Citing the adoption of bit coin technology for the capital markets as being a a matter of when, not if, a report claimed that the technology could come into practical use as early as next year.
The report claims that the adoption would revolutionize the industry by enabling more secure transactions and creating new streams of revenue. The report was prepared and released by TABB Research.
The technology, which has been named ‘blockchain’ was developed to be used with the cryptocurrency bitcoin. In order to stop tampering with financial data, the technology comprises of a huge decentralized ledger that records every transaction and stores this information on a global network.
The application of the blockcahin technology to market is being currently developed in the form of a framework by a consortium of more than 20 banks led by fintech company R3. is developing a framework for applying blockchain technology to markets.
By the second quarter of 2016, the blockchain solutions will be applied to track syndicated loans, predicted the report's authors. However the authors also said that the other business sectors might take longer to adopt the technology. The researchers claimed that while using blockchain to settle share trading is a decade away, applying blockchain to derivatives will take up to five years to develop.
The report says that more efficient and transparent systems to track and record financial transactions would be possible by the utilization of blockchain technology as well as improve upon existing systems used by banks.
"Within capital markets, a number of top use cases are coming to the fore, opening new opportunities for efficiency and generating revenue from greenfield projects, including private equity, interbank payments and corporate debt, among others," said Shagun Bali, a TABB research analyst and one of the report's writers, in a press release.
A year ago, the Bank of England, UK’s central bank, released a report on bitcoin and described the blockchain as a "genuine technological innovation". The reason for this assumption was that this technology would allow transaction systems to work without a third party intermediary and showed that digital records can be held securely.
There would however be a number of challenges to the use of blockchain technology according to Bali.
"Further due diligence for defining industry standards with regards to settlement, counterparty and other transactional risks involved are critical," explained Bali.
"As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead," Bali added.
In addition to the Bank of England, another US based bank – HSBC too sees blockchain technology to benefit state-installed central banks according to reports very recently published in the media.
Media reports claimed of a document prepared by HSBC that sees the potential of blockchain technology to transcend private and investment banks and influence or even enhance central banks’ policies.
Reports claimed that HSBC was convinced that the central banks would be benefited by the technology as all transactions would be recorded in real-time in an instantaneous money transmission system. The government too, says the bank, would be able to better manage the economy as it would have access to real time financial data that would be clearer enabled by a blockchain based system.
(Sources:www.cnbc.com & www.engadget.com)
The report claims that the adoption would revolutionize the industry by enabling more secure transactions and creating new streams of revenue. The report was prepared and released by TABB Research.
The technology, which has been named ‘blockchain’ was developed to be used with the cryptocurrency bitcoin. In order to stop tampering with financial data, the technology comprises of a huge decentralized ledger that records every transaction and stores this information on a global network.
The application of the blockcahin technology to market is being currently developed in the form of a framework by a consortium of more than 20 banks led by fintech company R3. is developing a framework for applying blockchain technology to markets.
By the second quarter of 2016, the blockchain solutions will be applied to track syndicated loans, predicted the report's authors. However the authors also said that the other business sectors might take longer to adopt the technology. The researchers claimed that while using blockchain to settle share trading is a decade away, applying blockchain to derivatives will take up to five years to develop.
The report says that more efficient and transparent systems to track and record financial transactions would be possible by the utilization of blockchain technology as well as improve upon existing systems used by banks.
"Within capital markets, a number of top use cases are coming to the fore, opening new opportunities for efficiency and generating revenue from greenfield projects, including private equity, interbank payments and corporate debt, among others," said Shagun Bali, a TABB research analyst and one of the report's writers, in a press release.
A year ago, the Bank of England, UK’s central bank, released a report on bitcoin and described the blockchain as a "genuine technological innovation". The reason for this assumption was that this technology would allow transaction systems to work without a third party intermediary and showed that digital records can be held securely.
There would however be a number of challenges to the use of blockchain technology according to Bali.
"Further due diligence for defining industry standards with regards to settlement, counterparty and other transactional risks involved are critical," explained Bali.
"As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead," Bali added.
In addition to the Bank of England, another US based bank – HSBC too sees blockchain technology to benefit state-installed central banks according to reports very recently published in the media.
Media reports claimed of a document prepared by HSBC that sees the potential of blockchain technology to transcend private and investment banks and influence or even enhance central banks’ policies.
Reports claimed that HSBC was convinced that the central banks would be benefited by the technology as all transactions would be recorded in real-time in an instantaneous money transmission system. The government too, says the bank, would be able to better manage the economy as it would have access to real time financial data that would be clearer enabled by a blockchain based system.
(Sources:www.cnbc.com & www.engadget.com)
