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Banks increasingly rely on blockchain

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Banks increasingly rely on blockchain

A WSJ report explains how traditional banks, while not yet embracing cryptocurrencies, are nevertheless using blockchain technology for their operations.

Banks and Blockchain, between traditional finance and DeFi

In September 2017, Jamie DimonCEO of JPMorgan Chase, derided Bitcoin:

“It’s worse than tulip bulbs. It’s not going to end well. Someone is going to get killed.

The statement refers to the Dutch tulip market bubble of the 17th century.

Lloyd BlankfeinSenior Chairman of Goldman Sachs, had, in turn, echoed him by saying:

“Something that moves at 20% [overnight] does not look like a currency. It is a vehicle to perpetrate fraud.

This well represents what the general opinion of the big investment banks was towards cryptocurrencies, which were considered a scam or otherwise a purely speculative and transitory phenomenon.

This opinion has changed over time, and now the banks, although they still look world of cryptocurrencies with some suspicion, have nevertheless changed their attitude. But what, however, does not seem to have changed is the propensity of banks themselves to watch with increasing interest the technology behind cryptocurrencies, namely blockchain.

In a very recent report, The Wall Street Journal explained how major investment banks are turning to blockchain to to evolve their services and make transactions faster, cheaper and more secure. From what we can tell from the report, payments are the first and foremost use case of blockchain for banking and finance.

When it comes to blockchain finance, central and commercial banks around the world are now benefit this new payment technology processing and potential issuance of their own digital currencies.

Blockchain enables faster, more transparent and simpler transactions, which is why banks are increasingly implementing this technology in their payment systems.

bank of operations blockchain
Banks are getting closer and closer to the blockchain

The benefits and potential of blockchain

But Blockchain is increasingly being used, even experimentally, in the traditional stock market process, which often requires lengthy procedures. However, the decentralized nature of blockchain technology in banking can remove all those unnecessary intermediaries and allow transactions to take place on computers around the world.

No more dedicated servers united in an interconnected network. Without forgetting all that concerns the customer identification treat. Blockchain could, in fact, be a very important resource for banks to reduce costs related to human error and bureaucracy. Some, by the way, wonder why it was not adopted earlier than traditional banking.

Wall Street Journal columnist Paul Vignathe author of blockchain reportStates:

“I think what’s interesting is that it’s actually not a, why are they doing this now? It’s more like, why do they still do it? In fact, they have been on this path for several years now. They experimented with the blockchains, technology, and concepts behind Bitcoin and other cryptocurrencies. The main reason they do this is because it potentially provides an advantage for their business. »

The major banks involved

Also according to the long and detailed report by the American economic newspaper, the bank that seems to be most focused on blockchain technology so far is Goldman Sachs, but JP Morgan and loyalty also seem to be betting heavily on implementing technology in their processes.

Most major banks and financial institutions have some sort of dedicated digital asset group, working to figure out how to use the technology.

JP Morgan, for example, which is specifically mentioned by Vigna in his article, has a platform based on blockchain concepts called Onyx, which they have been using for a few years now. They also have a small office service that does real transactions, which would have already processed $350 billion transaction value.

Goldman Sachson the other hand, would have issued bonds via the blockchain, up to 200 million dollars with the European Investment Bank.


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