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The Evolution of Blockchain for Bank Payments Modernization
May 30, 2023
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Blockchain: 1985-2014

The idea of cryptocurrency first emerged in the late 1980s.  But it was only in 2008, when Satoshi Nakamoto published the white paper Bitcoin – A Peer to Peer Electronic Cash System, that Bitcoin, the first cryptocurrency, was realized. Cryptocurrencies were designed to be anonymous and have no central authority. Therefore banks, as regulated entities, could not use cryptocurrencies.

In 2012, Ripple was launched. The system was built upon a distributed open-source protocol, and using XRP, a Ripple-issued cryptocurrency. While Ripple had the aspiration that banks would adopt the system, the reliance on XRP was a nonstarter for banks. Ripple eventually introduced RippleNet, separating the Ripple messaging service but without the use of XRP or tokenization.

Where Ripple was a centralized, permissioned payment network, the Stellar network was launched in 2014 as an open, semi-permissionless network. Stellar Lumens, another cryptocurrency, act as a medium of exchange. In 2017, IBM announced that they would attempt to use the Stellar protocol to build a payment network for banks, but this was never completed.

The reliance on cryptocurrency as a medium of exchange for interbank payments was a hurdle banks could not get past. It wasn't until the focus on bank solutions shifted from cryptocurrency to the use of blockchain and distributed ledger technology to build bank payment infrastructure that blockchain gained traction with banks.

Generation 1: The blockchain consortium

The first of these initiatives was R3. Rather than focusing on the issuance of a cryptocurrency, R3 started as a consortium funded by HSBC and others in 2017.  In 2018, they received additional investment from another 44 banks. The idea was for each bank to not only invest in R3 but to use the R3 technology to enable payments. However, the early R3 model assumed that the banks had the in-house technical resources to develop payment systems using the R3 technology. This proved to not be the case. Conceding this, R3 has changed its business model to partner with consulting firms like Accenture to take the R3 technology and build custom implementations for banks.  

UBS funded some early research on what was called the Utility Settlement Coin Project. By 2019, this evolved into a consortium renamed Fnality International. Members included 15 multinational banks. Fnality has yet to launch a service.

The original concept of a consortium of banks building interoperable systems using common R3 or Fnality technology appears to have fallen by the wayside. None of the bank investors in R3 or Fnality appear to be actively supporting their activities.

The rise and fall of Facebook Libra/Diem is a fascinating illustration of the challenges facing a consortium. The initial Libra Association included Facebook, Visa, Mastercard, Stripe, PayPal, and several other technology companies. (Interestingly, neither digital wallet providers Apple and Google nor any banks joined the Libra Association.) Beginning in May 2018, this consortium funded the development of a digital coin tied to a basket of fiat currencies and securities. The project ran into regulatory headwinds and, in November 2020, was downsized to a set of single-currency stablecoins and later, only a USD denominated stablecoin. In January 2022, after a number of members left the Diem Association, it was decided to wind down operations and sell the intellectual property to Silvergate, a crypto-focused bank.

Generation 2: The megabank blockchain projects

With the demise of the consortium model, blockchain projects became the province of a handful of very large multinational banks. Perhaps the best known of these projects was the efforts of JP Morgan Chase and the launch of their JPM Coin in February 2019 (subsequently rebranded Onyx Coin Systems). This involves the creation of a USD stablecoin issued by JPMC.

The New York Times has reported that in 2020, “Bank of America filed the biggest number of patent applications in the bank’s history, including hundreds involving digital payments technologies. It’s unclear how exactly the bank plans to use its technology, but it was partly driven by the desire to keep customers within the bank’s systems rather than lose them to scrappy cryptocurrency start-ups that allow them to transfer money free.”

These megabank projects suffer from a number of limitations:

  1. They are costly. Hence limited to only the largest multinational banks with a user base large enough to generate (or at least theoretically support) the necessary return on investment.

  2. Blockchain engineers are generally not attracted to banks. While large banks may employ engineers, these are traditional engineers with backgrounds in relational database technology and conventional transaction processing. Blockchain experts are typically trained at blockchain companies and often leave to form new blockchain companies.   

  3. In some cases, large banks developing technology may be unwilling to license their technology to competitors.

  4. Conversely, other banks may be reluctant to use the developing bank’s product. For example, it is hard to imagine a Citi or Bank of America using a JPMC-issued stablecoin and connecting to JPMC systems to process their payments.

Generation 3: The independent blockchain-aaS

Recognizing the limitations of a megabank project and the opportunities it creates, we argue that it is time for a new generation of providers. These providers would be independent of any single bank and technology-driven with expertise in both cutting-edge blockchain and the esoteric world of conventional payments.

Benefits

The Gen 3 provider enables:

  • Creation of a network of banks like Gen 1, but without individual banks having to do the development.

  • Faster time to market. The services would be delivered in a SaaS model.

  • Shared cost. Development costs could be capitalized and recovered across multiple bank customers.

  • Ease of integration into existing infrastructure. The new system would employ open APIs to enable easy integration into existing bank systems. These APIs could be integrated with key banking systems from vendors like FIS, FiServ, and ACI Worldwide. This means banks utilizing these systems would have an easier adoption path.

Implications for product

The emergence of a Gen 3 solution that can be shared across a network of banks has implications for the product/service:

  • Need for high throughput and low latency to easily serve today’s use cases and scale to tomorrow’s use cases. Target: 1M transactions per second at < 500ms latency.

  • Private permissioned DLT for speed and security with byzantine fault tolerant (BFT) consensus algorithm to deliver the highest system resilience and robustness.

  • Banks and payment service providers connect using APIs.

  • Payment information transparency for banks to meet regulatory obligations.

  • Optionally, provide regulators direct access to transaction information.

Implications for operations

It is likely that the Gen 3 provider will be a nimble, technology-first company. Exactly the kind of company that banks and regulators will have concerns about running critical financial infrastructure. As a result, we envision:

  • Trusted third-party operators will operate the Gen 3 platform - a local operator for each ledger. One ideal candidate for an operator would be the Payment Clearing House in a country. The Clearing House is often (a) owned jointly by the largest banks in the country, (b) has experience running key financial market infrastructure, (c) is already connected to the banks, (d) is trusted by the regulators, and (e) meets the data sovereignty requirements of many countries.

  • The role of issuing banks is unchanged in this model. The Gen 3 service acts as a parallel payment system. Issuing banks initiate payments (or requests for payments), hold customer funds, extend credit, provide customer service and reporting, and are responsible for KYC, AML, CFT, and sanction screening.

Implications for partnerships

Gen 3 providers may face challenges to engage decision makers at central banks and commercial banks. We predict that they would do best in establishing partnerships with leading technology suppliers who already provide software and services to banks. These suppliers are trusted and can stand behind the new Gen 3 provider. Some implications for these partnerships:

The message to Gen 3 providers and partners is: "don’t get greedy". There is enough for everyone and the opportunity is massive. Collaboration will lead to better interoperability and a higher chance of success as a result.

Thank you @MrmanXRP for sending us this Link

 

 

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🚀 Endorsed by US Government 😉

Op: Pyth Network

00:01:45
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Ever notice how TV shows drop subliminal messages that reveal the story without telling you? The same thing is happening in finance. RLUSD is quietly stepping in to buy US bonds and absorb debt. XRP handles the settlements. Connect the dots, this is the blueprint for global liquidity.

OP: Blackswancapitalist

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The future of Crypto x AI is about to go crazy.

👉 Here’s what you need to know:

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🚨 I personally wouldn't bet against Brian Armstrong and Jesse Pollak.

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Major news has been dropped, selling here & panicking looks stupid for me.

Im Buying more 📈

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According to Fib Levels, the green box looks a good zone for reversal. Also, good zone to DCA if you believe in @PythNetwork for the long term.

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The Great Onboarding: US Government Anchors Global Economy into Web3 via Pyth Network

For years, the crypto world speculated that the next major cycle would be driven by institutional adoption, with Wall Street finally legitimizing Bitcoin through vehicles like ETFs. While that prediction has indeed materialized, a recent development signifies a far more profound integration of Web3 into the global economic fabric, moving beyond mere financial products to the very infrastructure of data itself. The U.S. government has taken a monumental step, cementing Web3's role as a foundational layer for modern data distribution. This door, once opened, is poised to remain so indefinitely.

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Specifically, Pyth Network has been selected to publish Gross Domestic Product (GDP) data, starting with quarterly releases going back five years, with plans to expand to a broader range of economic datasets. Chainlink, the other key partner, will provide data feeds from the Bureau of Economic Analysis (BEA), including Real Gross Domestic Product (GDP) and the Personal Consumption Expenditures (PCE) Price Index. This crucial economic information will be made available across a multitude of blockchain networks, including major ecosystems like Ethereum, Avalanche, Base, Bitcoin, Solana, Tron, Stellar, Arbitrum One, Polygon PoS, and Optimism.

This development is closer to science fiction than traditional finance. The same oracle network, Pyth, that secures data for over 350 decentralized applications (dApps) across more than 50 blockchains, processing over $2.5 trillion in total trading volume through its oracles, is now the system of record for the United States' core economic indicators. Pyth's extensive infrastructure, spanning over 107 blockchains and supporting more than 600 applications, positions it as a trusted source for on-chain data. This is not about speculative assets; it's about leveraging proven, robust technology for critical public services.

The significance of this collaboration cannot be overstated. By bringing official statistics on-chain, the U.S. government is embracing cryptographic verifiability and immutable publication, setting a new precedent for how governments interact with decentralized technology. This initiative aligns with broader transparency goals and is supported by Secretary of Commerce Howard Lutnick, positioning the U.S. as a world leader in finance and blockchain innovation. The decision by a federal entity to trust decentralized oracles with sensitive economic data underscores the growing institutional confidence in these networks.

This is the cycle of the great onboarding. The distinction between "Web2" and "Web3" is rapidly becoming obsolete. When government data, institutional flows, and grassroots builders all operate on the same decentralized rails, we are simply talking about the internet—a new iteration, yes, but the internet nonetheless: an immutable internet where data is not only published but also verified and distributed in real-time.

Pyth Network stands as tangible proof that this technology serves a vital purpose. It demonstrates that the industry has moved beyond abstract "crypto tech" to offering solutions that address real-world needs and are now actively sought after and understood by traditional entities. Most importantly, it proves that Web3 is no longer seeking permission; it has received the highest validation a system can receive—the trust of governments and markets alike.

This is not merely a fleeting trend; it's a crowning moment in global adoption. The U.S. government has just validated what many in the Web3 space have been building towards for years: that Web3 is not a sideshow, but a foundational layer for the future. The current cycle will be remembered as the moment the world definitively crossed this threshold, marking the last great opportunity to truly say, "we were early."

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

Lutnick said, “The Department of Commerce is going to start issuing its statistics on the blockchain because you are the crypto President. And we are going to put out GDP on the blockchain, so people can use the blockchain for data distribution. And then we’re going to make that available to the entire government. So, all of you can do it. We’re just ironing out all the details.”

The data includes Real GDP and the PCE Price Index, which reflects changes in the prices of domestic consumer goods and services. The statistics are released monthly and quarterly. The biggest initial use will likely be by on-chain prediction markets. But as more data comes online, such as broader inflation data or interest rates from the Federal Reserve, it could be used to automate various financial instruments. Apart from using the data in smart contracts, sources of tamperproof data 👉will become increasingly important for generative AI.

While it would be possible to procure the data from third parties, it is always ideal to get it from the source to ensure its accuracy. Getting data directly from government sources makes it tamperproof, provided the original data feed has not been manipulated before it reaches the oracle.

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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain are EternlTyphonVesprYoroiLaceADAliteNuFiDaedalusGeroLodeWalletCoin WalletADAWalletAtomicGem WalletTrust and Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention to Non-Custodial and Compatibility fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

Source

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XRP: r9pid4yrQgs6XSFWhMZ8NkxW3gkydWNyQX
XLM: GDMJF2OCHN3NNNX4T4F6POPBTXK23GTNSNQWUMIVKESTHMQM7XDYAIZT
XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

 

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