OpinionThe financial world is finally ready to talk blockchain
Opinion
The financial world is finally ready to talk blockchain
"If you haven’t yet paid for a coffee with Bitcoin, don’t worry — neither have the vast majority of people around the world," writes Arik Galansky, VP of Technology at Fireblocks. "However, in the next few years, the average person is increasingly likely to use a product powered by blockchain technology."
The prices of cryptocurrencies like Bitcoin, Ethereum, and Solana are constantly in flux. Speculative bubbles form and burst every few years, yet the one constant is the growing adoption of blockchain technology by institutional financial entities and service providers. As blockchain technology evolves, companies are finding new use cases, and regulators are beginning to get a handle of the regulatory environment — making the industry’s direction clearer. Strong trends like tokenization and stablecoins, cross-border payments, digital identity, and evolving regulation clarity are positioning blockchain technology to serve as the infrastructure for the global economy.
If you haven’t yet paid for a coffee with Bitcoin, don’t worry — neither have the vast majority of people around the world. However, in the next few years, the average person is increasingly likely to use a product powered by blockchain technology. One of the first sectors pushing the boundaries of the crypto industry is the stablecoin market. Stablecoins operate on blockchain infrastructure but represent a stable monetary value pegged to fiat currencies like the dollar or the euro.
The stablecoin market has matured, now holding a market capitalization of well over $100 billion. These major stablecoins are not what the broader public has come to imagine —, these assets are backed by actual money held in banks. It’s becoming more common for financial institutions to use stablecoins as a means to move assets freely internally, between different companies and different regions.
As companies realize the efficiency of instant value transfers, competition is heating up over who will provide stablecoins to the broader financial industries. Initially, it was crypto companies but now established players like PayPal and traditional banks in various countries are creating their own stablecoins. This is supported by the gradual progress of regulators, allowing different entities to enter the market. As the tokenization of stablecoins proved successful, many financial institutions began to tokenize the equivalent value of other financial assets.
A shockwave hit the market when BlackRock launched its money market fund on the blockchain. While access to BlackRock’s fund is not open to everyone, it operates on the Ethereum network lending credibility to the platform and the industry. While it is not the first tokenized security to launch on-chain, many other financial institutions that saw this development were already working on a similar solution and are now speeding to get their products to market. The tokenized securities space is in its early stages, with future technological innovations and more comprehensive compliance and operational frameworks poised to drive widespread adoption.
This exemplifies the nature of decentralized networks: they're open to all, including major financial institutions. Surprisingly, the technologies these institutions use are often similar to those in the broader blockchain ecosystem, despite initial public skepticism about early use cases. While various factors are driving blockchain's mainstream adoption, key catalysts include institutional adoption, advancements in payment and tokenization technologies, and increasing regulatory clarity.
As these trends converge, we're witnessing a pivotal moment where blockchain technology is transitioning from a disruptive outsider to an integral part of the global financial infrastructure.
Arik Galansky is VP Technology at Fireblocks.
