The number of startups using and developing products on blockchain platforms has exploded in the last few years, with Ethereum taking decentralization and security that is the core of blockchain technology and applying it towards almost anything that can be computed. At its nucleus is the cryptocurrency Ether, which can be used to pay for any type of transaction and service built on Ethereum, making it so much more than Bitcoin.
Fintech is one industry that has been harnessing the power of blockchain.
Recent SiliconNYC Articles about Fintech, Startups and Blockchain:
Blockchain, a cryptographically secure list of transactions, is used by startups that mine and distribute digital financial instruments and digital currencies, but Ethereum has used it to build a platform that’s all encompassing. Jp Morgan and number of other banks just joined Ethereum Enterprise and are exploring building banking blockchain on ethereum base. If you are interested at learning more about the fintech application and actual use cases, we recommend this blockchain resource.
Essentially, Ethereum has the potential to profoundly effect and disrupt hundreds of industries, including finance, insurance, real estate and others.
Recent Blockchain events in NY: Future of blockchain tech. Financial Applications in Blockchain
The dominance of Bitcoin is further on decline due to FinTech (financial technology), which is leading the way in startup entrepreneurship blockchain. Coinbase is one of the FinTech startups underpinning widespread adoption of Bitcoin, which is currently valued over $1000 USD per coin.
FinTech startups have been using blockchain to power digital currencies, expand transaction security, and decentralize markets.
For those not in the know, Bitcoin is a digital currency that anyone with a computer can get through online exchanges, and its scarcity makes it even more valuable than the dollar. What’s more, Bitcoin and other digital currencies like it are protected from hacking and other cyberattacks by its blockchain, which encrypts every single transaction to keep the currency, and payments made with it, safe and secure—at least in theory.
Due to the ongoing debate around Bitcoin’s changing data processing speed, the release of software destabilizing its ecosystem, and app developers’ resulting unease towards it, transactions involving Bitcoin are slowing and fees are rising. Its value of about $2000 per coin is actually a normal figure—it peaked in 2013 at over $1000 and has been going up and down in that range ever since.
Bitcoin is losing ground and value among investors, who are now rallying to cheaper, more stable alternatives.
More investors are rallying away from Bitcoin due to increasing privacy and profitability concerns. The first 3 months of this year showed investment in other blockchain technologies overtake investment in Bitcoin, the biggest one is Ethereum. It is a blockchain decentralized framework that can allow for smart contracts, control of your own identity, payments and much more.
“[Blockchain] is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” Sally Davies, FT Technology Reporter
Ethereum blockhain, with its role as the technology underlying digital currencies and not what constitutes them, is much more versatile than the digital currencies it powers. It can enhance security, create digital assets, create data records, create self-enforcing contracts, and more. It’s extreme flexibility of being able to be both privet and public block chain, is what has been attracting attention of finance community.
The same blockchain technology as in Bitcoin and other systems is used as the base, and the security of the computation is guaranteed by the same kinds of cryptography and economic incentives, but the ability to execute code opens to developers a much larger world of possibilities.
New York City has proven to be a hotbed of innovation in this area, where many blockchain entrepreneurs are newly developing towards increasing security, efficiency and compliance. Ethereum domains are on the rise.
Digital Asset Holdings (DAH) CEO Blythe Masters, pioneer of the credit default swap, has more experience than most when it comes to knowing what to look out for on compliance and security. DAH builds distributed, encrypted processing tools to improve the efficiency, security, and compliance of digital currency transactions. In other words, DAH takes blockchain technology and uses it to supercharge and hyper-secure all digital transactions, providing newfound stability to digital currency and fiat currency ecosystems alike.
Some readers will recognize the credit default swap as the catalyst for the housing market crash, as seen in the popular film, The Big Short or Margin Call. It’s because of Masters’ expert experience with these highly substantive financial instruments, however, that she was appointed as the company’s CEO last year.
“We’re not seeking to disintermediate and destroy the current financial system,” Ms. Masters said in an interview with the New York Times. “We’re seeking to make it stronger, better, and safer [… and] the scale of the opportunity is gigantic.”
Where DAH is focused on security, ConsenSys, a startup that creates ventures that produce blockchain technologies, is focused on decentralization—dispersing financial transactions away from central banking authorities and putting power into the hands of consumers.
They are developing decentralized applications that use blockchain as a service, and those applications use a blockchain underlying Ethereum, a decentralized computing platform that empowers users to automatically execute contract agreements between each other that are recorded on the blockchain using Ethereum’s digital currency, Ether, which many say will be the next Bitcoin.
ConsenSys’ value proposition is so impressive because the blockchain they develop on is essentially a distributed computing system, which allows users to access services more efficiently and claim more value from them through the ventures ConsenSys’ applications power.
An excellent use case of this is ConsenSys’ and LO3 Energy’s joint business, Transactive Grid, the first blockchain energy market on the planet. Transactive uses the Ethereum blockchain together with solar panels to allow users to buy and sell energy on a decentralized energy market. Here, users bypass the costs of interacting with central energy companies, and bulky billing and accounting systems. It also allows the company to save on infrastructure costs, which the blockchain completely replaces, for free.
“Every kilowatt you buy, you pay for network. If you can cut out the middle man and do the trade directly, you don’t have to pay for the wires,” says Philipp Grunewald of the University of Oxford. Everyone saves, everyone wins.
Digital Asset and ConsenSys’ platforms are increasing overall transaction quality and decentralizing markets, and it’s all happening in New York City. We think this is going to be the new normal for the blockchain FinTech startup ecosystem in New York City, and will influence not only the goals of the next generation of entrepreneurs in this space, but will eventually change the way we purchase and interact with goods and commodities forever.
FinTech, insurance, goods and other markets it’s disrupting, will be forced to evolve to incorporate blockchain as the population becomes more technical to accommodate the increasingly tech-focused nature of the job market. Old cryptocurrencies like bitcoin and their proponents, such as Coinbase, are giving way to newer, better alternatives like Ethereum, ConsenSys, and DAH.
These three have the technology and the leadership to become the new standard for the FinTech blockchain startup ecosystem in New York City.
Up next: Read our coverage of Mya 17th, 2017 blockchain event in Fintech and exclusive after event interview with the speakers. Blockchain in New York: Blockchain Driven Assembles FinTech Leaders