Banks and BLOCKCHAIN: The future of the BankChain
3 January 2009, the first bitcoin block was mined, and a potentially revolutionary technology was born.
The revolutionary technology was not bitcoin itself, but a part of what enables bitcoin to operate – the blockchain.
The blockchain is a transaction database containing every transaction ever executed. It is currently utilised in bitcoin to keep track of the amount of bitcoin associated with each user’s public key but the potential of the blockchain extends far beyond currency.
Having a distributed and secure database enables live monitoring of ownership of any item that is tracked within the database.
Currently bitcoin is the most well known technology to use the blockchain, but bitcoin is not designed to manage multiple assests or tokens, which is why blockchain technology has not already revolutionised many industries.
Work is being done on projects such as the ethereum project to produce a platform that is able to manage many different tokens and therefore allow the power of the blockchain to be unleashed upon every major industry. The first 3 main industries that are being targeted by the developers of the ethereum project are:
- Contracts: decentralized logic
- Swarm: decentralized storage
- Whisper: decentralized messaging
The ethereum project is opensource and free, with the developers not taking a percentage cut or charging a fee for use of the platform. This means that the code can be verified by any company or organisation interested in using the technology. Furthermore it lowers the barriers to entry in developing a blockchain based system to anyone that can learn the core programming language that will power all ethereum projects.
As time marches on, the potential that blockchain technology offers is being increasingly recognized, especially in the banking sector.
As a result banks are showing strong signals of wanting to develop and integrate banking blockchains. These so called bankchains will lower the operating costs of banks but are yet to demonstrate advantages over opensource and publicly available blockchains. Only time can tell weather the banks adoption of this technology will succeed in helping them to fend off opensource, fee free alternatives.
“2015 has turned blockchain into something the industry has to live with. It is no longer a choice anymore.” – visa
“the Blockchain Could Disrupt … Everything” – goldmansachs
“Decentralised systems, such as the blockchain protocol, threaten to disintermediate almost every process in financial services” – world economic forum