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The march toward real-world use cases for blockchain technology continues. SETL, a London-based fintech, Deloitte, and UK challenger bank Metro announced on Tuesday the successful testing of a contactless card enabled blockchain system to process and settle payments. 

The system uses a digital version of fiat currency, pound sterling, rather than a cryptocurrency such as bitcoin, and connects to clients' bank accounts. It was tested by 100 users and could be generally available by the end of 2017 subject to regulatory approval. Consumers were onboarded using Deloitte's "Smart Identity" blockchain system, which creates an authorized ID for a customer that is used to verify their identity instantly without the need for further details. 

SETL's technology will enable the system to compete with major card networks. Historically, blockchain's use in payments processing has been limited by its inability to process large volumes of transactions. However, SETL says its blockchain can process billions of transactions daily, or tens of thousands of transactions per second, compared with the 2,000 to 3,000 transactions that incumbent card networks, such as Visa and MasterCard, can manage. This means that SETL's card is in a good position to challenge the card providers dominating the market. 

SETL also claims its card will offer cost savings for consumers and merchants. SETL CEO Peter Randall said the system will lower the cost of processing retail transactions as it reduces the number of players through which a payment must pass before it is cleared and settled. It enables consumers to send a payment directly from their account to the merchant's. This means less of the transaction will be taken in fees, resulting in cost savings that merchants could pass on to their customers. However, we think it more likely that merchants will keep such savings for themselves. 

Some barriers to adoption remain, but SETL seems well positioned to handle them. Aside from regulatory approval, one major challenge remains for the system: getting enough merchants and banks to adopt it. However, Deloitte's established name will likely encourage these players to try the technology. In addition, SETL's promise of lower costs and the opportunity to loosen the hold of the likes of Visa and Mastercard on payments systems will likely prove attractive.  

Blockchain technology, which is best known for powering Bitcoin and other cryptocurrencies, is gaining steam among finance firms because of its potential to streamline processes and increase efficiency. The technology could cut costs by up to $20 billion annually by 2022, according to Santander.

That's because blockchain, which operates as a distributed ledger, has the ability to allow multiple parties to transfer and store sensitive information in a space that's secure, permanent, anonymous, and easily accessible. That could simplify paper-heavy, expensive, or logistically complicated financial systems, like remittances and cross-border transfer, shareholder management and ownership exchange, and securities trading, to name a few. And outside of finance, governments and the music industry are investigating the technology's potential to simplify record-keeping.

As a result, venture capital firms and financial institutions alike are pouring investment into finding, developing, and testing blockchain use cases. Over 50 major financial institutions are involved with collaborative blockchain startups, have begun researching the technology in-house, or have helped fund startups with products rooted in blockchain. 

Jaime Toplin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain technology that explains how blockchain works, why it has the potential to provide a watershed moment for the financial industry, and the different ways it could be put into practice in the coming years.

Here are some key takeaways from the report:


Spending on capital markets applications of blockchain is expected to grow at a 52% compound annual growth rate (CAGR) through 2019, according to Aite Group, to reach $400 million that year.

Banks and major financial institutions are working both collaboratively and independently to develop blockchain tech. Over 50 major financial institutions are involved with collaborative blockchain startups, like R3 CEV or Chain. And many are investing in the technology on their own as well.

Putting blockchain to use for real-world transactions is likely not that far off. If working groups' tests are successful, firms could be using it to transact real value as early as the end of this year and we could see widespread industry application within the next few years. 
In full, the report:


Examines the funding increases that are pouring into blockchain

Assesses why blockchain is becoming so popular and what factors are driving up increased research and development

Explains in full how can I buy bitcoins blockchain technology work and what assets make it valuable and vulnerable

Identifies pain points in the financial industry and profiles how various firms are using blockchain to solve them

Demonstrates the challenges to mainstream adoption and their potential solutions
To get your copy of this invaluable guide, choose one of these options:


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