Blockchains Are Eating The World

As detailed in many of our weekly reports and past newsletters, lines are being drawn in the sand by those in the Blockchain Protocol Wars. This week was huge, with several product/protocol announcements from well funded FinTech companies working with Blockchain Technology.

A very important release took place a few days ago: Blockstream released its first functioning product called "Liquid," which is looking to simplify the transfer of bitcoins between participating exchanges.

This sidechain project’s success is critical on several levels. First it will show the financial world that private blockchains can be attached to the bitcoin protocol, through 2 way pegs. More importantly, it should solve a major liquidity problem that currently affects every exchange. The ability to share liquidity between exchanges would prevent catastrophic price drops due to a single large trader and also situations like margin calls as we saw on Bitfinex in late August. In addition this will reduce arbitrage opportunities between exchanges and make pricing more efficient.

**Please note:**Blockstream’s Liquid Protocol – Shares a similar name but has nothing to do with our ‘Bitcoin Liquid Index’ also known as "BNC-BLX". (This is the comprehensive historic price-index for bitcoin, also available as a live feed for settlements, and is available for institutional use today). 

Enterprise Blockchain Middleware:

In addition to the announcement from Blockstream, another interesting release this week came from Ripple (formerly Ripple Labs) with a new protocol “Interledger.”

Interledger is designed to be a connector between other ledgers, whether they are traditional fiat currencies or crypto currencies. This could turn out to be a very critical piece of technology that directly influences the work being done by R3CEV, Hyperledger and Chain to name a few.

It may also influence, and perhaps facilitate, transfers between fiat ledgers (or accounts) and the bitcoin ledger.

Businesses are still having a hard time getting banking relationships, even from the banks that seem to be investing in Blockchain Technology.

What Ripple appears to be doing is very smart. They are setting up their private token system to interact with other ledgers, even those that have yet to be made. By making Interledger a protocol, Ripple may have provided a bridge for many useful applications. In a way they might be levelling the playing field, and if this protocol gets utilized it brings a lot of confidence to the Ripple tokens and the private Blockchain that secures them.

How Blockchain technology can be applied within the traditional financial institutions continues to be the theme. Some time next year we expect this paradigm challenged, as more and more technology companies continue to move into the financial space. In the mean time, we continue to look for critical news on who can provide the first functioning private Blockchain.

**For full updates on;**Regulation, Blockchain Trends, Bitcoin Technical Analysis, Bitcoin Market Activity, Events & Resources, Please check out our detailed weekly – reports if you haven’t already.