The globe’s leading banks, including JP Morgan, Goldman Sachs and Barclays, may integrate the blockchain in the near future, as they have already started testing the system. According to the banks, the key benefits of using the technology behind bitcoin are a low risk of fraud and high level of transparency.
The banks have entered into a partnership with New York-based financial innovation firm, called R3CEV, to help it develop the same technologies that underpin the blockchain in order to broaden its usage among financial institutions.
“Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable,” R3CEV CEO David Rutter in a press release.
“If you’re looking to introduce applications with distributed ledger technologies to improve the financial markets, you can’t have each participant working to a different pattern. What R3 is doing is bringing a consensus which could establish common standards.”Christopher Murphy, rates and credit at UBS told The Financial Times.
The banks will then decide whether the system can be utilized and then carry out the testing of the technology. It has not been decided whether they would apply the blockchain technology or another one. The potential applications of the blockchain include tracking ownerships or asset transactions between two people.
Kevin Hanley, Director of Design at Royal Bank of Scotland, commented: “The collaborative model we’ve established with R3 and the other banks is a very effective way to deliver robust shared ledger solutions to the financial services sector. Right now you’re seeing significant money and time being spent on exploration of these technologies in a fractured way that lacks the strategic, coordinated vision so critical to timely success. The R3 model is changing the game.”
State Street, Royal Bank of Scotland, Credit Suisse, UBS, Commonwealth Bank of Australia and BBVA are among the other banks that consider incorporating the blockchain. More banks are also anticipated to support the initiative.
A blockchain is a shared public ledger of all digital currency transactions implemented in the bitcoin network. The system forms the basis of some virtual currencies, including dogecoin, ethereum and bitcoin. Despite the advantages of the blockchain, it was earlier involved in a number of attacks by hackers, who used the drawbacks of exchanges or virtual wallets holding the coins.
According to The Financial Times, some banks, including UBS and Barclays, are working on the development of their own blockchain systems and collaborating with other startups.
The financial sector has previously expressed a strong interest in the blockchain. Such banks as the Australia and New Zealand Banking Group and Westpac Banking Corporation unveiled that they were testing systems similar to the blockchain. Meantime, Barclays became the first UK leading bank to accept payments in digital currency. It is currently working with several companies to investigate the technology.