The Existing Infrastructure used by Financial institutions like Banks is Archaic, Slow, and Costly, with hardly any innovation in the past three decades.
Nine of the World's renowned Banks, including JPMorgan, Royal Bank of Scotland, Goldman Sachs and Barclays, are collaborating with New York-based financial tech firm R3 to create a new framework based on Bitcoin's Blockchain.
Yes, they are back in the game yet again, but this time officially!
Blockchain — the public and decentralized ledger technology that underpins all Bitcoin transactions has been now recognized as "the future for financial services infrastructure".
The blockchain technology is a way of keeping records by listing the owner's name with all the previous and present transaction the client was involved. It is a public ledger where a list of all the transactions ever executed is maintained.
The Banks are planning to develop and implement Blockchain-like Technology where distributed/shared ledger standards are going to replace (for better, of course) the current ledger transactions.
The idea behind such an initiative is to maintain the financial records securely without any central authority by adopting the Decentralized Blockchain technology.
The potential benefits of blockchain technology to banking institutions are almost innumerable, for example, this technological innovation is considered more safe and secure when compared to the conventional methods currently in use.
The Name of the Banks teaming up are:
- JP Morgan
- Commonwealth Bank of Australia
- Goldman Sachs
- Royal Bank of Scotland
- Credit Suisse
- State Street
Blockchain has tremendous potential to revolutionize the transaction systems used by Banks.
Blockchain is Revolutionary, Not the Bitcoins!
After coming out of this news, for banks it seems like blockchain technology is considered good but the Bitcoins still a "NO".
"These new technologies could transform how financial transactions are recorded, reconciled and reported – all with additional security, lower error rates and significant cost reductions," said Hu Liang, Senior Vice President and Head of Emerging Technologies at State Street.
Further Liang said, "R3 has the people and approach to driving this effort and increase the likelihood of successfully advancing the new technology in the financial industry."
The current rate of 1 Bitcoin (BTC) equals $230 (USD), in the recent past bitcoins were tagged as illegal currency and whoever found with the digital currency had to face severe prosecution.
The inoperability of Bitcoins was because of its usage in the conduct of illegal activities and being prime accused in triggering various cyber attacks.
This new alliance of banks will change the face of many financial activities, as the adopted bitcoin technology is supposed to save time and money by being more secure as well.
By taking the blockchain feature of bitcoins, the banks are going to prepare a separate standard. Therefore, they must bring this feature to the world only after undergoing strict testing methodology.
To know more about how the digital currency BTC operates, visit this article-PDF.