There has been a lot buzz going around blockchain lately. Debates arise on how to actually adapt the new technology and how to develop new disrupting propositions. Especially for FSI the new technology is of significant importance, as it creates transparency to financial transactions, lowers the barrier to entry the market, and can cut out middlemen. Banks are joining forces to create frameworks for using blockchain technology as they ‘feel’ that this technology could disrupt the total industry and beyond.
What is a blockchain?
In his original Bitcoin white paper, Satoshi Nakamoto defined an electronic coin - the Bitcoin - as "a chain of digital signatures" known as the 'blockchain'[1]. The blockchain enables each coin owner to transfer an amount of currency directly to any other party connected to the same network without the need for a financial institution to mediate the exchange.
Blockchain applications in banking
A recent article from Let's Talk Payments lists 26 separate banks currently exploring the use of blockchain technology for payments processing[2]. R3CEV, the New york start-up, says that it is working with 42 banks to explore a common set of standards and best practices with a view to creating commercial applications using a blockchain[3].This doesn't sound like an industry on the ropes. In fact, the race to develop applications highlights a sector-wide desire for change in traditional financial systems. In this fast-moving environment, no one wants to be left behind.The thinking around blockchain concepts to facilitate the exchange of money is well-established. Indeed, this is the original use-case for digital currencies like Bitcoin. However, there are further opportunities for banks to use the blockchain technology to improve other services and compliance activities less likely to be subject to disintermediation.
Download the report 'Blockchain - Enigma. Paradox. Opportunity'
To get a better understanding of what the blockchain technology is and how it could change our world, please download the full report 'Blockchain - Enigma. Paradox. Opportunity' and read more about:
- How a blockchain works
- The Internet of Value-Exchange
- The key challenges
- From vision to reality