Wall Street Doesn't Love Cryptocurrency But It Likes Blockchain
Luis Aureliano | Nov 14, 2017 01:30PM ET
Cryptocurrency is reducing the influence of governments over the global monetary landscape and it has shown an impressive ability to steal the attention of investors away from traditional investments on Wall Street.
Now, a whole industry is born around the idea of trading of cryptocurrencies, with different kinds of new digital currencies popping up in the market. There's also a new market to trade cryptocurrency futures as traditional investors start to pay more attention to the trend of the cryptocurrency markets. More so, many VC's are starting to look for opportunities to back blockchain startups as the growth of Internet companies start to reach a peak.
Retail investors who invested in cryptocurrencies such as Bitcoin, Ethereum, and Litecoin have also had reasons to consistently smile on their way to the bank. The chart below shows the year-to-date performance of Bitcoin in relation to other assets available on Wall Street.
From the chart, the NYSE Bitcoin Index has gained an incredible 849.9% in the last year. In contrast, the leading Wall Street indices have only gained low double digits. The NASDAQ Composite is up 28.91% in the last one year, the Dow Jones is up 24.27%, and the S&P 500 is up 19.31% in the same period.
The clouds of a disruptive change are gathering on Wall Street
Cryptocurrency already has its attention on Wall Street and there's not much that can be done to slow down the onslaught. Of course, Wall Street would be waiting patiently as Bitcoin undergoes a choppy phase over talks of forks among others. Yet, the fact that the cryptocurrency industry is currently undergoing changes akin to a civil war doesn’t necessarily mean that Wall Street's plan to destabilize the cryptocurrency industry has succeeded. Below are two Wall Street firms that are embracing blockchain technology in the hopes of building their competitive advantages.
NAGA Group
Fintech powerhouse NAGA Group (DE:N4G) is launching a blockchain solution that will forever transform the operations of the financial market. NAGA Group has the pedigree of a traditional, yet forward-thinking, fintech firm. The company, which is listed on the German Stock Exchange in Frankfurt, currently holds the record as the fastest German IPO in 15 years as its stock currently trades at more than 400% above the issue price, as seen in the chart below. In the last year, NAGA has moved from a 52-week low of $2.60 to a 52-week high of $22.80 and it currently trades around $12.86 per share.
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Naga Group has an extansive experience building and marketing fintech solutions. The firm created SwipeStox, a mobile-first social trading platform for trading forex, CFDs, and Indices. The firm created SwiteX, a unique platform that gamifies trading for an entertaining learning experience.
Now, NAGA Group is working on the first Blockchain platform for decentralized trading, investing and education in financial markets, virtual goods and cryptocurrencies. One of the key aims of Naga is to make it simple, rewarding, and entertaining for everyone to trade the financial markets. The NAGA Wallet offers a unique platform for traders to deposit and exchange cryptocurrencies in order to access the financial markets.
Interestingly, the NAGA Coin (NGC), which will be available in an upcoming token sale has the potential to become another major coin on the cryptocurrency landscape. For one, the token sale for NAGA Coin is not an attempt to raise funds in order to build something from scratch. Rather, NAGA Coin is a tool for tackling the largest markets in the world by offering decentralized access to the global financial markets.
JPMorgan Chase
On a first glance, JPMorgan Chase & Co (NYSE:JPM) doesn't look like a potential support for Bitcoin or its underlying Blockchain technology. JPMorgan's CEO, James Dimon has riled Bitcoin at every opportunity, going as far as calling it a fraud; yet, JPMorgan is leading what is probably the biggest blockchain revolution on Wall Street.
Last month, JPMorgan announced its pilot program, the Interbank Information Network (IIN), which it will use blockchain technology to process faster and secure cross-border payments. JPMorgan Chase in collaboration with Royal Bank of Canada and an Australian and New Zealand Banking Group Ltd wants to use a version of Blockchain that powers Ethereum to process banking operations across international borders.
With current banking technology, international payments processing could take as much as 15 days for individual and enterprise clients as banks try to go through a complex layer of communications. International payments processing is most often encumbered by the usual lack of information from different parties. JPMorgan alone notes that it processes about 150,000 inquiries annually to provide full names, missing numbers, date of birth or a missing digit in an account number.
With Blockchain technology, JPMorgan strongly believes that it could significantly cut down the processing times for cross-border payments. In the words, of the firm, “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”
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