Advancements in DeFi Capability will Drive Growth
In 2020 so far, we’re seeing the decentralized finance industry quickly pick up speed. As many companies begin to implement blockchain in their operations, more varied industries are benefiting from smart contract-based technology, and banks, in particular, are starting to jump on the bandwagon.
Late July brought an announcement from the Office of the Comptroller of the Currency (OCC) stating it would now allow national banks to hold digital assets for their clients. This is big for the industry, thanks in part to Brian Brooks, a former Coinbase exec who recently joined the OCC as Acting Comptroller.
“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be an increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers,” said the announcement.
The new technology is referring to digital wallets. Most people are familiar with e-wallets like Apple Pay, Google Pay, Zelle, and Venmo, and cryptocurrency holders use wallets like Coinbase. With this new development, regulated financial companies can now hold onto the unique cryptographic keys for the cryptocurrency wallets of their investors.
With banking services expanding to this space, financial institutions will need more advanced, secure, smart-contract driven custody solutions, which is what we specialize in at Upstate Interactive.
For example, cryptocurrencies are typically stored in a standard, single-key address, meaning whoever has the crypto key can access and move the funds as they please.
For increased security, banks may want to require two or more signatures (or private keys) before users access the funds. Multisig wallets strengthen security by protecting against phishing and malware (which single key is more susceptible to), and makes escrow transactions, managing organizational funds, and other banking needs safer and fairer.
At UI, we build tailored financial instruments and assets for a decentralized world.
Our team is experienced in building smart contract factories that generate 1:1 escrows, wallets, and other custody solutions for users and organizations. We empower individuals to freely control their own financial assets in a more equitable way using open protocols and transparent data.
In a recent project, we worked on a DAO for a commercial client comprised of nine smart contracts. With the DAO, users and shareholders can operate autonomously via the smart contracts we’ve developed and can process financial transactions, create and deploy smart contracts, mint tokens, handle governance, and manage multi-signature authentication. You can read more about that here.
DeFi is the future of financial services, and while we wholeheartedly believe in this new paradigm, we recognize that not everyone is on board just yet.
Many folks believe DeFi will ultimately lead to the end of centralized banks. On the opposite side of the spectrum, others feel centralized banks can play a key role in the transition to DeFi.
Technology is quickly evolving and industries must adapt to meet consumers’ changing demands. DeFi provides the security, transparency, and autonomy they’re looking for, and when your organization is ready to revamp its services, we’ll be there to build the solution you need.
