If you’ve been at any of the payments industry events this year, you’d have been lucky to escape the impression that blockchain is the next big thing. This technology, used by bitcoin to assure and secure transactions, is now seemingly more important than the currency it supports.
It appears that banks have woken up to the potential of what this technology enables which is described variously as a distributed ledger, a dispersed database or consensus computing. In essence it allows a number of parties to transact without sending messages directly to each other but by updating securely a shared set of records. One potential use might be for land or property registry, where ownership could be transferred without updating a single, database typically managed by a government.
Using blockchain to facilitate clearing payments became a hot topic and a great example was at EBA Day in May where a number of banking projects using blockchain were announced. Sibos, the international, banking conference was also dominated by blockchain discussions, investments and start-ups.
At present blockchain initiatives are in their infancy with early projects looking to apply this new technology to existing problems, such as cross-border payments, asset management and liquidity markets. It’s clear to see that while 2016 may be the year these pilots are launched, 2015 was the year that saw the seeds being planted.