Here are few practical applications of blockchain technology in fintech outside of bitcoin:
Blockchain could eliminate a lot of friction and stock tampering happening at the Wall Street.
Foremost, reduce the costs and time of stock purchases as right now when a stock is traded, it has to pass through brokers, exchanges, and needs to be “settled”. Of course, everyone receives the cut from the operation and the processing time may take days, especially when trading occurs over the weekends.
Additionally, blockchain will allow eliminating a lot of gray tactics used by traders such as “naked short selling” and in general, adding more transparency to the operational process.
One of the largest US online retailers, Overstock decided to focus on building the crypto-capitalism future. In summer 2016, the company unveiled their new blockchain-based private and public equities trading platform tØ, which allows instant and secure share trading online.
Unlike Nasdaq stock exchange company, which has experimented with blockchain-powered trading as well in partnership with Chain, tØ founders initially confirmed that their company does not plan to use bitcoin blockchain for issuing stocks.
E-Commerce and Online Marketplaces
Openbazaar startup has embarked on a new mission to introduce a fee-free online marketplace similar to eBay, which is powered by blockchain.
They promote an active exchange of goods and services between two parties without relying on a risky centralized authority and hence, enabling more people to start their e-commerce business without paying for additional e-commerce tools.
The company founders stated their “listing agnostic” position and promised not to enforce strict moderation rules to what could be exchanged within the community. However, they promise not to promote the service to those, who might be tempted to use it for illegal activities such as gun trade.
The company also plans to expand the scope of services to smart contract and P2P lending in the future. Again, no central arbiter will be in place to overlook those. Instead, Openbazaar aims to create a P2P arbitration process within the community, which would allow users to establish authority figures, who in turn would help to certify the transactions and to resolve disputes between users.
Almost 25% of the global remittance market is still controlled by the large players like the Western Union and MoneyGram, processing over $500 billion in remittances per year.
However, the fees for sending micro-payments, particularly popular in the developing countries like The Philippines and Nigeria, are inhibitive. For instance, the majority of Asian workers send a quarter of their personal income ($200 on average) to their relatives. Those $12 in fees paid for the transfer often equal to their half day’s wage.
A number of blockchain fintech startups have emerged to cater P2P micro-payments. Sentbe offers a 60% less expensive service for sending money abroad and offers cash pickup locations as an alternative to card/bank transfers – a good selling point for attracting the unbanked population to their service.
Abra is a similar app aimed at US-consumers, which also allows conducting free P2P money transfers and receiving payouts either to your bank account or in cash by using only a person’s phone number.
Unlike other popular mobile payment apps like Venmo or PayPal, Abra allows users to hold digital cash on their smartphones without any 3rd party getting a grip of their money. Again, that was made possible by using bitcoin blockchain technology, which fixes the value of digital cash in real time without any centralized financial intermediary.