Tuesday, March 22, 2016

40 Banks Test Bitcoin Tech for Trading Bonds


Consortium of 40 Banks Test Using Blockchain

A consortium of 40 main banks comprising of Goldman Sachs and Barclays tested a way to trade fixed income assets by using the blockchain, which is a technology that tends to strengthens bitcoin in an attempt to emphasize how serious the biggest lenders in the world are regarding the technology.

R3 CEV, the financial technology firm that had brought the banks together last year to work on blockchain applications had made the announcement recently.Blockchain tends to work like a large decentralized ledger for the digital currency bitcoin, records each transaction and stores the information on a global network which cannot be tampered. But most of the experts agree that the technology does not seem close to mass adoption and is in the trial stage.

The technology could be applied to wide selection of uses and especially for financial firms; the most interesting parts would involve the clearing of trades. Experts state that the blockchain would enable a huge number of transaction settlements in a matter of minute or even in seconds together with it being very secure since each transaction tends to be recorded and is unable to be tampered. Presently some trades tend to take day in the settling process.

Smart Contract – Computer Code

Supporting this is the idea of `smart contracts, a computer code which would only perform when the terms of a contract are fulfilled. For instance, a trade may be carried out once the money from the buyer is received,all of which would be done automatically and there would not be any dispute since the same has been recorded in the blockchain.

A number of distributed ledger companies had worked with the banks for this test namely Chain, Eris Industries, Ethereum, IBM and Intel. The institutions had done an assessment of each smart contraction solution to trade fixed income of the company.

David Rutter, R3 CEO and a former executive at London based electronic brokerage ICAP had stated in a statement that `this development tends to support the belief of R3 that close collaboration among global financial institutions and technology providers will create significant momentum behind the adoption of distributed ledger solutions across the industry. R3’s website mentioned that its mission is `building and empowering the next generation of global financial services technology’.

Blockchain – Probable Disruptive Force in Finance

These technologies represent a new frontier of innovation and would dramatically improve the way the financial services industry operates, in the same way as the advent of electronic trading decades ago delivered huge advancement in efficiency, transparency, scalability and security’.Banks do not seem to be the only ones interested in technology. Nasdaq used the blockchain, last month to enable international resident of Estonia to vote in shareholder meeting while they were abroad and tested the blockchain for trading shares.

Bitcoin could have risen to more than 35% this year, though it is the fundamental technology behind the crypto currency which is moving the world’s main banks. Blockchain has been indicated as a probable disruptive force in finance by main institutions which tend to claim bitcoin as just the opening act in something bigger.


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