Despite some setbacks towards the end of the year, this has undoubtedly been the year of the cryptocurrency. While the stock market has historically generated annual profits of 7%, including the reinvestment of dividends, and when adjusted for inflation, the aggregate increase in the value of all the combined cryptocurrencies has left it at nothing.
Having started the year at $ 17.7 billion in combined capitalization, the aggregate value of approximately 1,380 cryptocurrencies since December 25 was $ 542 billion. That's an increase of almost 3,000% since the beginning of the year, and it's a big reason why retail investors have gone head-to-head in cryptocurrencies.
Make no mistake: this rally is about blockchain
Although there is really no shortage of reasons behind the recovery of the virtual currency, most tend to lead to a single source: the emergence of blockchain technology. Think of blockchain technology as the infrastructure that underlies the virtual currencies that investors have been buying. Blockchain is the digital ledger, distributed and decentralized that is responsible for recording all transactions without the need for an external intermediary, which is often a bank. At present, it tends to offer three decisive advantages over the networks involved in the transmission of money.
First, as noted, the information on a blockchain is decentralized. Instead of being stored in a data center, which could be at risk of being attacked by a cybercriminal who could paralyze a virtual currency, information is poorly integrated into servers and hard drives around the world. This virtually eliminates the opportunity for cybercriminals to place a cryptocurrency on their knees. To summarize, it can be more secure than existing networks.
Second, it could also be much cheaper. Remember, blockchain cuts the intermediary, which is usually a financial institution. If that intermediary does not have to be paid, there is a good chance that transaction fees will actually be reduced over time as this technology improves. It is not clear if this means lower rates for consumers, but it seems to suggest a modest boost in results for companies that adopt blockchain technology for their money transmission needs.
Finally, but possibly most important of all, blockchain technology offers the ability to significantly speed up transaction settlement times. With the review of transactions that occur 24 hours a day, seven days a week and blockchain technology without having to comply with the "normal work week" defined by the current financial institutions, the days of withholdings of several days in cross-border transactions may come to an end
These Dow components have received blockchain with open arms
IBM
Big Blue, as it is occasionally called IBM (NYSE: IBM), failed the boat when cloud computing became the new medium for companies to store and share data, and since then has been playing up. However, it has a genuine opportunity to be at the forefront of the curve with regard to blockchain technology.
In October 2017, Stellar (formerly Stellar Lumens) announced a partnership with KlickEx and IBM to provide IBM with a means to quickly and economically facilitate their cross-border transactions. Remember, IBM generated nearly $ 80 billion in year-round sales in 2016, and tens of billions of these come from overseas markets.
According to the agreement, a dozen international banks in the South Pacific region will develop and deploy Stellar's blockchain technology to quickly process transactions, as well as to integrate the different currencies of South Pacific countries. Although it is a project that is developed in a single region, the chain of blocks of Stellar would be easily scalable to other parts of the world. With payments processed within two to five seconds, and for a cheaper cost than with current networks, it seems to be a win for IBM and its customers.
American Express
Do not leave home without that! American Express (NYSE: AXP), which had fallen into dismal condition after its breakup with long-time trading partner Costco in 2016, is among the leading pioneers in the banking arena with regards to blockchain technology.
In November 2017, American Express and Banco Santander (NYSE: SAN) announced that they would partner with Ripple to make trans-border instant transactions a reality. Under the agreement, the cardless payments made through AmEx's FX International Payment network to Banco Santander's accounts will be processed instantaneously through Ripple's blockchain technology, which means that there will no longer be delays of several days. Although this represents only a test for now, AmEx, like IBM, could extend this to new regions and partners in the future.
What's more, you can give Ripple the opportunity to show what your currency, the XRP, can do. In addition to just thinking about these virtual currencies as a means to buy goods and services, the XRP can offer the ability to act as an intermediary currency in cross-border transactions. For example, the change from US dollars to pounds sterling could be completed instantly by first converting dollars to XRP, then XRP to pounds sterling. Best of all, the cost of doing this may be cheaper than current networks.
Cisco Systems
Even the king of connectivity, Cisco Systems (NASDAQ: CSCO), is getting into blockchain madness. Looking for ways to go beyond its hardware, blockchain could give Cisco a viable path to growth, as well as consolidate the importance of blockchain beyond financial services transactions.
For starters, Cisco is one of the 200 organizations that are part of the Enterprise Ethereum Alliance. These are governments and companies from around the world and multiple industries, testing a version of the Ethereum blockchain. What makes Ethereum's Blockchain especially attractive to companies is that it incorporates intelligent contract protocols that help verify, facilitate or enforce the negotiation of a contract. It's a big reason why Ethereum has become the second largest market capital of all cryptocurrencies, behind Bitcoin.
In addition, Cisco is also working to create its own blockchain systems. In October, the company requested the trademark of a blockchain platform that can identify different connected devices, monitor the activity of those devices and evaluate how reliable those devices are when they connect to a network. It would also continuously and automatically evaluate new devices when they are added to the network. In other words, Cisco believes it has a chain of blocks that will change the rules of the game to follow the Internet of things.
Often regarded as old and heavy, these components of the Dow show that they still have some high growth tricks in their sleeves, thanks to the block chain.
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