Walmart (WMT) filed for two more blockchain technology patents in April, one for secure payments and another for digital shopping systems. Those are just the latest moves WMT has made to incorporate blockchain into its businesses. In March, Walmart filed for a “Smart Package” blockchain patent that allows tracking of contents, environmental conditions, as well as point of origin and location during shipment. That patent application states WMT technology will record the “key addresses” along the chain and will be used with robotic delivery methods like autonomous vehicles and drones.
In October, the world’s largest retailer started running tests with International Business Machines Corporation (IBM) for its live food business. Blockchain technology, according to WMT Vice President of Food and Safety Frank Yiannas, “will do for food traceability what the Internet did for communication.” Mr. Yiannas said blockchain was able to cut the time it took to track produce from six days to two seconds.
Entities who wish to avail themselves of the advantages of blockchain and are already using Amazon Web Services (AWS) now have AWS Blockchain Templates. “Blockchain-as-a-service” (BaaS) on AWS allows a company to sidestep the complexity of setting up its own distributed ledger. According to Amazon, a user’s requisite blockchain can be deployed in minutes on the user’s own servers. Compatible AWS blockchain networks can be set up “for rent” on Ethereum or IBM’s Hyperledger Fabric network.
In February, J. P. Morgan Chase’s (JPM’s) Global Head of Research Joyce Chang wrote in JPM‘s Perspectives, “Opportunities to utilize blockchain technologies for conducting business could have far-reaching implications for the sector in our view.” Her report has since become known as the “Bitcoin Bible.” Two weeks after the release of Ms. Chang’s research report, JPM, whose CEO Jamie Diamond once called bitcoin a “fraud,” said in its annual report that bitcoin and Ethereum are “risk factors” to JPM’s business and recognized digital currencies as new forms of competition. Umar Farooq, JPM’s head of blockchain initiatives, at the Yahoo Finance All Markets Summit, said of the rapid uptake of blockchain technology inside JPM, “It’s more than thriving. People have been surprised how quickly it basically spread as a way to address and think about customers differently,” adding, “It’s quite insane.”
Major corporations and international financial institutions are adopting blockchain in order to further fortify their strategic dominance. By overhauling their transaction processing systems, logistics, data storage and methods of customer acquisition, the world’s largest companies are taking advantage of the efficiencies afforded by distributed ledger technology. At least one start-up has become engaged in the radical shift toward this disruptive technology, not to compete with traditional financial institutions, but to bypass them entirely by eliminating the need for intermediaries. TradeConnect aims to be the first true decentralized multi-asset trading network. ThinkMarkets, an international brokerage, and premium online broker has pooled its knowledge and experience in order to support TradeConnect via its development and executive team. TradeConnect will facilitate the direct trading of currencies, equities, commodities, cryptocurrencies, derivatives and other contracts on a peer-to-peer basis. Meaning, a buyer and a seller with only an encrypted decentralized network between them—no broker, no exchange, no proprietary inventory—just one seller and one buyer.
All TradeConnect transactions will be settled in ThinkCoin (TCO), its digital currency, which will also fund the network launch after its initial coin offering (ICO) is completed. Use of ThinkCoin as its only transactional currency will allow trades to settle, not in the standard three days, but in a matter of seconds. TCO will also be an “asset-backed” cryptocurrency: the equivalent value of all TCO will be held by TradeConnect in fiat currency (dollars, Euro, Yen, Yuan, etc.) so as to stabilize the value of the token and provide liquidity for the network. TradeConnect market participants who wish to exit may do so immediately by converting their TCO into their preferred fiat currency and TCO will also be exchangeable for other major cryptocurrencies within the TradeConnect “ecosystem.” All participants will share, via “rebate,” the “connect fees,” which are composed of the differences between buyers’ bids and sellers’ offers.
Possibly the most important characteristic of trading via blockchain is the visibility of trading histories for all markets. Every member of a decentralized blockchain network will have equal and simultaneous access to all trades posted, and those trades will be posted in seconds, not days. With the advent of the Internet and online trading, securities markets have become nearly transparent as compared to most of the twentieth century and before. There was a time when a prospective investor might travel to a bank or a broker’s office to place a stock or bond order, checkbook or security certificate in hand.
But corporate and municipal bond trading has changed little. Bond “dealers” still buy-up blocks of bonds and then hold them until a customer, broker, bank or another dealer indicates an interest. The price at which the bond is traded is verbally negotiated between two human beings over a telephone line. The two parties to the trade may have almost no trading history to reference and so may use a tone of voice or audible breathing as an indicator for motivation to sell or desire to buy. All securities were once traded by the same distant voices. Before that, securities business was done face-to-face in a central marketplace like under the buttonwood tree outside 68 Wall Street or inside the Tontine Coffee House at the corner of Wall and Water Streets.
When blockchain technology is fully adopted by the financial industry, brokers, dealers, floor traders and telephone securities salesmen may go the way of railroad firemen, telephone operators, typists, stenographers and elevator operators. Pacific Investment Management Company (PIMCO), the former employer of the “Bond King” Bill Gross, may have found his replacement in a robot that trades bonds electronically. Displaced registered representatives, financial advisors and traders may find companionship among cab and truck drivers replaced by autonomous vehicles, and factory workers pushed out by robots.