Why Bank of America Is Betting on Blockchain
Undoubtedly you’ve heard a lot about blockchain as the next big revolution for businesses—it’s even been referred to as “the new internet,” and businesses of all types are finding ways to tap into its massive potential. The term is often used when referring to cryptocurrency. While that was one of its initial uses, blockchain has many other applications. Essentially, it is used to store information about transactions and the transactee on “blocks” in a chain with unique identifiers that can be distributed but not copied.
Recent attention by Bank of America research analysts underscores its viability—a new report predicts that blockchain is on pace to potentially be a $7 billion mark.
Blockchain Will Help Leading Companies Grow Even More
Bank of America research analyst Kash Rangan mentioned nine leading companies that he believes are poised to benefit from the possibilities, as they unite blockchain with current cloud computing operations and improve supply chain operations.
The companies he identified and expectations for their use of blockchain are:
Amazon, which is expected to deploy blockchain to gain more efficient operations from improved supply chain tracking. Walmart is one company that has already begun to use blockchain in the food supply chain process, which they claim allows them to trace a food source in 2.2. seconds, compared to seven days, using Food Trust solution from IBM—another company mentioned by Rangan.
Microsoft, which could enhance the burgeoning field of “software as a service,” (SaaS) by creating Blockchain as a Service (BaaS) through cloud computing program Azure.
Oracle, which has been lauded for its Oracle Blockchain Cloud Service, which allows companies to process business transactions faster.
Salesforce, which is developing use cases for blockchain on its sales platform, but also has won a patent that can detect spam emails using blockchain.
VMWare, which has announced it is working on an “open-sourced, scalable, energy-efficient decentralized trust infrastructure for digital consensus and smart contract execution.”
Mortgage companies, such as Redfin, Zillow and LendingTree, which Rangan says will benefit from distributed ledger technology (DLT), which decentralizes the storage of information to make all transactions immediately available down the chain. As PwC had previously stated in a report, “Blockchain technology may radically alter the process through which consumers buy a home, as well as the way financial institutions handle mortgages. Specifically, the technology could remove cost and friction from the process, create transaction records that are infallible and incorruptible, and facilitate near instantaneous settlement.”
Rangan clarified that the field is still emerging with many of these companies. “Many blockchain use cases have been identified, but full products/services have not yet been built out and are not used in production," he said.
Bank of America as a Stalwart Blockchain Supporter
Given Bank of America’s prominence in the research space, this type of support is one more avenue to accelerate public acceptance and widespread adoption of blockchain as companies with household names integrate it into their operations.
And this positive research report is just the latest in a number of inroads the second-largest U.S. bank has made into blockchain.
Notably, according to research from Marc Kaufman, an attorney co-chairing the Blockchain Intellectual Property Council at the U.S. Chamber of Digital Commerce, Bank of America holds close to 50 blockchain patents, the most “live” patents of any entity, and is among good company with other esteemed enterprises like Mastercard, IBM and Intel which are also busy in the blockchain patent field.
“While we’ve not found large-scale opportunities, we want to be ahead of it [blockchain]; we want to be prepared,” said Bank of America’s chief technology officer, Catherine Bessant, during the CB Insights Future of Fintech in June 2018.
The bank’s key interest is suspected to lie in the ability of blockchain to speed up payments. But it is exploring other avenues, too.
According to one patent, Bank of America may intend to replace existing data sharing systems with a blockchain that would add an extra layer of security to personal and business data and track who’s trying to access it.
Another patent held by Bank of America is described as “a means for managing security and access to resources associated with blocks/sub-components of a distributed validating network, such as a blockchain network.”
And yet a third Bank of America patent is designed to manage blockchain encryption tags, which would lead to more secure cryptocurrency storage in an enterprise environment.
Anytime a prominent company like Bank of America immerses itself in blockchain, the community makes strides toward its acceptance. And based on this most recent research report, companies in a wide variety of industries are likewise positioned to avail themselves of its many benefits.