Move over FinTechs! The real revolution in banking is being driven by the unstoppable rise of cryptocurrencies and blockchain protocols. Traditional financial institutions, long seen as the pillars of the global economy, are now also facing fierce competition from innovators that are harnessing blockchain technology to deliver financial services that are faster, cheaper, and more transparent, leaving old-school banks and their clunky, expensive systems like SWIFT in the dust.
The Promise of Blockchain Protocols
Blockchain protocols like Ethereum, Aave, Curve, and Dinero are revolutionizing finance. But what exactly are they? A blockchain protocol is essentially a set of rules and procedures that govern how a blockchain operates. Blockchains themselves are decentralized networks maintained by a network of computers.
Imagine transferring $10 million across international borders within minutes, instead of days or weeks, and at the cost of a piece of candy. Such efficiency and cost-effectiveness are game-changers!
“Where traditional banks might charge tens or hundreds of dollars per transaction, blockchain protocols offer a faster, cheaper alternative that’s already redefining the financial landscape”, says Matt Carstens, Director of Product Experience at amana. “Well-known funds and financial companies, like Blackrock, have already established tokenized funds. Blackrock’s tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund, was created earlier in 2024. It’s meant to provide qualified investors with the opportunity to earn U.S. dollar yields by subscribing to the fund, and Nomura is working on its own fund that offers yield from Ethereum ‘staking’ through its Dinero partnership”, Carstens adds.
Maturation of the Crypto Ecosystem
Much like startups growing into established companies, blockchain protocols are also maturing and gaining legitimacy. The ecosystem, though some aspects are still reminiscent of the Wild West, is surely seeing the emergence of blue-chip protocols that offer trustless borrowing and lending services with hundreds of millions to billions of available liquidity. For example, Ethereum and Aave have become trusted names in the crypto space, providing secure and transparent platforms for various financial activities. Even traditional companies and banks are beginning to integrate stablecoins like Tether (USDT) or Circle’s USDC, allowing users to seamlessly convert digital currencies into traditional fiat currencies within their accounts.
The Role of Crypto Wallets and Licensing
A crucial aspect of this transformation is also the growing adoption of crypto wallets. For protocols to function effectively, both parties in a transaction need a digital wallet. “The ultimate goal for companies like amana is to secure licenses that will allow them to offer a full suite of financial services—trading, saving, borrowing, lending, and sending money—all through the crypto ecosystem” says Carstens, “I strongly believe that this is where the future lies - in creating a seamless, integrated financial ecosystem that transcends traditional finance limitations. We are seeing this now with companies like Coinbase implementing their own seamless wallet solution and with their partnership with Circle’s USDC stablecoin their ability to onboard millions of new users alone doesn’t seem far off”, he adds.
Central Bank Digital Currencies (CBDCs)
The potential introduction of Central Bank Digital Currencies (CBDCs) could further accelerate the integration of blockchain into mainstream finance. CBDCs represent a fusion of traditional financial systems with the efficiencies and innovations of blockchain technology, potentially providing a regulated and widely accepted digital currency. Though in many respects this is still in a testing phase within a number of countries, this could be yet another major step towards the mainstream acceptance of digital currencies -bringing more legitimacy and trust to the ecosystem.
Ethereum – The Nividia of the Crypto World
According to Carstens, “cryptocurrencies are the future of finance, and Ethereum is at the forefront of this revolution. Ethereum's scaling, versatility, decentralized trustlessless, and unparalleled security make it much more than just a store of value like Bitcoin. Instead, it’s akin to a high-tech stock like Nvidia but with added yield (through staking) you would only earn on large-cap value stocks.”
Institutional investors are starting to see Ethereum's potential, particularly with the introduction of Ethereum ETFs, which we offer at amana (like ETHA, ETHD, ETHT and even the leveraged ETHU), I am confident that Ethereum will become a cornerstone of modern financial portfolios.
Beyond being a cryptocurrency, Ethereum is a platform that supports decentralized applications (dApps) with smart contracts. These technologies automate and streamline a wide range of financial services that the user can control themselves without going to a traditional bank. Being able to take out a loan or borrow funds instantly (without paperwork or going to your bank) on real-world assets (RWA) or digital assets they own is underway now and will open up considerably more soon.
“The future of banking is not just about digitization”, Carstens concludes. “It's about fundamentally rethinking how financial services are delivered. Blockchain protocols offer a glimpse into a future where financial transactions can be faster, cheaper, more secure, more scalable, and more transparent. As these technologies continue to evolve, they will undoubtedly reshape the financial landscape, challenging traditional banks and offering new opportunities for innovation and efficiency.
At amana, we are committed to being at the forefront of this transformation. Our goal is to leverage the power of blockchain technologies both as investment vehicles for our users to participate in as well as a new technology stack to consider pulling into our product suite to provide more and more value to our great users.”
