Barclays in conjunction with a start-up is working on how to use underlying technology of bitcoins, BlockChain, in their day to day banking activities.
As per Finextra, the bank has joined hands with a Swedish company, Safello, that was also a part of Fintech accelerator program in London to understand how this latest technology can be used for the benefit of traditional finance.
As per Finextra, the deal includes Safello, who is operating bitcoin online exchange, to work with Barclays to come up with new concepts that will test the traditional processes on the latest BlockChain technology to proof that they are compatible.
What is blockchain technology?
BlockChain software has come into limelight as being the underlying technology that powers Bitcoins. It allows transactions to happen over decentralized network while keeping a record of who paid how much to whom. Through this technology, the coin is only being spent once and eliminates the need for a central authority.
Why are banks so interested?
There are many reasons to pique the interest of the banks in this digital currency for many reasons but the most important ones are speed and cost involved. The banks that work on ancient systems take long before they can send money across borders and the transaction fee is very high. However, if blockchain can be incorporated at this level then many of these issues will be eliminated thus making traditional banking faster and cheaper.
As per a recent report, it has been estimated that if BlockChain is successfully implemented into the traditional systems, it can save the banks up to $20 Billion in infrastructure costs every year.
Quite naturally, Barclays is just one of the many financial institutions who want to experiment with the blockchain technology and see if they can make it work for themselves. UBS has already set a lab in their Canary Wharf office to explore the possibilities of BlockChain integration into their system.
Even Goldman Sachs has invested money in bitcoin start-ups while Nasdaq has already started dabbling in blockchain.
However, despite so much action in the conventional banks around the bitcoin technology, it is speculated that if blockchain works, it will not be adopted any time soon. As per BitPay CEO Stephen Pair, the earliest this technology will find its way into traditional systems is at least 5 years.