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.
The blockchain holds huge promise for the future of the financial industry, with the world’s leading organizations developing solutions based on the bitcoin technology.
The financial industry players across the globe are showing growing interest in blockchain, a distributed ledger that powers the virtual currency. The technology is likely to disrupt the existing financial services by bringing fundamental changes to the way the industry works.
In addition to higher security and transparency, the blockchain eliminates the need for intermediaries, what significantly reduces transaction costs.
It is evident that the technology holds huge potential, which has already been recognized by a number of financial institutions. Some of the world’s leading banks are now investigating the technology and how it can be integrated within their systems.
“Blockchain is a bit like gluten,” said Tim Swanson, director for market research at R3CEV, the company which has recently launched a blockchain project supported by the globe’s major banks. “Everyone is talking about it but no one knows what it is in great detail,” Swanson told Financial Times.
“People have to deliver something within the next 12 to 18 months or they will go back to their existing technology vendors,” he said, adding it’s necessary to support the technology and develop its use cases so that it won’t disappear.
“In theory it could bring benefits. But if we’re not rigorous in issues like switching costs and all the ‘boring stuff’, it won’t go anywhere.”
In September, R3CEV established a consortium of companies that will combine their knowledge to develop various blockchain applications. The innovations startup has already joined with the world’s leading banks, including Morgan Stanley, UBS, Citi, Barclays, Deutsche Bank, HSBC, Bank of America, J.P. Morgan and Royal Bank of Scotland. Besides, the initiative received support from bitcoin core developer Mike Hearn and fincancial cryptographer Ian Grigg.
One of the project’s members, UBS, is currently working with Clearmatics Technologies to develop a new digital settlement coin based on the digital currency. The currency is expected to accelerate the trade of assets and lower operational risks.
The project has gained support from such investors as Route 66 Ventures LLC, Nyca Partners and Tellurian Capital Management LLP, what demonstrates the rising interest in the technology underlying bitcoin.
A few days ago, one of the globe’s largest banking companies, Goldman Sachs, announced that it created its own digital currency for trading securities, bonds and other financial assets that is aimed at facilitating the trade of stocks.
The chief information officer of the Commonwealth Bank of Australia, David Whiteing, admitted the blockchain could revolutionize the financial sector, while speaking at the opening of a blockchain workshop in Sydney.
“It is clearly … faster, cheaper and more transparent than some of the existing practices we have today,” he said. “But more importantly than that, as we’ve looked at this and explored and experimented, it goes way beyond just banking, and from our perspective, that’s an exciting opportunity as well.”
He noted the bank had been exploring the technology and later concluded that it “presents a very exciting set of opportunities and protocols for how we might think about the business going forward”.