BitCoins have always been the epitome of digital financial handling, with the user generated and traded currency being used worldwide easily and safely since its beginnings in 2008. Now, a conglomerate of big banks are considering adopting some of the technology behind BitCoin for use as part of regular commercial financial transactions using physical currencies.
Banks considering the adoption include big names such as JPMorgan Chase & Co. and Goldman Sachs as well as Barclays. The idea is to take technology used in BitCoin, and, with the help of financial startup R3, to reverse engineer or adopt the technologies into the normal everyday financial system. Work on the overhaul is speculated to begin over the next few years.
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Of course, the big star feature of BitCoin which a lot of companies have been looking into adapting is a process known as blockchain. When a BitCoin transfer is made the information is added to the blockchain public ledger. It’s like an activity log that’s accessible to users and records global transactions on the website at blockchain.info.
The idea of a public ledger, and also the technology behind it, is attractive to banks as the data created is important for tracking movement of assets and finances between companies – creating a permanent record of transactions for anyone to use. This would theoretically revolutionize banking by simplifying tracking ownership and trading financial items, including stock, bonds and loans.
A mainstream financial blockchain could change the way financial workers carry out their day to day activities – it doesn’t mean as much for the rest of us though, unless you need to verify the ownership of some commodity for your own personal reasons. I guess it could also make bankers work for us a bit quicker in the long run too.
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Testing and planning phases for implementing blockchain are being handled by previously mentioned startup R3, who have come up with a model in order to unite squabbling banks under one common testing initiative. Kevin Hanley of Royal Bank of Scotland explained that “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,”
A more united effort by R3 will hopefully add BitCoin’s blockchain to big banks sometime in the near future, or at least something similar. We’ll relay more news on the topic as it comes in.
Blockchain in action @ Blockchain.info