Sergey Nazarov, co-founder of Chainlink(LINK), has a bold vision regarding banks which will develop their own blockchains and could adopt the newly launched CCIP protocol to connect them.
According to him, this specific initiative could generate significant value in the crypto world. See below for all the details.
Summary
Chainlink (LINK): trillions into crypto from banks
Just a few days ago, Chainlink unveiled its new cross-chain interoperability protocol, aiming to simplify the transfer of money between different blockchains.
However, Chainlink co-founder Sergey Nazarov has an even more ambitious vision that goes beyond merely interconnecting public blockchains.
Indeed, he predicts that banks and financial institutions will create their own blockchains, probably with some degree of control or authorization, and that, in the future, the regulatory framework will allow them to connect to public blockchains such as Ethereum.
If this prediction comes true, the result could be a significant value-add to cryptocurrencies. In this regard, Nazarov told The Block in an interview with EthCC the following:
“You have this public blockchain and the internet of contracts defined primarily by DeFi, and you have this world of banking chains, which I think will be primarily defined by real-world asset tokens. The next phase will be to make these two worlds overlap. And when that happens, beyond the efficiencies and the earnings for each of these groups, then you’ll see the blockchain industry as a whole, I think grow very, very rapidly by trillions of dollars.”
Specifically, the newly launched protocol serves as a robust technical infrastructure for transferring tokens between different chains. Using Chainlink’s network, which is known for its reliability in providing real data to blockchains, such as price information, the CCIP protocol facilitates the exchange of information between different blockchains, ensuring the safe movement of resources.
Although the protocol is already being early accessed on the mainnet and is currently being tested in collaboration with crypto projects such as Synthetix and Aave, it is interesting to note that it has already been explored in the mainstream banking system as well.
Swift, the global interbank messaging network, along with more than a dozen financial institutions, has been evaluating the use of CCIP to facilitate token transfers across public and private chains, leveraging the existing Swift messaging infrastructure.
The importance of blockchain banking according to Chainlink and Sergey Nazarov
Nazarov went on to state the following:
“So I’ve been selling blockchain stuff to these banks for about six, seven years. And the historical pattern has been that when there is a decline in cryptocurrency prices, banks lose interest. But this time is the first time in the four cycles I’ve been through that it hasn’t happened. And I think the reason that hasn’t happened is because their customers want blockchain stuff.”
Sergey Nazarov explained the reasons why he believes banks will need to develop their own blockchains, based on the work done by Chainlink in collaboration with Swift and financial institutions.
According to Nazarov, the adoption process for banks begins with three distinctive phases. The first phase focuses on the custody of crypto assets, which involves the simple management of crypto assets, based on customers’ trading requests, on their native blockchains.
In the second phase, there is tokenization of real assets, similar to the creation of derived assets. In this context, banks are asking a fundamental question: on which blockchain should they place these tokenized assets?
Nazarov argues that right now, banks recognize the need to create their own blockchains to gain full control over their tokenized real assets.
Referring to banks that have created departments dedicated to digital assets, Nazarov noted that the conclusion of these departments is that they need to have a customized chain.
They do not want to pay fees to third parties for the use of an external blockchain, preferring instead to own and control their own chain.
Nazarov points out that this is the time when banks realize the importance of creating their own chains to have total control over their real tokenized assets.
Chainlink(LINK) will play a crucial role in crypto and DeFi solutions, according to Nazarov
Phase three takes place when banks begin to develop financial protocols within their proprietary chains, essentially reflecting the contemporary DeFi (Decentralized Finance) environment, but within a more rigorous and regulated framework.
At this stage, Nazarov anticipates that Chainlink will play a crucial role in providing solutions within these banking financial infrastructures.
In summary, Chainlink and Sergey Nazarov propose a proactive vision of the future of banking, in which the creation of customized blockchains will play an essential role in ensuring full control of tokenized assets in the real world and in developing innovative financial solutions within a defined regulatory framework:
“In that third phase, they will inevitably have to deal with us because we power the vast majority of DeFi. They’re going to need market data, they’re going to need identity data, they’re going to need automation, they’re going to need features. All the things we produce will need them. I know this because I have seen many projects already and the projects are basically copying the DeFi protocols that we already power.”
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