Cryptocurrency scams have been a popular topic in recent movies. However, it is essential to note that these movies do not reflect the true potential of blockchain applications. Blockchain technology can potentially revolutionize how we do business in many markets. Many well-known financial institutions have already started exploring the possibilities of blockchain technology and have launched projects that could change how we think about finance. For example, IBM has developed a blockchain solution to help banks reduce the time and cost of cross-border payments. However, unlike the idea that films convey to the audience that this technology encourages cheating, blockchain technology facilitates compliance by providing a secure, transparent, and tamper-proof record of transactions, making it easier for regulators to monitor and audit financial activities.

In recent years, the silver screen has been awash with portrayals of cryptocurrency scams and illicit activities, painting a dark and often sensationalized picture of the blockchain landscape. While these movies have captivated audiences with their thrilling narratives, which include rogue hackers and get-rich-quick schemes, it is essential to distinguish between cinematic dramatization and the reality of blockchain applications. The real story unfolding in the blockchain space involves collaboration, technological advancements, and strategic partnerships. In fact, the emerging blockchain technology promises to revolutionize various sectors, offering innovative solutions and efficiency gains that extend far beyond the shadowy tales depicted on screen.

The world of finance is witnessing a paradigm shift as established players explore blockchain applications. In this context, it is relevant to debunk the myths propagated by cinematic portrayals of cryptocurrencies and shed light on the groundbreaking projects initiated by reputable financial institutions. These initiatives have the potential to redefine the way we conduct business across diverse markets, emphasizing transparency, security, and efficiency.

The story starts in 2017 when the Monetary Authority of Singapore (MAS) and JP Morgan embarked on a groundbreaking collaboration that marked a significant milestone in adopting blockchain technology in the financial sector. This partnership was a crucial component of Project Ubin, an initiative launched by MAS to explore the applications and potential benefits of Distributed Ledger Technology (DLT) in payments and securities settlement. At the forefront of this collaboration was the vision to create a multi-bank payment network that could streamline and enhance the efficiency of cross-border transactions.

Under the umbrella of Project Ubin, the collaboration leveraged the power of permissioned Ethereum, specifically utilizing the Quorum blockchain platform developed by JP Morgan. Quorum is a variant of the Ethereum blockchain designed to meet the specific needs of the financial industry, offering features such as enhanced privacy and permissioning. This choice of technology reflected a strategic decision to harness the advantages of blockchain while addressing the regulatory and privacy concerns associated with financial transactions. The collaborative effort aimed to demonstrate the feasibility of a blockchain-based payment network, exploring the potential for increased speed, security, and cost-effectiveness in cross-border transactions involving multiple banks.

The MAS and JP Morgan collaboration on Project Ubin highlighted established financial institutions’ growing acknowledgment of blockchain’s transformative potential. By embracing permissioned Ethereum and developing a multi-bank payment network, this initiative laid the groundwork for subsequent endeavors in the blockchain space, inspiring confidence in the technology’s ability to revolutionize traditional financial processes. The project showcased the technical capabilities of blockchain. It demonstrated the commitment of financial authorities and institutions to explore and implement innovative solutions to benefit the broader financial ecosystem.

After that, in 2019, J.P. Morgan significantly contributed to adopting blockchain in finance with the launch of JPMCoin. This USD payments product, built on permissioned Ethereum (Quorum), marked a tangible step towards incorporating blockchain into mainstream financial operations. Simultaneously, MAS, the Bank of Canada, and the Bank of England collaborated to test cross-border and cross-currency Central Bank Digital Currency (CBDC) payments. These experiments, conducted on permissioned Ethereum (Quorum) and R3 Corda, demonstrated the versatility of blockchain technology in addressing the complexities of international transactions within the central banking domain.

MAS, Temasek, and J.P. Morgan collaborated again the following year, focusing on developing a multi-currency payments network. This network supported Delivery versus Payment (DVP) settlements and introduced conditional payments, escrow for trade, and payment commitments for trade finance. All these functionalities were implemented on permissioned Ethereum (Quorum), underscoring the technology’s adaptability to the intricate needs of the financial industry.

Later, in 2021, DBS, J.P. Morgan, and Temasek jointly launched the Partior platform. This innovative platform aimed to digitize M1 commercial bank money, offering solutions to reduce friction and latency in cross-border payments, trade transactions, and foreign exchange settlements. Once again, the permissioned Ethereum (Quorum) blockchain played a pivotal role, highlighting its consistent relevance in driving transformative changes in financial processes.

Recently, MAS and JP Morgan collaborated again to develop Project Guardian, which aims to explore how tokenization and interoperable networks could establish the future of financial infrastructure. In 2023, Onyx by J.P. Morgan and Apollo collaborated under Project Guardian to deliver a proof-of-concept using permissioned blockchain infrastructure to test how tokenization and smart contracts could create a step change in the asset management industry through a new paradigm for portfolio management. The proof-of-concept demonstrated how holistic discretionary portfolios can be built across a fragmented tokenized traditional and alternative funds landscape. The project is a collaborative initiative that combines multiple industries through various pilots to explore how tokenization and interoperable networks could revolutionize asset and wealth management.

The project is a significant step towards the future of wealth management, as it aims to simplify investment processes, enable cross-chain interoperability, and enhance liquidity through tokenization. The proof-of-concept is a working portfolio construction and management solution demonstrating how a representative portfolio manager could create, deploy, rebalance, and update many portfolios, even when they contain alternative investments. To bring the proof-of-concept to life, Onyx and Apollo designed an illustrative portfolio manager and investor application, Crescendo, showcasing the future of wealth management. The project paves the way for tokenizing real-world assets to bring them onto the public blockchain. This changes the game for regulated institutions wanting to participate in the public blockchain to exchange assets, including borrowing, lending, and trading.

In parallel with these relevant projects, many other renowned financial institutions developed their projects, and many startups emerged to offer solutions for the development and widespread blockchain in the financial market. Institutions such as Credit Suisse, ING, Sberbank, World Bank, Commonwealth Bank of Australia, BBVA, Societe Generale, Santander, Bank of China, EIB, Goldman Sachs, BNP Paribas, SGX, and HSBC, among others, have experimented with issuing bonds on Ethereum or Canton. More recently, in other initiatives, Hamilton Lane enabled access to private equity and private credit funds on Polygon. At the same time, PayPal issued USD Stablecoin, PYUSD, on Ethereum, and many countries launched their Central Bank Digital Currencies (CBDCs), such as Brazil, which launched DREX in August 2023.

Remarkably, these critical milestones in integrating blockchain into financial markets have largely remained absent from Hollywood’s portrayal of the technology. While Hollywood captivates audiences with narratives of illicit activities, the real story in the blockchain space unfolds through collaboration, technological advancements, and strategic partnerships. As demonstrated by these events, the story of blockchain in finance is far from the exaggerated narratives depicted on the big screen. Instead, it revolves around tangible, collaborative efforts by reputable institutions to enhance efficiency, security, and transparency in the financial ecosystem. As these collaborative efforts mature, they pave the way for a future where blockchain reshapes traditional financial processes, fostering a new era of innovation and trust. Therefore, this is a story that is still far from over. This is just the beginning.

Authored by:

Cristiano Oliveira, Associate Professor at the Federal University of Rio Grande — FURG andHead of Research at Rivool Finance.

Tiago Piassum Theodoro Founder of Rivool Finance.