The Hong Kong central bank has announced that its official launch next month will include a blockchain-built trade finance platform for logging transactions and credentials, which will therefore be immutable. Although the platform in no way utilizes cryptocurrency, it will be one of the largest bank-related blockchain integrations of all time. HSBC and Standard Chartered are among the 21 banks that have opted in for the platform.
Blockchain for Banking and Global Trade
Next month, Hong Kong’s central bank will go live with a blockchain-built trade finance platform. The platform will distribute data and information through ‘blocks’ to (at the time of this writing) over 21 banks. The world renowned HSBC corporation will be one of those banks. HSBC had previously noted their interest in the blockchain, stating it is “viable” for the future of the global economy. Standard Chartered, the multinational banking service, is another of the participating banks.
The announcement was released on July 15 and came in association with information about the development team. The entire distributed system was designed by China’s Ping An group. Community members and financial advocates alike have argued that the launch of the platform will be the most notable integration of blockchain for modern finance, as it will seamlessly connect global banking systems to one another through an immutable and distributed ledger.
Hedging Fraud and Double Spending
The current global trade finance industry runs at a total of about $9 trillion. Current systems within the finance industry incorporate many digital features but have not successfully eliminated the need for various manual transactions and paperwork that result in lost time and money. Additionally, the current financial system still sees instances of fraud. The newly developed blockchain system takes on these challenges.
The blockchain system to be implemented will run to ensure legitimacy and enable immutability within the banking ecosystem. While this blockchain system is not associated with cryptocurrency (which some believe can end trade wars), it will most likely be the largest use-case implementation of blockchain for any sort of system. The inclusion of the new platform will reduce unnecessary manual transactions, enable easier credential confirmation, and identify any trace of possible fiat double-spend errors.
A Banking Conglomerate Now Officially on the Blockchain
Interestingly, as pointed out by Ping An’s deputy chief executive, Jessica Tan, “Instead of individual banks trying to do this you have the regulator trying to bring the banks together.” In doing so, various improvements to the current financial system should result. Final implementation of this blockchain-built system will provide over 21 banks the ability to finance any transactions on the blockchain.
The new system is said to give smaller companies improved access to financial services due to quicker verification and data collection processes. Companies will be able to go through the selected banks on the platform and have instant access to the global trade, as well as the supply chain (a sector for which companies around the world have sought integration of blockchain). Every person interacting with said platform will require verified credentials on the blockchain, essentially allowing for the first ‘unhackable’ finance trade system.
A Bright Future of Trading and Finance Built on the Blockchain
The integration of Hong Kong’s new blockchain-built platform is setting a new standard for institutions and financial centers around the world. With this new development—immutability and legitimacy ensured by a virtually unhackable ledger—other banks could possibly now have new thresholds to surpass if they want to be perceived as being the most trustworthy option.
The finance industry is only one of the various industries blockchain has been thought to revolutionize. From journalism to healthcare to the automotive industry, developers are finding ways to improve on existing systems using blockchain technology.