After four years of investigating the possibilities of blockchain technology, Australia’s Commonwealth Bank revealed its idea to issue a bond on the blockchain.
The Commonwealth Bank of Australia (CBA) has already completed its work on 25 proof-of-concepts applying blockchain technology to real problems of the business world. Now the institution is going to issue the world’s first bond on the blockchain. It is expected to be implemented next year.
Speaking at the GMIC conference in Sydney on Tuesday, CommBank’s head of blockchain Sophie Gilder stated that the launch will be the culmination of CBA investing in the possibility of a single transaction that moves the asset, and the payment for that asset is secured within the blockchain.
“We’re particularly interested in that in financial markets in equities, bonds, syndicated loans, many other applications where we currently have markets that have a lot of friction — they currently don’t work well”, she said. “We think the platform we have built can make this more efficient.”
Sophie Gilder continued: “”We took a very practical approach and started with experiments, and we’ve now completed 25 proof of concepts or experiments applying blockchain technology and other emerging technologies to real-world business problems”.
She explained that “Blockchain itself is not a complete solution; it’s one very interesting module which can enable us to do business in very different ways to how we do it today”, so it is just one part of the overall piece for CBA, with artificial intelligence, the Internet of Things (IoT), robotics, quantum computing, and biometrics also on the bank’s radar.
Blockchain is one of many emerging technologies that provide endless possibilities, and with this idea Gilder offered up the concept of a blockchain mesh.
“If we can incorporate IoT and AI on a blockchain mesh, what we can do in the future is link the physical with the digital, make machines learn and respond to the world that we’re living in, and then connect these elements through a secure, synchronised blockchain network — this will deliver more efficient ways of getting through our lives on a daily basis,” she said.
She sees international money transfers as potential for blockchain as well. Moreover, CBA is also exploring the use of blockchain with cybersecurity. With bitcoin’s growing value the blockchain is a perfect structure for addressing the risk of cybersecurity threats in the future. And this is not the only advantage of blockchain.
Firstly, it allows transferring value peer-to-peer within seconds or minutes, depending on which network or protocol. Secondly, it can be programmed. With a digital token that can be transferred on the blockchain, the user can add own terms to it.Tokens on the blockchain can represent any type of value.
It could be, for example, frequent flyer or loyalty points. For Sophie Gilder and CBA these are not all. “In the future, I can see not just payments on the blockchain, but more broadly peer-to-peer programmable value transfer powered by blockchain”.