With so many established financial players focusing on Bitcoin technology these days, a lot of people are wondering how they are planning to use the blockchain exactly. There is no doubt this powerful technology will be used to facilitate finance in some capacity, but exact details remain rather vague these days. Furthermore, do banks even recognize the potential of smart contracts, and what role will they play? People have lots of questions and very little answers where bankchains are concerned.
Also read: DTCC Releases Report on Blockchains in the Financial Industry
The Concept of Bankchains – Bitcoin vs. Ethereum
Private permissioned blockchains – or bankchains, as they are often referred to – will wield a version of the Bitcoin blockchain to conduct financial transactions. Various Bitcoin industry experts see this as a bad idea, simply because there will be dozens of competing private blockchains, not all of which will be able to communicate with one another.
While there are efforts underway to connect different bankchains together into one ecosystem that works, no one has gotten past the experimental phase just yet. Whether or not this solution will be even remotely interesting from a technical point of view, remains to be seen, as these ideas are nothing more than a proof of concept at this stage.
A lot of people who have been involved in the digital currency ecosystem for longer than two years will gladly tell you how the Bitcoin blockchain is vastly superior to the Ethereum one. Even though the latter is an extension of the Bitcoin blockchain in a way, Dr. Gideon Greenspan feels that the Bitcoin-style blockchain will perform better in the long run.
But there is no reason to believe a fully working bankchain will have to decide between these solutions. A new type of hybrid blockchain could be created allowing the simple movement of assets and offering a more advanced set of features to those users who want to experiment. As a result, a multi-tiered blockchain would be created, using elements from Bitcoin and Ethereum to create a bankchain.
The Devil is In The Details
In the end, the success or failure of the bankchain concept will come down to details and proper education. It is reasonably easy for developers to build a proof of concept that uses blockchain technology, but putting that concept into something that actually works, is a different story. Not all of these ideas are practical, and that is only normal.
Smart contracts, on the other hand, will be of great relevance to the concept of a bankchain in the future. At this time, it is difficult to estimate how the technology will be implemented by banks and other financial institutions, but there will always be a demand for smart contracts to complete transactions or business deals. Once people are properly educated on the blockchain as a whole, and what sets Bitcoin apart from Ethereum in this regard, the real development can begin.
Source: IB Times
If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.
