Nine of the world's largest banks, including Barclays and Goldman Sachs, are considering adopting the technology behind the virtual currency Bitcoin, according to BBC News. They are working with FinTech company R3 to develop the technology, which is referred to as the "blockchain system" and keeps a computer record of who spends virtual coins.
The blockchain system works in a way that each person using virtual currency such as Bitcoin helps verify each deal. Even with the amount of people contributing to this system, it is difficult for even one user to process a fraudulent deal, as it would need to be verified and approved.
The main reasons for the banks' interest in this technology is the fact that it makes fraud much more difficult and increases the speed of trading systems and the transparency of deals. "Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable," said David Rutter, CEO of R3.
"We held several roundtables...to deeply consider what the possible implications of the blockchain were, and what it could possibly do to save money, and time, and to create a better paradigm for the world of Wall Street and finance."
It still remains unclear as to whether the technology's architecture will utilize Bitcoin's blockchain or the framework of a different virtual currency, according to Reuters.
The financial industry has had its eyes on the blockchain technology for some time due to its increased security and potential for decreased infrastructure costs, according to Ars Technica.
"These new technologies could transform how financial transactions are recorded, reconciled and reported - all with additional security, lower error rates and significant cost reductions," said Hu Liang, Senior Vice President and head of Emerging Technologies at State Street.
