Banks in Partnership to Form Blockchain
According to reports, nine of the world’s biggest banks which include Goldman Sachs as well as Barclays have come together with New York based financial tech firm R3 in order to develop a structure in utilising blockchain technology in the market.
For the first time banks have now joined forces to work on a shared way in which the technology that helpsbitcoin a Web based cryptocurency couldbe utilised in finance. Interest in blockchain has increased in the past few years and has already attracted major investments from many important banks which would be saving them money by making their operation quicker, efficient and more translucent.
The latest project which is the outcome of over a year’s worth of consultations with the R3, the banks as well as other members of the financial industry, would be led by R3 CEO David Rutter, earlier CEO of electronic trading at ICAP Electronic Trading which is one of the world’s largest interdealer brokers.
Rutter had informed Reuters recently that they had several round tables to consider in depth what the possible implications of the blockchain would be and what it could probably do in order to save money and time as well as to create an improved paradigm for the world of Wall Street and finance.
Function as Huge Decentralized Ledger
Some of those who have signed up for the initiative are J P Morgan, UBS, State Street, Royal Bank of Scotland, BBVA and Commonwealth Bank of Australia and Credit Suisse.
Blockchain tends to function as a huge decentralized ledger of all bitcoin transaction made which has been verified and shared through a global network of computers.
Hence it tends to be effectively tamper-proof. A team from Bank of England have been dedicated to it calling it a `key technological innovation’. Data that can be safeguarded by using the technology is not limited to bitcoin transactions.
Two parties could utilise it for the exchange of any other information quickly as well as without the need of a third party to verify the same. Rutter has mentioned that the earlier focus would be to approve on underlying architecture, however it had not been certain whether it would be supported by bitcoin’s blockchain or another one like one which is being built by Ethereum, offering additional features than the initial bitcoin technology.
Technologies - Transform Financial Transactions
He further added that once the same is agreed on, the first use of the technology could be the issuance of commercial paper on the blockchain.
He is of the belief that these technologies would probably be post-trade and the savings would be in the settlement side, in post-trade in issuance though not in exchange trading of OTC trading, in the near future. He also mentioned that R3 will soon be announcing a few more banks that would be joining the banks.
Hu Liang, Senior Vice President as well as the head of emerging technologies at State Street, had mentioned in a statement that these new technologies could transform how financial transactions are recorded, reconciled as well as reported, with all additional security, lower error rates and significant cost reductions.