As the new year arrived, news broke on Reddit that the bank Capital One had moved to ban customers from purchasing cryptocurrencies with their credit cards due to concerns over risk, volatility and limited mainstream acceptance. Now UK bank Lloyds has followed suit. However Capital One’s attitude to the associated blockchain technology has not been so hostile. In 2016 they partnered with Gem, an enterprise blockchain provider, to create a ‘successful prototype’ that uses blockchain technology for tracking the life cycle of health care claims.
While controversy and value swings continue to dog Bitcoin and other cryptocurrencies, interest in the associated blockchain technology is rising, with major players in the financial and other industries showing signs of taking it seriously.
While almost ubiquitous with Bitcoin, what people often refer to as ‘The Blockchain’ is actually a computer science pattern for structuring and storing data. There are many different types and (as a quick look at the blockchain APIs list on Programmable Web shows) many implementations of blockchains are now available across the internet.
A blockchain’s value lies in it effectively implementing a permanent, distributed ledger and this is something that enterprises are beginning to test the potential of. Outgoing Starbucks CEO Howard Schultz has hit the headlines with an endorsement of the blockchain as a future payment platform. However, while Starbucks has no specific project or investment in blockchain, other companies are beginning to take steps to engage the developer community through the release of blockchain APIs.
Late 2017 saw two giants of the electronic payments industry, Visa and Mastercard, announcing blockchain APIs. Blockchains come in three main varieties: public (like Bitcoin), permissioned and private. Mastercard and Visa’s offerings are both private blockchains and initially targeted at the business-to-business (B2B) area. Mastercard suggests three main use cases for their three APIs. The first is providing proof of provenance, the second is preserving vehicle service histories and the final is person-to-person money transfers which utilise Mastercard’s settlement network to transfer the funds between banking institutions.
Cross border payments can be a particularly cumbersome and lengthy process and this is an area where Visa is touting blockchain as a potential solution. The payments company is partnering with Chain to create the Visa B2B Connect APIs, which also utilises a private blockchain to provide almost instantaneous cross border payments between participating financial institutions. The platform is currently in pilot with US bank Commerce Bank, Shinhan Bank in South Korea, UnionBank of the Philippines and United Overseas Bank in Singapore processing bank-to-bank test transactions.
Some see this as a desperate effort by the banks to retain control over an industry they are about to lose, but like all those real and mythical by-products of the space race, it seems that companies are now finding all sorts of different use cases for Satoshi Nakamoto’s blockchain beyond its original implementation for Bitcoin. The blockchain is now a solution for everything from keeping blood diamonds out of the global precious stones market to proving the provenance of tuna.