Banks like to talk about blockchain, but none wants to be the first to actually use it

By September 29, 2016Bitcoin Business

Daniel McMahon/@cyclingreporter There are more than 50 major banks clamoring to adopt the technology known as blockchain – the underpinnings of bitcoin – but none of them wants to be the first. Goldman Sachs, JPMorganChase, and Bank of America are among the big names that have signed onto R3, an industry-wide body trying to bring blockchain technology to the finance world. They all expect blockchain to simplify and streamline transactions in a way that reduces costs, increases security, and boost profits by making markets more efficient. But blockchain technology only works effectively if there is an industry wide standard and all the banks are using it. For the first bank to adopt this digital system and overhaul existing infrastructure, it could mean a risky and expensive investment, and that bank would then have to hope others follow suit. That’s why this is one of the few cutting edge technologies that is generating a lot of talk, but not a lot of action among banks. While they are dabbling in the technology, attending conferences and joining R3, no one bank is actually taking the lead, going from proofs of concept to actually using it in the real world. "The network effect here is important," said Fredrik Voss, VP of Blockchain Innovation at Nasdaq, at the IMN distributed ledger conference in Manhattan. The more companies use blockchain, the more useful and valuable it is. But because banks are reluctant to make the initial investments in blockchain, it may be up to technology companies to lead the charge, said Grainne McNamara, co-leader of PwC’s blockchain for financial services practice. "They have two main reasons for doing this," McNamara said. "One is to drive their market share in the financial services sector more broadly since the competition amongst providers is pretty fierce. Second, […]

Leave a Reply

All Today's Crypto News In One Place