Blockchain Technology: The Future Of Traditional Banking-PDX, a true global utility coin
The blockchain technology is arguably the fastest-growing digital technology in recent history thanks to its revolutionary decentralized model. And if you look closely, part of blockchain’s popularity is derived from cryptocurrency, which is now 10 years old based on the year (2009) Bitcoin - the first established cryptocurrency- was launched.
The blockchain technology is generating significant interest across a wide range of industries and this includes the financial sector. Commercial banks, central banks, stock exchanges, among other players in the financial sector are keenly exploring blockchain’s potential. Findings from a study by Accenture show blockchain technologies will play a pivotal role in the financial markets in the coming years; in fact, the study projects the global banking sector can save $20 billion by 2022 with using blockchain.
Read on to learn more about blockchain’s potential in the banking sector and how PDX, a “disruptive” and a true global utility coin, is going to revolutionize the financial sector.
Introducing PDX – A True Global Utility Coin
Today, the banking industry suffers from a number of challenges such as fraudulent attacks on centralized servers, rising costs of operations and difficulties in ensuring transparency.
This is largely due to the fact that most of the banking transactions ranging from onboarding new customers to making global payments involve costly intermediaries, depend on intensive manual processing and documentation, and is time consuming as various participants at various point in time have to validate these transactions hence the delay.
Here’s how blockchain and cryptocurrencies can modernize the banking sector.
• Facilitate Payments and Real-time transactions
Most banks still depend on siloed and outdated processes when handling payments which normally results in additional fees and slow processing times.
Consider this case in point: you are based in New York and want to send some money to a family member back in Berlin, Germany; typically, you will have to pay somewhere between $20-$25 flat fee for a wire transfer and additional fees totalling close to 7 percent. Your parent bank gets a cut, the receiving bank gets a cut, and not to mention the exchange rate fees. And worse yet, the recipient will not be able to access the cash until a week later.
However, by establishing a decentralized ledger for payments (via cryptocurrencies), blockchain ensures a high-security and low-cost process of sending payments and eliminates the need for intermediaries. Essentially, this cuts down on the need for verification from third parties hence faster processing times.
PDX coin is one such solution which seeks to transform the financial sector. PDX is a cryptocurrency that is at the core of a powerful new banking and financial services ecosystem based on encrypted and permissionless peer-to-peer (i.e. no middleman) payments and money transfers. PDX use cases as a “disruptive” and a true global utility coin that is developing apps to make it extremely easy to make in-store purchases with retailers, as well as online purchases and bill payments, so that it’s as easy as using cash or a visa card today.
And unlike most fiat and digital currencies, PDX has the backing of underlying tangible assets, that is, physical reserves of crude oil and natural gas, and other energy assets. It offers all of the advantages of blockchain-enabled digital currencies while providing a verifiable asset base to protect its value, stability and security as a medium of exchange.
PDX coin holders will be able to make instant payments and transfers anonymously, and instantly, anywhere in the world, and their data will be stored on an immutable blockchain, making it indestructible, and theft-proof.
• Tokenized Securities
The blockchain technology has a lot of potential when it comes to tokenizing securities and removing middlemen like custodian banks which can lower asset exchange fees.
Currently, the process of buying or selling assets such as stocks, debt, and commodities involves a complex chain of exchanges, clearing houses, brokers, central security depositories and custodian banks; and heavily relies on outdated approaches and is largely inefficient. Additionally, it takes long to settle transactions because there are so many middlemen involved which means everyone’s books have to be updated and reconciled.
So how can blockchain help out?
A blockchain solution means a decentralized database of unique, digital assets which will ensure an easier way of transferring the rights to an asset through cryptographic tokens. While Bitcoin has accomplished this with purely digital assets, PDX coin will accomplish this using tangible assets, that is, physical reserves of crude oil and natural gas, and other energy assets.
• PDX creates a seamless Clearance and Settlements System
The lack of a seamless banking system is not only a headache for consumers alone but also for the banks themselves.
A simple bank transfer - say from a Zurich Cantonal Bank account in Switzerland to a SunTrust Bank account in the US – means bypassing a complex system of intermediaries. The process involves reconciliation of the two bank balances across a global financial system (think the Society for Worldwide Interbank Financial Communication (SWIFT)) which comprises of a wide network of traders, asset managers, funds, etc.
This complexity exists because Zurich Cantonal Bank and SunTrust Bank don’t share an established financial relationship; hence the need for the SWIFT network. This simple transaction will have to, therefore, involve more banks and not just the two banks which means additional transactional fees and reconciliation of different ledgers.
The SWIFT protocol which is centralized just sends the payment orders instead of the actual funds. The processing of the actual funds would thereafter involve a number of intermediaries.
However, with a blockchain solution in place, a decentralized ledger of transactions could be created to redefine this traditional setup. Instead of using the SWIFT protocol, an interbank public blockchain-based solution can be deployed to reconcile each bank’s ledger and also keep track of all transactions publicly and in a transparent manner. This, ultimately, helps create a seamless system for clearance and settlements for banks.
• Revitalize Trade Finance
Data from the International Chamber of Commerce (ICC) estimates that trade finance products account for between 80 percent to 90 percent of international trade. This translates to a trading volume of around $14 trillion.
Trade finance plays a crucial role in the global financial system but still depends on siloed and outdated processes; for instance, physical letters of credit are still being used to show proof that payment will be received.
That’s why we believe the blockchain technology and the distributed ledger technology can significantly improve cross-border trade transactions by shortening delivery times and reducing paper use. Blockchain technology could revolutionize this complex ecosystem of trade finance thus saving importers, exporters and their financiers billions of dollars annually.
It will mitigate fraudulent activities and also allow for payments to take place in tokenized form depending on delivery or receipt of goods. Smart contracts would enable importers and exporters to set up rules that would ensure automatic payments and thus reduce errors.
No doubt about it - the worlds of the financial institution, the consumer, and the blockchain technology are slowly converging. Blockchain solutions promise to significantly reduce the costly payments during transactions and with impressive accuracy and transparency.
This has even seen major financial institutions such as JP Morgan Chase, Deloitte, Bank of America, Commerzbank, the Spanish Stock Exchange Authority, Nasdaq among others partner with tech companies to develop blockchain-based systems.
The implication here is cryptocurrencies like Bitcoin, PDX, etc. are built on public blockchains that users can use to send and receive money. This means public blockchains removes the need for trusted third parties to verify transactions hence providing users across the globe access to high speed, cheap, and borderless payments in an ultra-secure manner.
We believe it’s only a matter of time before we start seeing the potential of blockchain-based solutions in the financial sector.
As always, we would love to hear from you. Let us know what you think in the comment section below.