Blockchain may not be able to solve all bank problems, but it can solve most.
So said Passion Capital’s Eileen Burbidge at Bank Innovation Israel last week, in discussion with Amos Meiri, CEO of Colu, a startup that provides tools for building blockchain applications. Meiri was being modest — Burbidge told him not to be.
Perhaps Burbidge had caught wind of today’s news — a $12.5 million raise for Align Commerce in a round led by Kleiner Perkins Caufield Byers, which powers cross-border payments using the blockchain — that’s the blockchain, as in the Bitcoin blockchain. A blockchain is a record of transactions stored on multiple computers, or nodes. This makes it hard to fake transactions, if many nodes are involved. (Student loan refinance specialist Earnest also raised a whopping $275 million, possibly to expand its offerings, a la SoFi — but that’s another story.)
Align was founded by Marwan Forzley, a former manager of strategic partnerships at Western Union.
The blockchain is the first rail of Align’s multi-rail payment platform — the others are traditional payment rails such as bank wires, used “in situations where the availability of other rails are limited.”
I’m starting to sound like a broken record. It’s not _the_ blockchain, it’s _a_ blockchain ?
— Dave Birch (@dgwbirch) November 17, 2015
With regard to banks today, blockchains are generally discussed as private ledgers, something of a contradiction in terms because blockchains rely on a number of nodes to verify and validate transactions — the more, the better. The bitcoin blockchain is by far the largest, but will not be scalable in its present form to handle the vast sums of value that flow around the globe daily. It is also disparaged because it is open and therefore, in the opinion of some, less secure. Bitcoin advocates argue that it is more secure owing to its larger number of nodes and the transparency it affords.
The advantage of the blockchain, besides speed — transactions generally settle within ten minutes or so on the bitcoin blockchain, while others can be much faster — is cost, which is near zero. Align charges a 1.9% cut of transfers between currencies.
Blockchains were a source of many conversations at Bank Innovation Israel, with Gideon Greenspan, CEO of Coin Sciences, joining a panel on global payments, seen in the video below. Ohad Maimon of Leumi Card, a major card issuer in Israel, speaks in the video, following up on a comment of Greenspan’s, about why blockchain is a great opportunity for payments companies.
Today’s news proves his point. “We are only at the beginning,” Maimon says. Expect much more news like this.