Bitcoin and Blockchain Technology Attract Banks and Governments

The world’s most famous banks and instituitions go public with their interest in Bitcoin and Blockchain technology.

Photo: Rie/Flickr

Photo: Rie/Flickr

According to IBTimes UK and it’s sources, BNP Paribas, France’s biggest bank and financial services company headquartered in Paris, has been doing “beta testing” involving digital currency and one of the bank’s currency funds in Paris, with a view to making an announcement about that in the near future.

“We are looking at blockchain technology and how it can be applied to post trade processes to make things faster and potentially cheaper but it’s all very much projects and it’s all in testing. It’s nothing live,” said a spokeswoman for BNP Paribas.

BNP Paribas caused some controversy earlier this month when the bank’s analyst Johann Palychata said that Bitcoin when applied to securities trading could make sections of the industry “redundant”. He wrote in the company’s magazine Quintessence that the Blockchain technology is transformative and “should be considered as invention like the steam or combustion engine”.

Meanwhile, France’s third largest bank Société Générale, posted a job listing on 2nd July for an “IT developer on bitcoin, blockchains and cryptocurrencies”.

According to the post, the 12-month contract would entail research and development involving digital currencies and the blockchain. Though no specifics were outlined, the post suggests that the bank is looking to develop in-house software, citing “prototype programming”.

“The type of position that is offered is at the forefront of SocGen’s attempt at anticipating sweeping changes in the banking sector caused by FinTech and adapt to it,” the post wrote.

As known, the Greek crisis caused a revival of interest in Bitcoin. When capital controls were imposed, the Greeks exchanged Euros for Bitcoins, and then Bitcoins for US dollar. The “normal” volume was around 10,000-12,000 Bitcoin transactions per day. Hovewer, it increased to over 120,000 transactions per day in June-July. The price rose from $220 per Bitcoin on June 1, to $285 on July 24. That is, 29 per cent gain against the dollar in seven weeks. In euros, Bitcoin rose from euro 213 on June 1, to euro 260 (July 24), a rise of 22 per cent.

Moreover, the Bank of England has recently stated that central banks consider implementing “hybrid systems” involving distributed ledger technology of the type currently used to record Bitcoin transactions.

“There is more than one way in which a distributed ledger system can work, and remuneration would have to be designed in such a way as to incentivise honest participation in the system without leading to socially inefficient over-investment in transaction verification,” the Bank of England stated.

Representatives of the Bank of England said that further research would also be required to devise a system that could utilize distributed ledger technology without compromising a central bank’s ability to control its currency and secure the system against systemic attack.

Banks could make use of the blockchain instead of having to rely on clearing houses to verify transactions. The blockchain system provides better efficiency and transparency compared to the regular approach.

Furthermore, it should not go unmentioned that Tunisia’s Ministry of Technologies and Digital Economy is reportedly seeking a Bitcoin intern to learn about Bitcoin and Blockchain technology. The government requires the appointed personnel to undertake specific FinTech research related to Bitcoin and Blockchain technology and study its impact on the nation’s existing banking infrastructure. There is a possibility of Tunisian government using the Bitcoin technology for a number of purposes — ranging from redesigning its banking infrastructure to collecting taxes.

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