From S&P Global Market Intelligence.
Blockchain holds the promise to remove trusted third parties from transactions by creating a global network of peers that verify and record transactions on a shared ledger. While this represents a monumental shift in the way the financial system works, it will be a series of small changes and implementations that gets us there.
A partnership between Citigroup Inc. and Nasdaq Inc., which was announced at CoinDesk’s 2017 Consensus conference, gives insight into what it takes to bring a blockchain solution from the lab into the real world.
The partnership leverages Chain Core technology to connect Citi’s treasury and payments platform to Linq, Nasdaq’s private market blockchain platform. Citi created CitiConnect for Blockchain, which will allow Citi to seamlessly process payments for transactions in private company securities completed on the Nasdaq platform. Both products were built using Chain Core technology.
This partnership is not a research project or proof-of-concept. It is a real, live, platform operating at this very moment to settle cash securities transactions on the blockchain.
Instead of building an entire distributed network, like many blockchain evangelists want to see, Citi chose to use blockchain as a bridge. Connecting Citi’s current treasury infrastructure to Nasdaq’s Linq platform is an incremental step that allows Citi to see how a real blockchain network performs. This is step one in a potentially larger roll-out. While Nasdaq is the only current partner on the CitiConnect for Blockchain platform, the product is able to connect multiple blockchains to Citi’s treasury department.
Morgan McKenney, head of Asia-Pacific treasury cash management and trade solutions at Citi, outlined three key components in developing a blockchain solution. First, it must solve a real customer problem. Second, the solution must be extensible, meaning it should be applicable to more than just the initial use case. Finally, the product needs to be something that can be implemented within a year, according to McKenney.
