Let’s start at the beginning- Blockchain. I’m sure you Bitcoin enthusiasts already know all about it, but let’s do a quick refresher course. Blockchain is the distributed ledger in which Bitcoin transactions are tracked and recorded.
Each transaction is added to a long string of code, the Blockchain. Since it uses open ledger technology anyone can look at all actions that have taken place, adding a certain transparency to the system. Using the Blockchain technology you also cut out the necessity of a third party, making each transaction quick, easy, cheap and secure.
With all the pros of this technology, people started to look into it to see where else it could be taken. Nine of the world’s largest banks (Barclays, BBVA, Commonwealth Bank of Australia, JPMorgan, UBS, Royal Bank of Scotland, State Street and Credit Suisse) have partnered up to figure out how the Blockchain technology can be used for commercial applications in banks and financial firms. Leading this partnership is R3, a startup headed by David Rutter.
Rutter said “The lightbulb went off that distributed ledger technology could be to finance what the internet was to media”. It could be used for “…everything from issuance, to clearing and settlement and smart contracts, where the code is the contract and it saves on back office costs.”
To name a few of the problems banks are having: huge fees on deposit interest, large spreads on currency conversions and delays in transfers. Banks think using Blockchain technology will allow them to create smart contracts for money transfers and loans, making it more efficient and more profitable.
We already see businesses like IBM using this technology, there are talks of even the Government finding its uses. Turns out we may not have as many Bitcoin Believers as we do Blockchain Believers, but either way it seems we have just scratched the surface of where the world can take Satoshi Nakamoto’s brilliant ideas.