Nine major banks join forces to develop blockchain technology standards for the banking industry

Blockchain technology is a public account that records all Bitcoin transactions on the entire network. No one can predict its future development. However, major banks such as UBS, Barclays, and Citigroup are all betting on it, believing that it may reshape the future financial world.

Bitcoin, once the darling of the dark continent of the Internet, has now reignited people's imagination with its underlying blockchain technology. As the forerunner of the "Financial Internet", blockchain technology has great potential in simplifying the settlement process and reducing transaction costs, which fascinates many bankers.

The potential applications of blockchain are wide-ranging, such as speeding up stock trading, reducing transfer fees, and improving payment efficiency, but no one knows where the center of this disruptive wave will be.

To be sure, this fundamental change in the ability to transfer value (in money, assets, stocks, contracts, etc.) has attracted new attention. Bankers are no longer questioning whether blockchain will have a business impact, but are now rapidly shifting their focus to how and when that impact will occur.

Blockchain, what is it?

Essentially, a blockchain is like a plain database that records and updates transactions. The concept of a database is not new; payment companies like PayPal (PYPL) and Visa (V) use similar bookkeeping systems to manage accounts. The difference is that blockchain resides in a decentralized network and uses distributed accounting, rather than being managed by a third party. All transactions are displayed in real time on a platform similar to a globally shared spreadsheet, and every user in the network can access and view them at any time.

Transactions in the blockchain are irreversible, which means that once a transaction record is confirmed, it cannot be tampered with. This notarization system establishes "network-wide credibility" in the distributed network, while the trust issue could only be solved by external institutions such as banks or clearing houses.

Global blockchain trial boom

"Blockchain is like a giant spreadsheet that is shared by everyone in a distributed network and is used to do things like confirm bitcoin payments." Bitcoin's blockchain technology is currently being tested by financial technology company R3, which has signed an initial testing agreement with nine major banks. The list of the nine banks is as follows:

• JPMorgan Chase

• Commonwealth Bank of Australia

• BBVA

• Barclays

• Goldman Sachs

• UBS

• Royal Bank of Scotland

• Credit Suisse

• State Street Bank

Nasdaq Group (NDAQ) is one of the first institutions to trial blockchain technology for its private stock system. The bitcoin-based blockchain technology will replace its current paper certificate system to enable faster execution and more transparent transactions.

UBS is another pioneer in blockchain technology. It established a blockchain research and development lab last spring, located in Level 39, London's most dynamic financial technology incubator. The UBS blockchain team is committed to "proof of concept: "propose a hypothesis, conduct verification, and test the results."

Barclays, which also runs a bitcoin incubation program, announced on Sunday that it would begin helping charities accept bitcoin payments, becoming the first bank in the U.K. to accept the digital currency.

Citigroup, which has long been silent on Bitcoin, reportedly created its own digital currency, “Citicoin,” this summer, revealing that it has combined three different blockchain distributed ledger systems internally to explore more efficient ways to transfer value.

BBVA and Goldman Sachs have also embraced blockchain technology. In July, BBVA re-proposed the idea of ​​a fully decentralized financial system based on blockchain technology. In May, Goldman Sachs called digital currencies a "megatrend" in the market that will revolutionize the way money flows.

In June, Santander Bank (SAN) announced that it was testing 25 different possible applications of blockchain technology through financial technology investment fund InnoVentures. Santander believes that blockchain technology may save $20 billion in international transaction and settlement costs each year.

The future of blockchain

The future of blockchain technology is still unclear, whether it will lead to faster transactions, settlements, payments or financial infrastructure. Bankers are exploring the concept of "permissioned" ledgers, which are private distributed ledger systems that take advantage of blockchain technology but retain higher levels of regulatory rights.

Obviously, along with the blockchain craze, there is also a surge in investment in the Bitcoin field: it has reached US$915 million this year, a year-on-year increase of 262.5% compared with last year.

As research on blockchain technology accelerates, the focus of market competition now is on who can grab the first piece of the pie.