Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.
More and more financial organizations are starting to explore the potential use cases of the blockchain technology, recognizing its numerous benefits. Many in the industry believe the distributed public ledger, which underlies the digital currency, could transform the way financial services are realized.
According to the research company Aite Group, banks will spend about $400 million on the technology behind bitcoin by 2019. This year, financial firms invested $75 million into the blockchain, what is twice the sum they invested in 2014.
“Bitcoin has been the most visible application of the blockchain, but it and other cryptocurrencies are a tiny fraction of the technology’s potential applications,” says Ben Knieff, senior analyst on the Retail Banking & Payments team. “Many technical details and variations signify different implementations, all of which could mean potentially disruptive applications for these technologies.”
There is a large number of companies that are convinced the technology could significantly improve traditional payment system and accelerate settlement process. Besides, blockchain will help financial institutions to cut their spending.
“Blockchain’s inherent cryptographic nature makes every transaction more transparent, secure, and irreversible, mitigating clearing and settlement risk,” the Aite Group said. However, it is unknown how blockchain developers will deal with financial services regulation, which is known to be quite strict in the US.
“Unless blockchain enthusiasts understand these inherent regulatory restrictions, massive adoption of blockchain technology within the financial services industry will not be possible,” the Aite Group added.
Currently, some of the Wall Street giants are investigating the technology as well. Some of the world’s leading banks, including Bank of America, Citi, HSBC, Barclays, Morgan Stanley, National Australia Bank and UBS, have recently joined a project on exploring and developing blockchain applications. The initiative was launched by the New York-based innovation startup R3, which expects to combine the expertise of the participating banks to create distributed ledger technologies that will benefit the financial industry.
Meanwhile, a group of the major financial and technology companies, such as JP Morgan, the London Stock Exchange Group, IBM, Cisco and Wells Fargo, have teamed up to develop the new distributed ledger technology.
Called Open Ledger Project, the technology is anticipated to offer higher level of transparency and automation. It could be applied across a range of financial markets and stock exchanges.
According to the consultancy company McKinsey, blockchain could achieve widespread adoption, given close cooperation among the industry players. Still, the agency said it won’t happen soon, as the technology is likely to be used in specific spheres.
A couple of days ago it was reported that The Bank of America has filed a patent on the ability to control the blockchain system in an attempt to detect suspicious activity.
The filing reads that the bank will guard such data, as IP addresses, public keys from the locations of users and third parties in multisignature transactions. Besides, it will monitor users’ locations, wallet usage and transaction history.