The blockchain train is picking up momentum. A Reuters report just published reveals that one in five financial institutions is considering trading cryptocurrencies in the next 12 months and 70 percent of those are looking to trade in the next three to six months.
The survey was the first of its kind and covered 400 entities including large asset managers, hedge funds and trading desks at the biggest banks. There have also been reports circulating this week about Goldman Sachs employing former trader Justin Schmidt to head a crypto trading desk and Barclays have also been approaching clients to gauge interest in crypto investing.
“The more participants the greater the competition, which puts a greater emphasis on quickly evaluating vast quantities of crypto pricing data. This is where electronic trading firms can steal a march, by using their more sophisticated analysis to trade on information quicker than the rest of the market”, said Fraser Bell, chief commercial officer at BSO, a market cloud and hosting firm in London.
“But for this to happen, crypto market data has to be easy to access and analyse in order to allow electronic traders to isolate what is useful from the large volumes of noise. Not difficult to manage in theory, but the relevant connectivity to new venues, such as the CME crypto futures exchange, is required to ensure a sudden spike whenever the next Swiftcoin or Litecoin surge materialises.”
11 questions to ask of whether blockchain is right for your company
With companies like IBM, Walmart and Amazon queuing up to endorse blockchain technology to add value to their business model – and often their share price – medium-sized firms are also trying to jump on the trend. But all the hype around the technology and its benefits can mislead so The World Economic Forum has published a checklist for companies to assess if they would benefit from a blockchain network.
“Blockchain is an innovative solution, but it is not the solution to all problems. Blockchain has to be the right solution for the right business problem. Busting the hype is necessary to make sure businesses are using it in the right way and not damaging the long-term prospects of the technology,” said Sheila Warren, head of the blockchain project at the World Economic Forum.
In the rush to add “blockchain” to their brand firms run the risk of not fully understanding whether it provides the necessary solution to what they are trying to achieve and instead make the business model needlessly complex.
WEF research found there were 11 questions for a company with no previous understanding of the technology to answer to determine if blockchain can be the solution.
Even in such a hotly-debated space, a vast majority of the participants believed that if the cryptocurrency bubble burst, the token economy would still be here to stay.