Blockchain technology is already on its path to reshape our financial systems. With its shared ledger being verified by miners, transactions are verified swiftly and can be accounted in computer systems. Blockchain, a shared ledger of transactions maintained by a network of computers on the internet, is the technology that underpins cryptocurrency bitcoin. Blockchain is more than bitcoin, a technology which is well accepted by global central banks including the Reserve Bank of India. It’s the technology behind bitcoin but its use far exceeds digital currencies. The importance of blockchain to finance and financial markets is its potential beyond bitcoin. The chain of transactions is recorded at not one place, but at multiple locations at the same time making it more transparent. FinTech experts have already formed the opinion that blockchain is the next big thing in the financial world.
Wall Street giant JP Morgan along with Royal Bank of Canada and Australia & New Zealand Bank recently launched an interbank information network powered by blockchain technology. JP Morgan in its press release said, the new initiative uses blockchain technology to limit the friction in the global payments market. Using blockchain, the new payment network will be able to reach beneficiaries faster with fewer steps and enhanced security.
“The Interbank Information Network will enhance the client experience, decreasing the amount of time – from weeks to hours – and costs associated with resolving payment delays,” said Emma Loftus, head of global payments and FX for JPMorgan Treasury Services. “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”
Royal Bank of Canada and ANZ are the first two banks who joined the network and JP Morgan is expecting more banks to join in coming months. JP Morgan Chief Jamie Dimon lauded the blockchain technology adapted by his bank. It is interesting to note that Jamie is considered to be the biggest critic of bitcoins. He recently referred to bitcoins as a fraud. If any JP Morgan trader is using bitcoins, he would be fired in seconds. Trading in bitcoins is against JP Morgan rules and the users are stupid, he said at an Investment Conference in New York.
Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times will encourage broader use of the cryptocurrency. Prices have climbed more than fourfold this year — a run that has drawn debate over whether that’s a bubble.
The blockchain technology adapted by JP Morgan and banks uses Quorum, a legal variant of Ethereum (a bitcoin-like cryptocurrency). According to the company, its Treasury Services business processes around $5 trillion in payments every day for clients in more than 100 countries, and has been investing in technology to enhance the client experience. A particular focus is on emerging technologies like blockchain, machine learning and robotics.
– Chaitanya Kulkarni | Twitter – @chai2kul
Originally published on TheIndianCapitalist.com | India’s leading business & finance blog.