The basic blockchain technology that underpins bitcoin and other cryptocurrencies could find its way into the basic infrastructure of the global financial system. A group of nine of the world’s biggest banks is taking the first steps towards adopting the blockchain concept, initially as a way of recording transactions. According to a story on Reuters, the group has engaged a financial technology company, R3, to develop a common blockchain-based platform…
[R3’s CEO David ] Rutter said the initial focus would be to agree on an underlying architecture, but it had not yet been decided whether that would be underpinned by bitcoin’s blockchain or another one, such as one being built by Ethereum, which offers more features than the original bitcoin technology.
The group will not do transactions via cryptocurrencies, at least not in the foreseeable future. Instead, the banks have decided that the blockchain method of reliably and transparently documenting transactions is potentially a better way of keeping track of who has bought what. At this point, there’s no plan to use it to buy or sell anything.
It’s a big endorsement of the open source method of developing key cybersecurity technologies. The bitcoin blockchain has remained secure throughout its lifetime, despite the huge incentive someone would have for cracking it. Flaws have been found in it, but widespread scrutiny – the result of the parallel incentive honest users have to keep it secure – has meant that bugs have been squashed and not exploited. Other aspects of the bitcoin ecosystem, online exchanges for example, have been successfully attacked, but the underlying technology that the banks are evaluating has proven rock solid.