Consortium of banks starts blockchain technology partnership

Nine major banks, including Barclays, Royal Bank of Scotland and Goldman Sachs, have formed an alliance with New York financial technology firm R3 to “build a framework for bringing blockchain technology to market.”

The new project is the culmination of more than a year of talks between R3, several banks and other members of the financial sector, Reuters writes. The project will be led by R3 CEO David Rutter.

Rutter has told Reuters that several ’roundtables’ have been held with various interested parties. Some key topics, Rutter said, were what the “potential implications of the blockchain are and what it could do to save money and time and create a better paradigm for the world of Wall Street and finance in general.”

The focus will initially be on deciding what kind of underlying architecture is desired and it is not yet clear whether it will build on the existing bitcoin blockchain or whether it will be a different one, such as the one rigged by Ethereum, a another open source blockchain project. The latter offers more possibilities than the original bitcoin blockchain technology.

Once it has been decided what technology to use, the first function will likely be to capture security in the blockchain. The latter is already frequently used by various start-ups, such as recording purchase contracts and digitally signing also digital works of art.

Rutter does not see the blockchain technology being applied quickly within trade, but the process after a purchase or sale, precisely by recording contracts in the blockchain in order to prevent fraudulent acts or to make it easier to discover and store more easily. The other six banks and institutions participating are: JP Morgan, State Street, UBS, Credit Suisse, BBVA and the Commonwealth Bank of Australia.