fb

Last week saw an upset for investors as the Bank of England’s Clearing House Automated Payment System (Chaps) experienced a sudden blackout. Though the problem has since been traced to an outage at the Swift international cross-border payments system, several hours of inaccessibility have profoundly impacted banking transactions and the housing market. Could a commitment to decentralisation and blockchain technology have prevented this costly error?

At Concept Capital Group, we believe in harnessing the technology of tomorrow to solve contemporary social, economic and administrative obstacles to a better housing market. As a market projected to reach a global value of $1,000 trillion by 2032, blockchain technology shows a vast potential for simplifying and reinforcing the integrity of banking. By extension, it has the potential to make an investment in a tangible real asset a smoother, more transparent process within the UK housing market.

For a comprehensive look at how the blockchain can promote a more stable housing market while preventing the threat of future outages and financial losses, this week’s blog could provide the investor insights you need.

Why Banking Needs Decentralisation

This is not the first time the Bank of England has struggled with Chaps. In August 2023, the system experienced a similar outage that rendered it non-functional for almost six hours. These disruptions can have wide-spanning implications for the housing market, as the Swift payments system behind Chaps is responsible for many of the high-value transfers used in housing completions, with an average of 4,000 housing transactions being processed through it a day. In total, the Chaps system alone processes 51 million payments a year, averaging £363 billion worth of transactions every day in June 2023. As such, even something as seemingly minor as a short-lived outage can have a dramatic impact on global markets, causing a ripple effect that can cost investors millions.

The question of whether the operational resilience of existing banking systems is enough to weather other mishaps of this nature has been a hot-button issue in financial markets in recent years. Fintech experts argue that the current payment infrastructure of the UK is outdated, which may require a complete overhaul to fix. Among the many suggestions proposed by these experts was the introduction of blockchain technology as both a decentralised alternative to traditional banking and a supplement to existing systems used for processing transactions.

With the relatively recent global reliance on digital assets and infrastructure for navigating financial markets, introducing systems that can support this new approach to high-value transactions has been an iterative process. With global investment in blockchain technology reaching $1 billion in 2017, however, there is a clear interest in the fintech space in supporting blockchains and the advantages they offer – whether that entails a complete restructuring of current banking and transactional systems or not.

What is Blockchain Technology?

It can be difficult for the average person to separate the concept of blockchain technology from cryptocurrency, for better or worse. The actual utility of blockchains stretches far beyond the crypto market, however.

IBM defines a blockchain as a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a network. In a strictly financial context, blockchains maintain a secure and decentralised record of the transactions conducted by various stakeholders within a system. Blockchains are unique in their transparency and immutability, as they allow everyone within a system to verify the irreversible, undeniable details of every transaction that takes place in it. This not only negates the need for third-party fact-checkers to verify the legitimacy of the transactions but also ensures everyone at every level of the system has access to the same information as everyone else.

Bringing Blockchain Technology into Banking and Housing

Banking

Banks have already begun exploring cryptocurrency and blockchains as a potential solution for processing and managing transactions. The Bank of England introduced its RTGS Renewal Programme in 2017, marking its goal of upgrading its existing Real-Time Growth Settlement (RTGS) system to reflect new technologies like blockchains and their potential for streamlining financial processes. Similarly, the EU passed the Digital Operational Resilience Act (DORA) in January 2023, with plans to bring its terms into full effect as of January 2025. The DORA will use technology like the blockchain to regulate and strengthen the IT security of financial entities like banks and investment firms to ensure the resilience of Europe’s financial sector in the event of widespread operational disruption.

Since the popularisation of cryptocurrency and blockchain technology in 2012, regulatory bodies around the world have been working to introduce methods for safely regulating their use. In Europe, the 2023 Markets in Crypto-Assets Regulation (MiCA) bill established a region-wide set of rules for crypto-assets, while the UK’s HMT Crypto Asset Consultation similarly saw the country commit to building a regulatory environment for the safe innovation and distribution of crypto-assets.

According to a cryptocurrency report by Natwest, an estimated 90 central banks worldwide are exploring the concept of Central Bank Digital Currencies (CBDC). These will allow them to use the blockchain to streamline the implementation of monetary and fiscal policies while reducing the risk associated with digital assets. Essentially serving as bank-owned cryptocurrencies, CBDCs can promote trust and widespread adoption of blockchain technology while avoiding the volatility of other cryptocurrencies. This process – known as ‘tokenisation’ – will create new efficiencies in global banking by lowering operational costs, mitigating the risk of asset exchanges and promoting liquidity across various asset types by readily converting distinct currencies into singular, widely recognised CBDCs.

The Housing Market

According to Forbes, blockchain platforms associated with real estate are uniquely positioned to improve the speed and safety of real estate transactions while mitigating risk to all parties. As a visualisation tool for detailing the status of properties and granting housing market stakeholders ready access to any deeds or history kept on record, blockchain technology can serve as a ready source of information that reduces the need for intermediaries.

The use of blockchain-dependent smart contracts may also support the interests of housing market stakeholders. The programmable nature of smart contracts could allow asset and financial transfers to be carried out in a highly automated way, ensuring all parties involved are automatically clued in and paid out whenever a housing completion takes place. These same contracts could also allow for fractional ownership in real estate, allowing those who lack the funding to secure homes on their own to purchase properties in shares. This could increase both the accessibility of tangible real asset investment opportunities and the liquidity of real estate assets in the future.

According to an article by PwC, the widespread adoption of blockchain technology into the real estate sector could reduce the cost of processes like maintenance and certification. Although the implementation of blockchains is still in its nascent stages, the article confirms that Sweden is already working on introducing a blockchain technology-based digital land register that could significantly improve the accessibility of records to housing market stakeholders of all varieties.

The Future of the Blockchain with Concept Capital Group

Widespread adoption of blockchain technology into the day-to-day processes of banks and the housing market is still on the distant horizon. At Concept Capital Group, however, we are already developing innovative ways to use the blockchain to facilitate new, tangible real asset investment and diversification opportunities for our clients. As we expand our range of asset types and packages, the blockchain will play an essential role in developing alternative products through which investors can reliably grow and manage their wealth.    

For more information on the blockchain, cryptocurrency and investing with Concept Capital Group, book a call with our team today.

Concept Capital Group

Latest Posts

Our Products

Our Modular Homes

Our modular homes are built to the British Standard Institution, BS 3632. This specification allows for year-round residential living and are designed to meet the latest EPC ratings.

Request a call back

Fill in the form below to request a call back from one of our team.

Claim Your Free Investor Guide

We will e-mail you to explain the following:

  1. Asset specifications
  2. How to get 10.75% return
  3. Investment period & exit options
  4. Asset insurance

If you have specific instructions or would like to make a purchase, please call us on 020 8138 1888