TheDinarian
News • Business • Investing & Finance
The Evolution of Blockchain for Bank Payments Modernization
May 30, 2023
post photo preview

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

 

 

community logo
Join the TheDinarian Community
To read more articles like this, sign up and join my community today
0
What else you may like…
Videos
Podcasts
Posts
Articles
Have you noticed a Personality Change in those who took the experimental Covid Vaccines?

If so, here’s the theory as to why this has happened, and it makes perfect sense as to why the elites would do this. THEY do not want you to be able to step into your power. With this destroyed, THEY win.

00:01:10
Stargate: Establishing the Physical Foundations of the AI Revolution 🛰️🌎

The Stargate initiative represents the most substantial investment in artificial intelligence infrastructure to date, as it begins to materialize on a global scale. While many perceive AI as an ethereal technology—simply accessed via applications like ChatGPT 🤖—each digital interaction is, in fact, powered by extensive physical resources: vast data centers 🏢, thousands of cutting-edge GPUs 💾, sophisticated cooling systems 💧, dedicated power grids ⚡, and essential water pipelines 🚰. AI does not reside on personal devices; it is anchored on Earth and demands significant resources.

As artificial intelligence continues to advance, its infrastructure needs only intensify. Regardless of improvements in model efficiency, the explosive growth in usage—billions of queries, ongoing model training, and worldwide deployment—necessitates ever-greater computing power, land, electricity, and semiconductors. This expansion is not plateauing; it is accelerating 📈.

Stargate stands ...

00:01:55
🚨 A Senior UAE Official Has Forecasted...👀

🇦🇪 The United Arab Emirates has taken a decisive step that the United States has been reluctant to pursue.

👉 “Within the next two years, cryptocurrency will be used more frequently than traditional currencies like the dollar or dirham, even for everyday purchases such as coffee and groceries.” 🏦☕🛒

It is worth noting which cryptocurrencies offer transaction fees that are virtually negligible. 😏

The official further stated: “Mark my words, I believe in actions, not just words.”

00:01:00
👉 Coinbase just launched an AI agent for Crypto Trading

Custom AI assistants that print money in your sleep? 🔜

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

👉 Here’s what you need to know:

💠 'Based Agent' enables creation of custom AI agents
💠 Users set up personalized agents in < 3 minutes
💠 Equipped w/ crypto wallet and on-chain functions
💠 Capable of completing trades, swaps, and staking
💠 Integrates with Coinbase’s SDK, OpenAI, & Replit

👉 What this means for the future of Crypto:

1. Open Access: Democratized access to advanced trading
2. Automated Txns: Complex trades + streamlined on-chain activity
3. AI Dominance: Est ~80% of crypto 👉txns done by AI agents by 2025

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

👉 Coinbase just launched an AI agent for Crypto Trading
The Vatican's Control Runs Deep 👀

The Vatican has been the subject of countless theories throughout history. From secret archives to alleged world domination schemes. Let's explore the most common Vatican theories, their origins, and what we actually know.

The Major Vatican Theories:

The Illuminati Connection: The Vatican secretly controls or collaborates with the Illuminati to establish a New World Order.

Secret Archives Control: The Vatican Secret Archives contain proof of alien contact, suppressed scientific discoveries, or evidence of historical cover-ups.

The P2 Masonic Lodge Scandal: The Vatican Bank was involved in a massive conspiracy involving the P2 Masonic lodge, political corruption, and murder.

Suppression of Scientific Knowledge: The Vatican has systematically suppressed scientific discoveries that contradict Church doctrine.

The Third Secret of Fatima: The Vatican is hiding apocalyptic prophecies revealed at Fatima that would cause global panic if disclosed.

Financial Scandals: Legitimate concerns about ...

post photo preview
Veritaseum Hodlers, Are You Ready For Chaos? 🚀 👩‍🚀

What would happen if Veritaseum was "Resurrected" from the Land of Dead Cryptos? Would Clif High's prediction of Veri trading 1 to 1 with Bitcoin actually come TRUE?! We may just find out SOONER than you think!!

$Velos New Payfi Litepaper 📝

As the market evolves, so do we. Our new PayFi Litepaper reflects our commitment to adapt fast, stay ahead, and win.

Dive into our latest vision and strategy for what’s next.

https://x.com/veloprotocol/status/1917550676860887446

post photo preview
Stellar's Ecosystem Surges Forward: Smart Contracts, Lightning Speed, and Real-World Impact in 2025

The Stellar blockchain ecosystem is experiencing remarkable momentum in 2025, with groundbreaking technical achievements and expanding real-world adoption that position it as a major player in the decentralized finance landscape. From lightning-fast transaction speeds to innovative smart contract capabilities, Stellar is demonstrating that blockchain technology can deliver both performance and practical utility.

Technical Breakthroughs Drive Performance

The Stellar Development Foundation's Q1 2025 quarterly report reveals impressive technical milestones that showcase the network's maturation. The platform now processes an astounding 5,000 transactions per second with remarkably fast 2.5-second block times, putting it among the fastest blockchain networks in operation today.

This performance leap isn't just about raw numbers—it represents Stellar's commitment to creating infrastructure that can handle real-world demand. Whether it's cross-border payments, asset tokenization, or decentralized applications, the network's enhanced capabilities provide the foundation for scalable blockchain solutions.

Smart Contracts Get Smarter with Soroban

One of the most significant developments has been the launch and continued evolution of Soroban, Stellar's smart contract platform. The introduction of Contract Copilot represents a major advancement in developer experience, enabling faster and safer smart contract development through enhanced tooling and guidance.

This focus on developer experience is crucial for ecosystem growth. By lowering barriers to entry and improving the development process, Stellar is positioning itself to attract innovative projects and talented developers who might otherwise choose competing platforms.

New Token Standards Meet Market Needs

The Stellar Development Foundation has introduced new token standards developed specifically based on feedback from developers and institutional users. This responsive approach to platform development demonstrates Stellar's commitment to building technology that meets actual market needs rather than theoretical requirements.

These standards are particularly important as institutional adoption continues to grow, with organizations requiring robust, compliant, and flexible token frameworks for their blockchain initiatives.

Global USDC Integration Expands Utility

The integration of USDC across Stellar's global network represents a significant milestone for practical cryptocurrency adoption. Stablecoins like USDC provide the price stability necessary for everyday transactions and business operations, making them crucial for blockchain platforms seeking real-world utility.

This integration is particularly impactful in emerging markets, where access to stable digital currencies can provide financial services to underbanked populations and facilitate more efficient cross-border transactions.

Industry Events Build Community Momentum

The Stellar ecosystem's growing influence is evident in its presence at major industry events. The foundation's participation as a sponsor at Consensus 2025 in Toronto and Digital Assets Week in New York demonstrates its commitment to engaging with builders, investors, and institutional leaders across the blockchain space.

These events serve as crucial networking opportunities and platforms for showcasing innovative projects within the Stellar ecosystem. Recent Meridian events have highlighted creative projects like Skyhitz and HoneyCoin, illustrating the collaborative spirit and diverse applications being built on the platform.

Real-World Impact in Emerging Markets

Perhaps most importantly, Stellar's growth isn't just about technical metrics—it's about real-world impact. The platform's focus on emerging markets addresses genuine financial inclusion challenges, providing efficient payment rails and access to digital financial services where traditional banking infrastructure may be limited.

This practical approach to blockchain implementation sets Stellar apart from projects that focus primarily on speculative trading or theoretical use cases. By solving actual problems for real users, Stellar is building sustainable demand for its technology.

Looking Ahead: Enterprise-Grade Infrastructure

Stellar positions itself as offering enterprise-grade asset tokenization alongside its DeFi capabilities and payment infrastructure. This comprehensive approach makes it attractive to institutions looking for a single platform that can handle multiple blockchain use cases.

The combination of fast transactions, low costs, smart contract capabilities, and regulatory-conscious development creates a compelling value proposition for enterprises considering blockchain adoption.

The Road Forward

As 2025 progresses, Stellar's ecosystem appears well-positioned for continued growth. The technical infrastructure improvements, developer-focused enhancements, and real-world adoption initiatives create a strong foundation for expanding use cases and user adoption.

The blockchain industry has seen many projects promise revolutionary capabilities, but Stellar's focus on delivering measurable performance improvements and practical solutions suggests a mature approach to blockchain development. With transaction speeds that rival traditional payment systems and growing institutional adoption, Stellar is demonstrating that blockchain technology can move beyond experimental phases into mainstream utility.

For developers, institutions, and users looking for blockchain solutions that prioritize both performance and practical applicability, Stellar's 2025 developments represent significant progress toward a more accessible and useful decentralized financial ecosystem.

Source: The Dinarian ⚡ Claude AI

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 The Dinarian

Read full Article
post photo preview
Soroban Security Audit Bank: Raising the Standard for Smart Contract Security

The Stellar Development Foundation (SDF) is deeply committed to helping ensure that the highest security standards are available for projects building on the Stellar network. Last year SDF launched the Soroban Security Audit Bank, an initiative to provide projects access to auditing experts and tooling that are proven to help prevent hacks by catching potential bugs, inefficiencies, and security flaws before contracts go live. Through the Soroban Security Audit Bank, we’re empowering teams building on Soroban with comprehensive security audits from leading audit firms, enhanced readiness support, and robust tooling, significantly elevating the ecosystem’s safety and efficiency.

Since launch, the Soroban Security Audit Bank has successfully conducted over 40 essential audits, deploying over $3 million to support security of the smart contracts on Stellar. Check it out!

 

Ecosystem Success Stories: How the Soroban Audit Bank Drives Security Forward

By making automated formal verification available to developers, in addition to allocating significant budget for securing many of the top DeFi protocols built on top of Stellar, SDF has established a new security standard in the Web3 ecosystem. Mooly Sagiv, Co-Founder of Certora
SDF has been a strong partner as we’ve worked with teams across the Stellar ecosystem. SDF’s Audit Bank initiative allows for a smooth and streamlined review process, and is a clear reflection of the Stellar ecosystem’s enhanced commitment to security. Robert Chen, CEO of OtterSec
 

Leading projects within the Soroban ecosystem have highlighted the impact of the Audit Bank

Finding a good auditor is difficult, expensive, and high-stakes. The Audit Bank streamlines the process and supports ecosystem projects with security review at critical growth milestones. Markus Paulson, Co-Founder of Script3
The audit firms we worked with deeply understood the full ecosystem and the underlying protocols used. Their expertise and the tools from the Audit Bank strengthened our security and supported user and investor trust. Esteban Iglesias Manríquez, Co-Founder of Palta.Labs

What's New in 2025: Enhanced Audit Support for Soroban Builders

Teams building financial protocols, high-dependency data services, high-traction dApps funded by the Stellar Community Fund are able to request an audit and will typically be matched with a reputable audit firm within two weeks. We recently restructured the program for this year to enhance audit efficiency and incentivize accountability, and rapid and complete vulnerability remediation:

  • Complimentary Initial Audit: Projects will need to contribute 5% of the audit cost upfront, but this co-payment amount is eligible for a full refund, provided that critical, high, and medium vulnerabilities identified are swiftly remediated within 20 business days of receiving the initial audit report (learn more).
  • Incentivized Security at Key Traction Milestones: Complimentary, extensive follow-up audits are available as projects achieve critical traction milestones (e.g., $10M and $100M TVL). These audits include deeper assessments such as formal verification or competitive audits, significantly boosting project security at pivotal stages.
  • Advanced Security Tooling: Projects can enhance their security self-serve through complimentary or discounted access to specialized tooling, which provide vulnerability detection and formal verification capabilities (see full list of available tooling). These tools are encouraged to capture ‘easy-to-spot’ issues prior to audit as well as a final check post-audit to increase the effectiveness and thoroughness of audits.
  • Enhanced Audit Readiness Support: Projects receive structured preparation support, including the implementation of best practices and security standards based on the STRIDE threat modeling framework. This ensures project teams are thoroughly prepared, optimizing audit efficiency and minimizing delays.

Get Started Today

If you're already funded through the Stellar Community Fund, meet the criteria and ready to secure your smart contracts, check your email for an invitation to submit an audit request–if you haven’t received one, contact [email protected].

If you haven't built on Stellar yet, we encourage you to start your journey with the Stellar Community Fund to become eligible for future security audits and ecosystem support. For any broader questions on the program, contact [email protected].

Also, we’re organizing an exciting series of workshops–join us for the kick-off on Soroban Security Best Practices on Friday, May 30, 2025 at 2 PM ET on @StellarOrg. Together, we're shaping a secure and resilient future for smart contracts on Stellar.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 The Dinarian

Read full Article
post photo preview
Santander mulls stablecoin, crypto offering

Bloomberg reported that Banco Santander is mulling introducing euro and dollar stablecoins, or potentially making a third party coin available to clients, citing sources. This move aligns with broader crypto ambitions, as its digital bank, Openbank, has reportedly applied for a European cryptocurrency license under the Mica Regulations and may enable retail access to digital assets.

Systemically important banks embrace stablecoins?

Major banks are now moving from observers to participants in this expanding market. Should Santander confirm plans to launch a stablecoin, it will be the fourth global systemically important bank (G-SIB) to do so. Societe Generale’s FORGE subsidiary launched the EURCV euro coin in 2023. Deutsche Bank is a partner in ALLUnity, another stablecoin initiative with plans to launch this year, subject to regulatory approval. And Standard Chartered is part of a joint venture in Hong Kong that intends to introduce a stablecoin.

Santander’s involvement could extend beyond an individual initiative. The bank is a shareholder in The Clearing House, where the Wall Street Journal reported that US banks are exploring the potential to create a joint stablecoin. If a US initiative took that route it could involve nine more G-SIBs including Bank of America, Barclays, BMO, BNY Mellon, Citi, HSBC, JP Morgan, TD Bank and Wells Fargo.

Apart from these initiatives, our research shows that more than 20 other banks have been involved in stablecoin projects.

Until recently stablecoins were mainly used to settle cryptocurrency transactions and by residents in countries with volatile domestic currencies. During the last year stablecoin infrastructure has been expanding, especially for mainstream cross border payments. Plus, President Trump issued an executive order prioritizing stablecoins. One of the administration’s motivations is this increases demand for US Treasuries, lowering the interest rate the government pays on the Treasury bills.

Santander as an early digital assets mover

Santander’s stablecoin consideration builds on years of blockchain experience. The bank was an early Ripple investor and previously used Ripple’s permissioned network for payments (not XRP), while also embracing permissionless blockchain activities including issuing a digital bond on Ethereum in 2019. This dual approach led to collaborations with other major players – alongside Societe Generale FORGE and Goldman Sachs, Santander participated in the European Investment Bank’s first digital bond, also on Ethereum. Currently, the bank’s most significant digital money initiative involves Fnality, the wholesale blockchain-based settlement network, where Santander ranks among 20 institutional backers and is part of the early adopter group alongside Lloyds Bank and UBS.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 The Dinarian

Read full Article
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals