Traditional Finance Faces “Existential Threat” in 2018 from Blockchain

Traditional Finance Faces “Existential Threat” in 2018 from Blockchain

Whilst 2017 will likely go down as the Big Bang of the ICO phenomenon, 2018 seems set to be the year in which these blockchain start-ups start bringing concrete products to market. 

According to one estimate, the single largest category of ICOs are those that operate within financial services with a least one in six ICOs emerging from this one industry alone. And it is from within this industry that a new wave of ICOs have announced upcoming product rollouts for January.  

Traditional Financial Services Under Threat?

Accounting and credit analysis are just some of the traditional industries that look set to be confronted with real – and no longer potential – disruption in 2018.

With the former, Populous (PPT), an invoicing cash flow management platform, is releasing a Beta platform over the next few days that will allow investors to settle unpaid invoices. That allows the original invoicee to settle operational debts in real-time when his or her own cash flow allows it, with interest paid to the investor who originally settled the account. 

By having first mover advantage in the space, Populous has managed to translate an initial $10 million crowd-sale to a current market capitalisation of $2.1 billion, with its current token price hovering around $50.

With the latter, Paypie (PPP), who use a blockchain-based proprietary risk score algorithm to asses credit risk, have announced that they will be unveiling their Alpha stage in late January.

Although a smaller operation by comparison, Paypie has achieved a market cap that is tenfold its crowd-sale, currently standing at $264 million with a corresponding token price of around $3.40. Paypie’s unique risk algorithm is based on blockchain triple-entry accounting, which guarantees that the risk score is transparent and fraud-proof.

The current market risk scores for businesses are rife with inconsistencies and manipulation; only this week JPMorgan inadvertently demonstrated the issues within current credit risk assessment practices as they unveiled a mark-to-market loss of $140 million on a failed loan to South African-based Steinhoff International.

“The attitude of Financial Services today is not dissimilar to that of Nokia’s in relation to the release of the iPhone,” said Liam Miller, an ICO investment group organiser, commenting on CoinLoan’s upcoming platform release in Q2 of 2018. 

CoinLoan will be offering a borderless, peer-to-peer creditor/debtor pairing platform that looks set to challenge traditional lending models.

“The banks can see these new solutions emerging all around them but, because much of the attention attached to blockchain is itself attached to general cryptocurrency giddiness, they are not appreciating the full-scale of what is about to hit them,” Miller added. “This is an existential threat that very few traditional operators are taking seriously.”