Steve Chiavarone, a portfolio manager at Federated Investors, a U.S investment firm which handles over $364 billion in customer assets, says that cryptocurrency might drive the fourth industrial revolution as big banks and large-scale investors are swarming towards the industry.
“When you think about it from an enterprise perspective, it has the ability to replace reconciliation, which is expensive and requires back office, time, and paperwork, with more instantaneous verification. What that means is, companies can have more efficient supply chains. They can cut their back and middle office costs and that will allow businesses to flow more efficiently and will allow cost to be cut and that savings to be passed along. We think blockchain will one of five key technologies along with automation, robotics, AI, and the Internet of Things,” Chiavarone told CNBC in an interview.
Large-scale institutional investments
Major banks such as Goldman Sachs, JP Morgan, Bank of America and others provide financial services to conglomerates and large enterprises. Now, to sustain their chain supply and manage other operations, these firms take services of third-party providers and spend huge amounts of money on quarterly basis.
According to Chiavarone, major banks are investing heavily in blockchain and cryptocurrency to meet the growing demands of their clients. Bitcoin was the first cryptocurrency and was initially the only way to access blockchain technology, however with time, a lot of cryptocurrencies and blockchain networks have been built which are being widely explored by financial firms.
“A lot of investors went into bitcoin first because it was the first way to access blockchain. Big banks are investing in this heavily. Bank of America boasted at Davos that they’re investing the most,” he added.
Now, blockchain startups like Bluzelle have already started building efficient blockchain networks for conglomerates such as Microsoft, HSBC, MUFG and KPMG.
Chiavarone believes that if startups continue helping big institutions and succeed in replacing offices, extensive labor and expensive chain supply maintenance, the blockchain technology will surely lead the next industrial revolution.
“Any company that runs supply chains can benefit from blockchain technology and it is some of the tech names that underlie that kind of technology. Whether it be Nvidia or Intel, or any kind of company that’s around processing power that enables blockchain verification or the beneficiaries of it [are good investments],” he said, noting that it would be a smart strategy to invest in companies that may use the blockchain tech.
Right now investment firms such as Federated Investors are looking into the stocks of large-scale conglomerates like Nvidia and Intel that could merely benefit from blockchain technology.
The growth of the whole blockchain sector which includes, blockchain’s networks, startups and cryptocurrency businesses, depends upon its adoption by major banks and financial firms which could make huge investments and help the industry increase in value.