When Bitcoin was first introduced, it initially was considered a direct competitor to traditional banks and their legacy payment systems. Many in the Bitcoin community seemed to think that the cryptocurrency was the “anti-bank,” as it allowed someone to be their own bank.
However, now it looks like banks themselves are starting to be interested in the technology that underlies Bitcoin:
Nine of the world’s biggest banks including Goldman Sachs and Barclays have joined forces with New York-based financial tech firm R3 to create a framework for using blockchain technology in the markets, the firm said on Tuesday.
It is the first time banks have come together to work on a shared way in which the technology that underpins bitcoin – a controversial, web-based “crytocurrency” – can be used in finance.
Over the past year, interest in blockchain technology has grown rapidly. It has already attracted significant investment from many major banks, which reckon it could save them money by making their operations faster, more efficient and more transparent.
A lot of people are talking about the Blockchain (which is the distributed online database that underlies Bitcoin), and many seem to want to separate it from Bitcoin (the currency). However, what has not been proven is the possibility of a successful Blockchain without an incentive like the value of the Bitcoin currency to keep it secure. After all, what makes the Bitcoin Blockchain work is that people are incentivized to keep it secure and running. What will a bank do to maintain the Blockchain? If they simply run the nodes on their own network, then it really is just a centralized database; if they give out incentives for people to run nodes, then why not just use Bitcoin to do so?