territories worldwide. VisaNet is a more recent addition at a scale, which processes 10,000 transactions per second.

On the heels of these two mammoths is the technology underpinning the success of all decentralized cryptocurrencies. Implementation of the blockchain in today’s financial landscape may enable banks to facilitate cross-border payments by eliminating intermediaries and significantly impacting the capital costs and clearing fees.

While JPMorgan CEO Jamie Dimon took a negative stance on Bitcoin in the last couple of years, the bank has always separated cryptocurrencies from the underlying value of blockchain technology.

JPM Coin isn’t even an actual cryptocurrency at its core. Each JPM Coin represents U.S. dollars held in designated accounts at JPMorgan. In this regard, it can be regarded as a stablecoin.

IBM chose to use Stellar (XLM) rather than create a native token for their platform. Created in 2014 by Ripple co-founder Jed McCaleb, Stellar is known for easing cross-border transactions between any pair of currencies. Alongside Stellar Lumens, IBM will also use stablecoins.

Since IBM is not in a position to become a bank, the IT firm will run the blockchain infrastructure, while a financial institution transmits digital tokens over the network. IBM is reportedly in discussions with two major US banks over the issuance of the stablecoin across the network.

Private Blockchains Gaining Tractions

Along with JPMorgan and IBM, third-party finance solutions providers, including Visa and MasterCard, have made their foray into the DLT space, deploying a private blockchain-based payment network for cross-border payments and settlements.

SWIFT is conducting a private blockchain proof-of-concept with Asian Pacific partners including the Singapore Exchange, along with some established banks including Deutsche Bank.

Moreover, the New York-based CLS Bank, which oversees $5 trillion a day in global settlements, recently announced that Goldman Sachs and Morgan Stanley had been part of the test drive for CLSNet, the firm’s DLT-based payment network.

All in all, the growing interest in DLT by companies like JPMorgan, IBM, and CLS banks, among others, may encourage further implementations of the blockchain technology. This could eventually lead to widespread awareness of the cryptocurrency environment that started it all. With awareness, general adoption might be just around the corner.

Can the implementation of private blockchains in the financial sector help to boost the overall cryptocurrency market? Share your thoughts in the comment section below.