Goldman Sachs: Blockchain is ready to take center stage

Blockchain technology is ready to take center stage, according to a new report from banking giant Goldman Sachs.

Earlier this year, the bank participated in a $50 million funding round for bitcoin startup Circle. Today, Goldman Sachs said in a research note to clients that bitcoin may just be the “opening act” for blockchain technology.

The report, from Goldman Sachs’ equity research team, reads in part:

“Once Bitcoin’s underlying technology is understood, it could usher in new tools to cut costs, challenge the profit pools of middlemen, and hopefully make these centralized institutions obsolete. This solution promises opportunities not only for consumers, but also for businesses that are more interested in profit.”

Robert D. Boroujerdi, the report's author, noted that "roadblocks" remain before the potential of blockchain technology can be fully realized.

Cutting out the middleman

Brujerdi chose to highlight the decentralization-prone nature of blockchain technology as its main advantage compared to existing financial technology systems.

Cutting out the middleman means blockchain technology can operate more efficiently, more reliably and at a lower cost than current systems, Brujerdi wrote, adding that it can reduce counterparty risk and has the potential to provide instant feedback on transaction risks and costs.

The report also highlights a number of use cases for blockchain technology, ranging from back-office banking and regulatory paperwork to notarizing alternative assets (such as artworks) or providing records of academic certificates.

The report states:

“This decentralized cryptography-based solution removes the middleman and has the potential to redefine transactions and back-office operations across multiple industries.”

Blockchain without Bitcoin

The report also points out some potential problems with blockchain technology, such as the limited transaction throughput issue that is often discussed in the community. Currently, the Bitcoin blockchain is limited to 7 transactions per second, which is no advantage compared to the 47,000 transactions per second supported by VisaNet.

Additionally, the report points out issues with public and private chains that could lead to friction, slow adoption, and increased fragmentation.

Brujerdi noted that a healthy entrepreneurial ecosystem would benefit from the "exponential" growth of venture capital.

Outside of startups, Goldman is closely watching the work done by banking consortium R3CEV (of which Goldman is a member); IBM’s ADEPT project, which aims to bring together the Internet of Things and blockchain; and Nasdaq, which has partnered with blockchain startup Chain to build its own Linq private markets platform on a blockchain.

Can blockchain be separated from Bitcoin? Goldman Sachs thinks so:

“Those who look down on Bitcoin may have missed out on the golden egg, as its underlying technology has the potential to power a multitude of industries. Simply put, blockchain can survive in a world that doesn’t need Bitcoin.”

Last month, Goldman Sachs also filed a patent application with the U.S. Patent and Trademark Office for a securities settlement system based on a new cryptocurrency called “SETLcoin.”

As early as this spring, Goldman Sachs analysts mentioned Bitcoin and blockchain technology in their "Future of Finance" report.

Original: http://www.coindesk.com/goldman-sachs-report/
By Yessi Bello Perez
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/goldman-sachs-report)