There have been a lot of headlines lately about the growing interest in blockchain technology from banks around the world. While Bitcoin remains something of an unproven resource — valuable but nowhere near the potential some people still envision — the public ledger used to track its transactions has proven to be of major interest to a number of industries. The idea of a blockchain system in which transactions are automatically and always recorded is a simple concept with the potential to greatly improve the speed, accuracy, security, and transparency with which business is conducted.
Just this fall we saw nine of the world’s biggest banks join forces to create a framework for using blockchain in financial markets. And in the time since, even more banks have joined in, resulting in a very real initiative to take Bitcoin’s technology and turn it toward existing financial systems. The core concept underlying this movement is to improve transparency and facilitate big data analysis that would theoretically allow banks to better understand and ultimately balance economies.
This is a very serious development with potential to drastically change the ways in which big banks do business, at least in a broad regulatory sense. But more recently, there’s been another interesting piece of news that should hit a little closer to home. Specifically, Microsoft has announced a partnership with blockchain start-up ConsenSys to bring Bitcoin and its technology to financial institutions. This essentially means Microsoft is lending its name, industry clout, and cloud platform to a company that, with that backing, is capable of bringing blockchain technology and cryptocurrency security to major financial companies.
It’s a little early to say what the specific effects of this move will be, and in fact Microsoft is still playing its cards close to the chest in terms of which financial institutions have already signed on (though four “major” ones supposedly already have). But the move does appear to be the latest indication that while some countries are actively prohibiting banks from involvement with cryptocurrency, Bitcoin continues to thrive in the U.S. despite the lack of an official government stance on their usage or value. In other words, the U.S. does not yet recognize Bitcoin to the extent that it can be used in official government transactions, but it’s doing nothing to stop or slow the increasing influence of Bitcoin and Bitcoin tech in the banking system.
Ultimately Microsoft’s involvement may amount to its own corner of the overall movement toward banks implementing blockchain-like technologies. However, the deal also carries the potential to help the involved financial institutions to actually start dabbling in cryptocurrency specifically, which would be a very major development indeed.
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Guest post by Amanda Cole