JPMorgan Chase and nine other major banks jointly invest in Bitcoin blockchain technology

Nine major global banks on Tuesday expressed their support for blockchain, the technology used to support bitcoin.

     Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JPMorgan, State Street, Royal Bank of Scotland and UBS have formed a partnership to develop industry standards and protocols for the use of blockchain technology in banking. The partnership is led by startup R3, which has offices in New York and London and is headed by David Rutter, a Wall Street veteran who previously served as CEO of ICAP Electronic Broking.

     Root told Business Insider that the plan is to build a "structure" for the banking industry and develop commercial uses for banks and financial institutions. He also said that other banks have signed on to the partnership, but the names of these banks were not mentioned due to the timing of the announcement. According to the Financial Times, Goldman Sachs is also involved in the partnership.

     The so-called "blockchain" is the software that both powers and regulates the virtual digital currency Bitcoin. In its most basic form, blockchain technology records the ownership and transactions of Bitcoin. A transaction is first signed by the parties using the software, and then added to the "blockchain", a long series of codes that records all transactions; once other transactions are added to the blockchain, the record of the transaction can never be changed.

     The software would make a "trusted middleman" unnecessary, as the software would act as such. As a result, transactions using the software would be faster, cheaper and easier to conduct than with the systems banks currently use. That's why banks are eager to see if the software can be used for transactions using traditional currencies, rather than just bitcoin.

     The blockchain uses an open ledger technology, which means that all these transactions are free and public for anyone who wants to check, rather than being stored in a private data center. In theory, anyone can check if someone has used stolen bitcoins, which means that the system is highly transparent.

     Major global banks including Barclays, Citigroup , Spain's Santander and UBS have expressed interest in blockchain technology, but this is the first time that banks have joined forces on a project.

     Root said he began approaching banks 15 months ago and had previously visited about 30 blockchain and bitcoin companies to consider investing in them. He said: "The distributed ledger is to finance what the Internet is to media."

     He also said R3 has drawn up a “wish list” of things its banking partners would like to do with blockchain technology, covering “all sorts of things, from insurance to clearing and settlement to smart contracts.”

Barclays analyst Derek White recently told Business Insider that the bank has identified 45 possible uses for blockchain technology, while Spain's Santander said it is looking at 25 uses for the technology.

     “I think we’ll be able to demonstrate appropriate use of this technology in the next year or two, basically,” White said. “How long it will take to integrate it with existing systems is beyond my knowledge, so I can’t comment.” He added: “Our goal is to have some examples within the next year to prove that this works.”

As part of the partnership, the bank will invest in R3. “I can’t reveal the amount, but it’s been reported to be in the millions,” Root said. “From my perspective, having the bank involved, the human element is much more valuable.”