As much as the financial establishment hates to admit it, Bitcoin is a major economic and technological advancement, and it's not going anywhere. In fact, it is going everywhere banking will be in the future. Now, nine of the largest and most successful banking organizations have formed a partnership around Bitcoin’s innovative and valuable Blockchain technology, according to Reuters.
If you can’t beat ‘em, join ‘em!
In association with New York’s financial tech firm R3, the group of competitors will join forces on establishing a feasible working framework for the integration of Blockchain technology. The names involved looking to get ahead of the curve using Bitcoin technology reads like a who’s who of global economic leadership.
Goldman Sachs, Barclays, J.P. Morgan Chase, State Street, UBS, Royal Bank of Scotland, Credit Suisse, BBVA, and Commonwealth Bank of Australia are all currently signed, and more are on the way, according to R3’s CEO, David Rutter.
Rutter was formerly the head of electronic trading at ICAP Electronic Trading, one of the world's largest interdealer brokers. He has been working on bringing together traditional banks and Bitcoin’s blockchain technology for over a year, after initially looking at becoming an investor in Bitcoin-related businesses.
"The light bulb went off that distributed ledger technology could be to finance what the internet was to media,” Rutter told Reuters. "We held several roundtables (with banking leaders) […] 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.”
If you’re a bank, bitcoin: bad, blockchain: good
The common refrain from the economic establishment, unwilling to give Bitcoin its fair due, was that Bitcoin’s currency is bad, but blockchain technology has promise. This makes sense from a centralized, establishment perspective since a bank would not be able to create bitcoins as easily as they create dollars through fractional reserve banking.
A currency that one cannot manufacture at will and control through regulation and government influence would naturally be unattractive and easy to dismiss. New technological breakthroughs that make Bitcoin so effective for the common citizen could help businesses work much more efficiently, with some modifications. Rutter added:
"I think that these technologies will probably be post-trade. I think savings are in the settlement side, in post-trade, in issuance, but not in exchange trading or OTC trading any time in the near future.”
Ideas on how to proceed include using Bitcoin’s blockchain directly, creating their own version of the block chain, or a more feature-rich design, like Ethereum's platform. UBS had already been working on Blockchain technology with their “Bitcoin Labs” in London. Barclays and Santander have also been working on dozens of ways to leverage Bitcoin’s innovative underlying tech for future business models as well.
"I think broadly speaking we'll be able to demonstrate within 1 to 2 years that the technology is fit for purpose,” opines Rutter. “How long it will take to roll that out and integrate into existing systems is not something I know enough about to comment on. Our goal is to have some real examples of how this could work within the next year, so really fast."
They won’t admit they were wrong, but…
You know what they say. There is no such thing as bad publicity, and this only underscores how effective Bitcoin technology is if these Fortune 100 companies are willing to work together to drink it like water. In coming years, will these titans of industry be honest about how they’re “innovations” came to fruition when they release their next-generation banking services? Of course not, but that’s not the point.
Bitcoin and its associated technology is proving everyday that it is a cut above and several years ahead of the establishment’s status quo. Who knows? One day, maybe you can walk into a bank and do a wire transfer in less than 2-3 business days? Only it will probably cost you US$70 for “Instant Service” then instead of US$30 today, or just pennies using bitcoin.
Hey, AT&T now sells millions of internet modems, after spending years fighting against the tide of the Internet’s innovations in the 1990’s. Call it the price of progress.
In this financial arms race, follow or get out of the way. But while the establishment isn’t leading, it at least seems smart enough to follow. Some of us would rather be true leaders, however, and use the world’s best financial technology today, with Bitcoin.