The quiet rewiring of the world’s financial plumbing
Financial markets are on the verge of their biggest infrastructure change since trading moved from paper to screens. Yet many people still associate…
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Financial markets are on the verge of their biggest infrastructure change since trading moved from paper to screens. Yet many people still associate blockchain solely with cryptocurrencies.
Bitcoin introduced blockchain to the world and the crypto market has attracted enormous attention since. But one of the biggest misconceptions is that blockchain and cryptocurrency are the same thing. They are not.
Cryptocurrencies are one application of blockchain. A blockchain is digital infrastructure that allows information and value to be recorded, validated and transferred securely and efficiently. While cryptocurrencies have captured the headlines, the bigger opportunity may lie in how the technology can improve the plumbing of the global financial system.
The distinction between private permissioned blockchains and public permissionless ones matters, too. Private networks may improve efficiency, but they often replicate the features of the systems they are meant to replace. The greatest potential lies in public networks, where transparency, interoperability and shared infrastructure can unlock new ways of transferring value and connecting markets.
Interest is growing globally in tokenisation – representing real-world assets such as cash, bonds, shares and funds as digital tokens on a blockchain. What was once a niche innovation is now attracting the world’s largest financial institutions. Asset managers including BlackRock and Franklin Templeton have launched tokenised investment products, while the Depository Trust & Clearing Corporation is developing tokenised market infrastructure.
The potential benefits are significant: faster settlement, automated administration and markets made more efficient through programmable smart contracts.
Stablecoins are becoming an important part of this evolution. Designed to hold a stable value by referencing an underlying currency, they are increasingly used to move value across blockchain networks. South Africa has already seen a wave of rand-pegged issuance, with ZARU, ZARP and ZAR Supercoin all now in the market. For businesses, this can mean faster cross-border payments, better liquidity management and less settlement friction. For individuals, it can mean lower transaction costs and improved access to financial services.
Read: How tokenisation is rewiring global finance – and why South Africa can’t sit it out
Tokenisation also addresses longstanding inefficiencies in capital markets. Many transactions still rely on multiple intermediaries, manual reconciliation and settlement cycles that take days to complete. Combining digital assets with smart contracts allows certain steps to execute automatically once predefined conditions are met, cutting complexity and cost while improving transparency.
South Africa should be paying close attention. The local financial system is sophisticated, well regulated and globally respected, yet many of its processes remain costly and dependent on legacy infrastructure. B…