Wall Street giants accelerate the deployment of DeFi, the new financial technology revolution is about to start

If you look back at the news of Wall Street and encryption last year, you find that the Wall Street giants are still very cold on encryption. And this year, the attitude of these predators has changed a hundred and eighty degrees.

Not only that, financial tycoons led by JP Morgan Chase, Goldman Sachs, Fidelity, UBS, VISA, MasterCard, etc. have begun to accelerate the field of layout encryption. DeFi is hot and hot, and a revolutionary new financial technology revolution is about to take place. It started.

Wall Street giant running for admission

On February 14 this year, JP Morgan Chase, the largest commercial bank in the United States, officially announced that it will launch its own cryptocurrency JPM Coin linked to the US dollar. When the news came out, it immediately became the focus of attention, and the heat was high for a long time. This also opened the prelude to the Wall Street predators to begin the encryption field layout.

JPM Coin is similar to a stable currency, used to instantly settle payment transactions between customers, and will anchor the dollar in a 1:1 ratio. The private blockchain of the row is used. JPM Coin can deliver “instant” delivery of bonds on the blockchain platform.

A major application scenario for JPM Coin is "to replace the dollar." JPMorgan Chase has handled a large pool of regulated funds for technology companies such as Honeywell and Facebook. In 2018, the service generated $9 billion in revenue for JP Morgan Chase. If JPM Coin succeeds in replacing the US dollar in the company's business, JPMorgan can more effectively integrate and manage funds to achieve higher interest rates.

The future will be used in three areas: international payments for large corporate clients, securities trading, and large companies that use JP Morgan Chase's capital business. Umar Farooq, head of services and blockchain at the Digital Finance Department at JP Morgan Chase, revealed that the company intends to conduct a JPM Coin pilot test of selected customers near the end of the year, if approved by the relevant regulatory authorities.

JPM Coin has been shouldered a lot of "missions": Some people say that Morgan Coin is the first shot of JP Morgan Chase to challenge the traditional currency pattern. Some people say that Morgan Coin marks the first year of enterprise blockchain application, and others call it an international block. The symbol of the formation of the chain financial empire.

When JPMorgan launched JPM Coin, many people were still skeptical about the determination of large financial institutions to lay out blockchains. However, in just a few months, the market has spread news of blockchain finance from traditional financial institutions such as Goldman Sachs, Fidelity, VISA, TD Ameritrade, ErisX, UBS, VISA and MasterCard.

It can be said that in the field of encryption, especially in the integration of its own business through cryptocurrency, JP Morgan Chase has led the old rival Goldman Sachs.

And will Goldman Sachs be left behind? Obviously not. In a recent interview with the French "Echo", Goldman Sachs CEO David Solomon revealed that Goldman Sachs is "widely researching" on cryptocurrencies and payments. For the old rival JP Morgan Chase has been the first to launch its own cryptocurrency JPM Coin, Solomon said that Goldman Sachs "absolutely" will follow.

Solomon revealed that Goldman Sachs is "widely researching" cryptocurrencies and payments, saying that "blockchains represent the future of payments. All major financial institutions around the world may be concerned about the potential of asset certification, currency stabilization and instant payments. ”

Goldman Sachs is also increasing its cooperation with technology companies, and the Apple Card with Apple has completed early testing. At an industry conference, Solomon introduced the Apple Card's features, including helping track and manage spending and making payments without generating debt. Apple Card is an important financial product launched by Apple in March. It has NFC, special account management and other functions, as well as free of charge, cash rebate and other benefits. Goldman Sachs is one of its key partners.

Cross-border payments have always been an important market for financial companies such as JPMorgan Chase, Goldman Sachs and VISA. According to McKinsey, a well-known consulting firm, cross-border payments are expected to generate more than $2 trillion in revenue by 2020.

On June 12th, U.S. payment giant VISA announced the launch of a blockchain-based cross-border payment network "B2B Connect." According to VISA, B2B Connect has covered 30 trade channels around the world and will expand to 90 markets by the end of 2019. It has only one goal – making cross-border payments faster and cheaper.

From a business perspective, VISA seeks to capture high-net-worth markets in the cross-border payment sector through B2B Connect. Goldman Sachs CEO Solomon also expressed his recognition of blockchain payments in an interview with Echo, "I believe that the future of payment systems must depend on the blockchain." However, it is not only Goldman Sachs that is interested in the encryption payment market. Now VISA has already taken the shot ahead.

Facebook launched cryptocurrency project Libra triggered a “blockchain effect” in the Wall Street financial circle. In its white paper, Facebook wrote, "Libra's mission is to build a simple, borderless currency and financial infrastructure that serves billions of people." Among its first announced partners, we also saw giants in payments such as MasterCard, Visa, Stripe and PayPal.

Goldman Sachs CEO Solomon did not evade direct evaluation of Facebook Libra. He said that Libra conducts cross-border, frictionless payments through a stable currency based on a basket of real money, which is the direction of the payment system. At the same time, he also said, "I don't think banks will disappear because of the emergence of new players such as Libra."

Financial institutions that want to issue digital currencies can be more than giants such as JP Morgan Chase, Goldman Sachs, and Facebook. Recently, 14 financial institutions represented by UBS Group AG plan to launch “bitcoin-like” cryptocurrency for cross-border transaction settlement. The 14 financial institutions are large banks and financial institutions from the United States, Europe, and Japan. In addition to UBS, they include 14 financial institutions including Barclays Group, Nasdaq, Credit Suisse Group and New York Mellon Bank.

The parties invested a total of 50 million pounds (about 63.2 million US dollars) to set up a joint venture called Fnality International to manage the upcoming cryptocurrency. The cryptocurrency that they have high hopes for is called "utility settlement coin" (USC). USC can act as both a payment instrument and a "messenger" – carrying all the information needed to complete a transaction, reducing the time and cost of the transaction. Fnality CEO Rhomaios Ram said that within 12 months, USC will be fully operational.

The Wall Street giants also participated in the encryption field with different roles. Another Wall Street financial giant, Fidelity Investment Group, is also trying to enter the field of cryptocurrency. The group's R&D and innovation division, Fidelity Labs, recently announced a formal partnership with the cryptocurrency startup Coinbase to achieve this capability. Fidelity's customers are now able to track their bitcoin and cryptocurrency investments, just like tracking other traditional investment assets.

Previously, Bakkt, the cryptocurrency trading platform to be launched by the New York Stock Exchange's parent company Intercontinental Exchange (ICE), has also announced that it will begin testing the bitcoin futures contract for physical settlement on July 22. Its shareholders include Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft's venture capital department M12, Pantera capital, PayU, Naspers' Financial Technology Division and Protocol Ventures.

On the one hand, the United States conducts large-scale investigations of cryptocurrency trading venues and stable currency providers, and on the other hand, it begins to attract regular military admissions that can be incorporated into the Wall Street operating system.

Jason Qiao, former executive director of the Private Banking Department of JP Morgan Chase, said: "This year's 'regular army' is more pragmatic and is still doing the simplest payment-based ecological construction." In his view, payment is a prerequisite for the success of all other projects in the blockchain finance sector. But this project is complicated. If you want to succeed in Wall Street, you must link Silicon Valley and even some blockchain projects in the head.

Finance columnist Xiao Lei is shouting, and it is not far from Wall Street to take over the bitcoin industry.

Why is DeFi so red?

In the first half of the year, Wall Street giants made efforts to speed up the layout in the field of encryption, and they all made DeFi the main battlefield.

Although DeFi is not a new concept in the field of encryption, today's traditional financial companies have entered the market, and DeFi has turned red again.

Nowadays, “DeFi” has become the common language of the cryptocurrency industry for decentralized financial applications. “DeFi” is not only “Decentralized Finance”, but also “Open Finance” and “Transparent Finance”, which is “decentralized finance” and “open finance”.

DeFi is an open source technology designed to de-intermediate by introducing a decentralized layer, eliminating rent-seeking intermediaries, removing traditional financial institutions or third-party intermediaries, allowing individuals and individuals to directly serve each other's financial needs through the blockchain. It highlights the characteristics of decentralized finance that is open (no access required), distributed, and transparent. Thereby improving the current financial system in all aspects.

Nadav Hollander, co-founder and CEO of the encryption lender Dharma, said at the consensus definition "DeFi" forum that he believes DeFi can be divided into three levels. The narrowest level is to use smart contracts to remove financial intermediaries and reduce transaction costs. Further, it is possible to create new forms of financial products and create a more competitive financial system in an open, open source, and non-permission-less blockchain ecosystem. In the broadest sense, it is expected to break away from the imagination of the modern financial system and create a financial system that does not need to be closely integrated with politics.

In the case of cross-border payments, for example, when a person sends money to someone in another country, it is generally necessary to find a financial institution to complete the payment task, but the financial institution will charge a fee in return.

However, the DeFi (Decentralized Finance) application can mediate the entire remittance process, and he or she can send digital currency directly to the payee from his wallet without the need for financial institution intermediation services.

Just as there are many different decentralized applications, there are many different decentralized financial applications, including payments, loans, stable currencies, Tokenization, decentralized exchanges, and so on.

At present, there are thousands of DeFi projects, from stable coins to decentralized exchanges, wallets, payment networks, lending and insurance platforms, to key infrastructure, markets and investment engines, and the entire DeFi ecosystem is booming.

But the big entry of traditional financial companies this year is the beginning of a true new financial technology revolution. CSDN founder Jiang Tao said, "The technical era of DeFi has just begun. At present, more than 4 billion US dollars of financial applications are running in Ethereum. On the Internet, e-commerce and information fields have undergone tremendous changes. On the blockchain. The financial sector has enormous potential and opportunities, and it is also the most worthwhile to explore in the blockchain."

Blockchain software development company Consensys also published earlier this year that DeFi is one of the most active development areas of the blockchain in 2019, and the Ethereum project is already leading the entire ecosystem, with more than 100 projects being developed. Decentralized financial applications, including stable currency, payments, DEX (decentralized exchanges), investments, KYC & identity, derivatives, loans, etc.

Consensys researchers say that, on the one hand, open financial platforms enable individuals around the world to participate in this new, reshaped financial system; on the other hand, decentralized financial solutions are also changing existing traditional institutions, “we are in front of us I saw a new industry at an early stage."

These principles of DeFi are not available in traditional financial technology services (Fintech). For businesses and developers, DeFi provides a basic freedom and intermediary platform, such as magnets that attract builders built with open source software, creating a powerful network effect. According to the World Bank, 2 billion people worldwide do not have bank accounts or access financial institutions. DeFi allows financial services for people who do not have a place in a bank or financial institution.

NEST Chief Designer zaugust is confident in the future of DeFi. “We expect that high-quality financial services will be fully contracted in the future, and in the perspective of 20-30 years, the scale of decentralized financial services will account for the entire scale. 30%-50% of financial services, and a stronger prediction is that most financial assets will be smart contracted."

China is ready to go

Libra's white paper was released, causing a worldwide sensation. Some commentators have asserted that Facebook's digital currency plan may be the most significant event in the cryptocurrency sector since Bitcoin was introduced in 2009. After the release of Libra, digital currency is expected to become the main battlefield of financial technology and the focus of digital economy competition.

On June 25th, the English edition of Global Times published a commentary entitled “The era of global digital currency competition, China cannot be absent”, pointing out that Libra will become the actual representative of the US dollar in the global digital economy. China must participate in this round of figures. Economic competition. "With the advent of the global digital economy competition era, it is necessary for Chinese industries and regulators to conduct more dialogue on digital currency, understand and even encourage digital currency. Otherwise, China may fall behind in the new financial landscape."

Obviously, in this round of competition, China has become lagging behind. But in fact, China has been leading the world in research in the field of cryptocurrency.

The People's Bank of China has been in the digital currency field for five years. As early as 2014, the People's Bank of China established a special research group on legal digital currency to study the feasibility of issuing legal digital currency. In 2017, the Chinese people The bank officially established the Digital Currency Research Institute in Shenzhen.

In just a few years, the Central Bank Digital Money Research Institute built a trade finance blockchain platform and published a series of blockchain patents and reports.

In addition, at the Big Data Expo held in Guiyang in 2019, the PBCTFP trade finance blockchain platform developed by the Central Bank Digital Currency Research Institute was unveiled. It serves the trade finance of Dawan District in Guangdong, Hong Kong and Macau, and has been truly real.

It is reported that four blockchain applications have been set up on the PBCTFP platform, with 26 banks participating, achieving 17,000 businesses and more than 4 billion yuan in business.

Former director of the China Central Bank Digital Currency Research Institute and General Manager of China Securities, Yao, published an article entitled "The Past and Present of Digital Money" in the "China Law Review". The article mentioned that the People's Bank of China is currently conducting research and development of central bank digital currency. Due to the sudden emergence of third-party payments, our account system is at the forefront of the world. But in fact, many people believe that the real representative of the future direction of technology development should be the central bank's token based on cryptocurrency technology, namely the Central Bank Cryptocurrency (CBCC). At present, academics and the industry are actively exploring the CBCC model. Many people believe that CBCC can allow customers to truly manage their own money, rather than handing it over to third parties, and truly giving customers the right to freedom. Although it is not certain that it must be the future direction, at least for now, this is the hottest frontier.

According to a report released by the International Monetary Fund (IMF) recently, it conducted a survey with the World Bank to collect 189 member states' views on various topics in the field of financial technology and received 96 responses.

The IMF believes that central banks may issue central bank digital currencies in the future. According to reports, some central banks (such as Uruguay) have piloted CBDC on a limited scale, and other countries are also trying and exploring (such as the Bahamas, China, Sweden and Ukraine). Some central banks support private sector legal digital currencies (DFCs) under the regulatory sandbox regime, such as Barbados and the Philippines.

In the eyes of the International Monetary Fund (IMF), the central bank's digital currency (CBDC) may have become a part of the future. Researcher Zoltan Jakab said in the IMF research comment that the central bank's digital currency will soon become a reality.

China is gaining momentum and will not fall behind.

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Source: Chain Internal Reference