Digital assets are poised to become accepted as investable assets and stores of value, tradable on global, licensed exchanges, and accessible to individuals and institutions around the world. This global decentralized framework relies on — and is powered by — distributed ledgers that eliminate the need for central intermediaries to facilitate the value exchange. Bitcoin is the breakthrough asset of this type, and many more cryptocurrencies have emerged in its wake. But a long history of innovation and experimentation preceded it and made it possible.
Digital assets adoption is growing at an exponential rate. Tokenization alone is expected to grow to USD 24 trillion by 2027, a figure that represents 10 percent of global GDP. Cryptocurrencies are also seeing increased adoption by institutions, namely Tesla and Square. These firms have invested USD 1.5 billion and USD 50 million into Bitcoin respectively. In March 2021, US congressmen Stephen Lynch and Patrick McHenry introduced bipartisan legislation to establish the formation of US Digital Asset Working Group: “Innovators across the country are leading the way on financial technology—Washington needs to keep up,” said Rep. McHenry.
As digital asset ecosystems continue to grow and evolve, new players, new investment opportunities, new moves from the traditional financial sector and growing interest from regulators signal a stable long-term future for digital assets. And making it all possible? Distributed Ledger Technology (DLT).
91% of banks have invested in DLT solutions. DLT, or blockchain as it is sometimes called, is disrupting the financial services sector worldwide. In a drastic improvement over current technologies, blockchain-based solutions allow financial institutions (global asset & wealth managers and asset servicers) to create new digital asset "ecosystems". From accounting to custody of digital assets, and as global processes are becoming increasingly digitized, blockchain-based solutions are arguably the most significant technology innovation in the last few years.
Moreover, "Smart Contract" powered blockchain solutions address security, transparency and chain of custody issues. The "chain of attestation" is supported by cryptographic hash technology which is immutable and underscores a "single source of truth" related to the digital asset and any associated transaction.
Even regulators are now starting to take notice and weigh in, giving "guardrails" within which to operate. As an example, over the last year, regulations have become clearer, and the Office of the Comptroller of the Currency (OCC) has put forth directives that will benefit the adoption of digital assets. In addition to the OCC, Fed Chair Powell has mentioned the launch of a “digital dollar” as a high priority project.
As institutional interest in cryptocurrencies grows following bitcoin’s blistering rally at the beginning of the year, Federal Reserve Chair Jerome Powell said the central bank is looking closely at the prospect of issuing a “digital dollar.”
The concepts of money and value transfer have been evolving since primitive societies adopted shells and stones for monetary exchange, but the concept of digital money has been sought after for as long as there’s been an internet and peer-to-peer networking capabilities to drive its development.
Digital money is drawing stronger interest as the future of an increasingly cashless society. 86% of the world’s central banks are exploring digital currencies. The adoption of a CBDC could mean widespread use of a regulated digital currency. Adoption will significantly increase the speed of various processes carried out by central banks and the US Department of Treasury.
Allowing money to be deposited directly into an employees' digital wallet will allow for near instantaneous transfer of tax refunds, stimulus checks, and government aid. Utilizing a digital currency would also eliminate the cost of minting money. Currently, it costs 2.06 cents to make a penny and 7.53 cents to make a nickel, an economically inefficient process.
Funds can be deposited in the digital wallet prior to any transactions or, in other cases, an employee's bank account or payroll can be linked to the digital wallet. Employees might also have their driver's license, health card, employer-sponsored ID card(s) and other employer documents stored within the wallet. These credentials can be used to authenticate the employee's credentials. For example, a digital wallet could verify the medical, dental, insurance and financial benefits associated with each employee.
Digital central bank currencies are forms of money issued by a country’s central bank that exist entirely electronically, without any connection to physical bank notes or coins. They’re different from decentralized cryptocurrencies like bitcoin, which aren’t controlled by one central player, though some of the underlying technology is the same.
Treasury Secretary Janet Yellen stated that “Too many Americans don’t have access to easy payments systems and banking accounts, and I think this is something that a digital dollar, a central bank digital currency, could help with,” she said. Yellen also suggested that a digital central currency could help make payments faster, safer and cheaper (that’s because proponents of the technology say it will help simplify complicated, often days-long settlement processes).
Powell said Tuesday that since the U.S. dollar serves as the world’s reserve currency, it’s more important to get the project right than it is for the United States central bank to be first to unveil a digital version of its currency.
"Permissioned" blockchain solutions address many of the previous trust, security, transparency and productivity issues and improve upon legacy employee payroll processes. Credentials and digital employee wallet ownership, including central bank digital currencies (CBDCs) is cryptographically authenticated.
Our solutions are based on our Intellectual Property (IP) and some are US Patented. Moreover each solution is customized for the specific requirements of the institution(s) involved.
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