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Opinion | What’s at stake in global markets as Google ventures into blockchain
Google may become the largest blockchain player. Without global regulation, the dominant technology could set rules worldwide by default
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Google’s recently announced blockchain for financial institutions is the latest move in the battle to dominate the infrastructure for processing global transactions in bitcoin, digitised currency, stablecoins and tokenised assets.
While government leaders are obsessed with semiconductors, the deeper and more critical issue could be the type of blockchain that will prevail in capital markets. The winner will shape whether financial risks shrink through efficiency and transparency or expand.
With that future comes questions about the optimal balance between decentralisation (spreading bits of a transaction across many participants) and centralisation (having a dominant player that standardises operations).
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A blockchain is a digital ledger shared across a network of users rather than kept in one central location. Each transaction is recorded in a “block” which is linked to others in chronological order, forming a “chain”. Since every authorised participant in the chain holds a copy of the ledger, it is extremely difficult to alter past records without majority agreement.
Blockchain provides greater transparency with its real-time audit features, fostering trust and accountability. It reduces the need for banks, clearing houses or other intermediaries, lowering transaction costs. In contrast, traditional paper-based processes are time-consuming, prone to human error and can require third-party mediation.
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Barriers to entry for issuers and investors are low while friction – meaning obstacles preventing immediate transactions – is reduced along with markets’ operational costs. The machine-readable digital assets make AI-guided portfolio management easier.
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