Seven Trends at the Frontier of Blockchain Banking at Australia

It’s not hard to see why blockchain is being hailed as the future of banking. The technology has already disrupted the financial sector with its ability to streamline transactions and cut costs. Here are seven trends at the frontier of blockchain banking in Australia.

Smart Contracts

Smart contracts are formal, legally binding agreements that have been digitally implemented. They create obligations and standards for choices among several parties, much like ordinary contracts do.

However, smart contracts include characteristics not available to traditional contracts since they employ blockchain technology to track changes and other associated activity. When a clause in a smart contract specifies a change if specific requirements are met by the parties, the contract can automatically act on that clause.

Initial Coin Offerings

In the blockchain and investing world, the usage of cryptocurrencies to raise financing for startups is already a well-established trend, and many venture capitalists are aware of it. Its size and breadth are expanding in the meantime.

The initial public offering (IPO) process is comparable to that of an ICO, but without the protections that come with regulated public offers. Additionally, it typically grants the issuing business a better level of independence because it only offers returns based on financial performance, not equity.

Asset-Backed Digital Tokens

One significant new development in the area of DLT is the tokenization of monetary instruments and tangible assets. Asset-based digital tokens have been frequently ignored by investors up until now, but their role in financial portfolios will grow.

Asset-backed tokens are connected to a different, non-cryptocurrency source of value, unlike ICO tokens, whose value is based on their market value as a cryptocurrency.

Non Fungible Tokens (NFTs)

The next trend among the 7 trends at the frontier of blockchain banking is NFTs. NFTs are essentially a type of digital token, but they differ significantly in that each token stands for a particular entity.

In the sense that they cannot be traded for identical substitutes, these underlying items – typically collectibles like handcrafted luxury goods, signed artwork, and (particularly) digital artwork – are nonfungible. After all, a visual product by an artist or craftsperson has no exact counterpart.

Central Bank Digital Currencies (CBDCs)

To combat the decline in the usage of cash and the rise of private cryptocurrencies, central banks around the world are thinking of developing their own digital currencies. A CBDC is not solely fiat money because a nation’s central bank also issues this digital medium of exchange. Instead, it functions as a liability against the nation’s assets, which is confirmed via a blockchain-based technology system.

Although no central bank has yet made a CBDC available to the public, many are creating concepts and testing particular functionalities.

Decentralized Finance (DeFi)

A wide range of new cryptocurrency products for lending, investing, staking claims, and establishing mortgages are included in the trend toward decentralized finance. Compared to smart contracts or tokens, these goods are more flexible and offer a wider range of applications:

Create fresh versions of established financial products without the need for a middleman.
Enable peer-to-peer trade to eliminate the need for transactions to pass through a bank or other central organization.
Rely on smart contracts to keep an eye on things and verify the legitimacy of the transactions.

Robo-advisory Services

Algorithms and artificial intelligence (AI) are used by robots and automated software programs to monitor cryptocurrency activity, identifying signals that point to profitable buying or selling opportunities and informing the investor or holder of those chances.

This enables program trading as well as active and intelligent portfolio management, with the robo-advisor set up to initiate specific purchase or sell decisions.