Some of the biggest investment banks are planning to consider Bitcoin blockchain technology in their banking process. The blockchain technology logs people who spend virtual coins in a computer equivalent of a ledger.
According to some reports, the basic technology that supports Bitcoin virtual currency could possibly be used by nine large banks. These include Barclays, Goldman Sachs, JP Morgan, State Street, UBS, Royal Bank of Scotland, Credit Suisse, BBVA, and Commonwealth Bank of Australia.
The banks want the blockchain technology method to make deals more transparent and fraud more difficult as well as speed up trading systems. In addition, this is to expand its use in the finance industry. The project to test this technology is led by a New York-based group of trading and technology executives called, R3CEV, which has signed the nine banks mentioned up to the initiative.
R3CEV desires to establish consistent standards and protocols, while connecting bank collaboration on design of prototypes, research, and experimentation to build a network effect. All data are analyzed, matched, and stored outside the bank's firewalls.
David Rutter, the Chief Executive Officer of R3CEV, said that "This partnership signals the first significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system." The banks will also back R3CEV with seed capital, collectively contributing several millions of dollars, as reported by The Financial Times.
Blockchain has the potential to overhaul the sprawling and complicated network of bank payments and settlements. This technology would be a great help to instantly update payment ledgers in multiple locations without a single, centralized authority.
This new initiative is an exciting milestone for the financial sector and might be one of the largest joint research efforts in the field. However, there is no timetable given yet when technical trials of the Bitcoin blockchain technology might start.
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