Last month, I wrote about how institutional traders are not coming to save digital currency traders. 71% of institutional traders have no intention of getting involved in digital currency markets anytime soon.
However, that piece deserves a follow-up, showing that the institutions are coming into blockchain technology and digital assets in a big way. While the big banks’ trading desks have realized most coins are worthless, the biggest financial institutions in the world are waking up to just how powerful blockchain technology, digital currencies, and distributed ledgers are.
Let’s explore some of the most noteworthy institutional projects involving blockchain and distributed ledgers over the past few years. Looking at what they’re doing will give us some insight into what they’re thinking and how the future might look.
| Institutions | Project Description |
| BIS & Central Banks | mBridge Project: A cross-border payment system using multiple CBDCs, involving BIS Innovation Hub, HKMA, BoT, UAE Central Bank, and PBoC. |
| Federal Reserve Bank of NY | Regulated Liability Network (RLN) Pilot: A 12-week proof-of-concept exploring an interoperable network of central bank and commercial bank digital money. Participants included BNY Mellon (NASDAQ: BK), Citi (NASDAQ: C), HSBC (NASDAQ: HSBC), and Mastercard (NASDAQ: MA). |
| SWIFT | Tokenization Experiments: SWIFT demonstrated its infrastructure’s ability to transfer tokenized assets across different blockchains, enhancing cross-border asset interoperability. |
| UBS | Digital Cash Initiative: UBS piloted a blockchain-based payment system enabling real-time cross-border settlements using smart contracts. |
| Canton Network | A consortium including Goldman Sachs (NASDAQ: GS), Visa (NASDAQ: V), and BNY Mellon launched a privacy-enabled open blockchain network for real-time settlement. |
| DTCC & Digital Dollar Project | Conducted a pilot test of a simulated digital dollar for securities settlement. |
| European Union | DLT Pilot Regime (DLTR): The EU authorized financial institutions to experiment with DLT-based market infrastructure for trading and settlement. |
| State Street | Tokenized Bonds and Funds: State Street explored the tokenization of bonds and money market funds, integrating blockchain with traditional finance. |
| U.K. Government | Digital Gilts Initiative: The U.K.’s City Minister advocated for blockchain-based government bond issuance to modernize financial markets. |
| Visa | Visa Tokenized Asset Platform (VTAP): Visa launched a platform enabling banks to mint, burn, and transfer tokenized deposits and stablecoins. |
The above is by no means an exhaustive list of all the institutional blockchain projects and pilots, but it covers the biggest and most ambitious of them. Scanning the project descriptions, you’ll notice a few concepts jump out at you multiple times: cross-border transfers, settlements, central bank digital currencies (CBDCs), tokenized assets, and digital money.
We can learn from this that the world’s biggest institutions aren’t interested in the price of BTC or the latest memecoins; they’re interested in how blockchain, smart contracts, and tokens can rewire the global financial system to make it more efficient, transparent, and interoperable.
Blockchain’s value was always about utility
Those who have entered the industry in the past decade may not be aware that Satoshi Nakamoto released Bitcoin as a peer-to-peer payment system capable of micropayments. A glance over the first page of the whitepaper or Satoshi’s early forum posts makes that abundantly clear.
While today’s BTC is a far cry from Satoshi’s original invention, the point is that Bitcoin’s inventor intended it for a lot more than speculation and HODLing. He intended it to be used for small, casual payments, including tiny payments and was convinced it didn’t have a scaling ceiling.
There’s no need to rehash the history of Bitcoin here. It’s enough to note that, after 15 years of confusion, the world is finally realizing how powerful blockchain technology and digital currencies are, and it has nothing to do with the current value of any given token.
Distributed ledgers like BSV enable hyper-efficient, time-stamped, peer-to-peer transactions at scale. Anyone, anywhere, can pay another person elsewhere in the world for amounts ranging from millions of dollars to fractions of a cent. Settlement is instant for all practical purposes, and with smart contracts and the original opcodes, all types of interesting contracts and transactions can be created.
While the world’s biggest financial institutions have only dipped their toes in the blockchain pond and are still focused on using the ledgers they control, I’m still convinced that, in time, blockchain will take the same course as the internet: the world will move onto the most scalable, efficient public protocol that allows permissionless building.
When this happens, remittance apps, next-generation cybersecurity tools, Web3 social media platforms, and even tokenized national currencies will work together seamlessly on one scalable distributed ledger. As with TCP/IP today, most people won’t even know they’re using it; they’ll merely interact with the applications they choose using the digital currencies of their choice.
Until then, we’ll see many more experiments on blockchains and ledgers from institutions, governments, central banks, enterprises, and startups. When it clicks that interoperability requires seamless interaction on one global chain, the first movers will enjoy the biggest advantage.
The value of blockchain technology has always been in the utility, and on a single blockchain, every app that someone builds that can interoperate with others adds to the utility of the whole. After Teranode, I believe the dominant blockchain will be BSV. Time will tell if that prediction is correct, but there are no other realistic competitors today.
Watch: Reviving the true value of blockchain—utility
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