Citibank is taking bold steps in the banking industry with the introduction of its pioneering Citi Token Service and it is said to be reshaping how institutions approach transaction handling through the utilization of blockchain technology.
The Citi Token Service allows clients to turn their deposits into digital tokens, making it possible to send money anywhere in the world instantly. This means no more waiting for days for your money to cross borders. It is not just about speed, but smart contracts are also in play. These little bits of code automate the trading process and makes everything smoother and more efficient. Citi even tested this with shipping giant Maersk. The result was positive.
What makes this particularly noteworthy? It signifies that amidst the earlier speculative chatter surrounding blockchain the banking industry is now genuinely committed to harnessing its practical potential. Research firm Bernstein said they anticipate that over the next five years about $5 trillion in tangible financial assets will transition into blockchain-based tokens. Understandably, this has ignited a fervor among banks eager to undergo this transformative shift.
However, there is a catch to it. The approach of Citi is confined to private blockchains. To understand why this might be a limitation, let us take a look to the early days of the internet.
In the early days of computer networking, numerous protocols like ARPANET, X.25 and DECnet emerged, but none endured. TCP/IP emerged as the dominant internet protocol due to its open standards, robustness in handling network issues, end-to-end communication focus and scalability with increasing transaction volumes.
In short, TCP/IP won because it was open, worked with everyone, didn’t break easily and could grow as needed. These are precisely the qualities lacking in private proprietary blockchains.
