There is a ‘game changer’ technology on Wall Street and people keep confusing it with bitcoin

There is a ‘game changer’ technology on Wall Street and people keep confusing it with bitcoin

blockchain1

This is a recreation of the engineer Paul Baran’s diagram published in “On Distributed Communications” in 1964.

 

Wall Street banks are buzzing about blockchain.

Goldman Sachs says the technology “has the potential to redefine transactions” and can change “everything.”

JPMorgan last month announced it was launching a trial project with the blockchain startup led by its former executive, Blythe Masters.

Her company, Digital Asset Holdings, has secured funding from Goldman, Citi, ICAP, and a boatload of other financial firms.

If you’re wondering what a blockchain actually is, or how its works, you’re not alone. Autonomous Research, which calls the technology a “game changer,” has released a report to answer all of your blockchain questions.

The important thing to understand is that it has nothing to do with bitcoin — at least for Wall Street’s purposes. Blockchain is the technology behind bitcoin, but it has many other uses too.

Wall Street wants to use blockchains to simplify the way it processes transactions.

That may not sound very exciting, but if it works, it could eliminate back-office jobs and costs. So it’s worth paying attention to — especially if you’re one of the thousands of people who work in bank back offices.

Here’s how it works.

 

Blockchains are ledgers (like Excel spreadsheets), but they accept inputs from lots of different parties. The ledger can only be changed when there is a consensus among the group. That makes them more secure, and it means there’s no need for a central authority to approve transactions.

blockchains-are-ledgers

 

Blockchains control information and avoid duplication.

blockchains2
There’s no need for a centralized authority to validate transactions when multiple banks, asset managers, or custodians can agree and validate them instead.

blockchain3
When blockchain transactions take place, smart contracts automatically execute themselves.

smart_contracts

 

What does it really mean for Wall Street? It could eliminate back-office costs — and jobs.

sales_costs_jobs
And it could create a huge amount of value for the top Wall Street banks. That’s why they’re so interested in the technology.

value
Here are some helpful definitions.
definitions

 

[BusinessInsider]

March 11, 2016 / by / in , , , , ,

Leave a Reply

Show Buttons
Hide Buttons

IMPORTANT MESSAGE: Scooblrinc.com is a website owned and operated by Scooblr, Inc. By accessing this website and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy, as amended from time to time. Scooblr, Inc. does not verify or assure that information provided by any company offering services is accurate or complete or that the valuation is appropriate. Neither Scooblr nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising, for any error or incompleteness of fact or opinion in, or lack of care in the preparation or publication, of the materials posted on this website. Scooblr does not give advice, provide analysis or recommendations regarding any offering, service posted on the website. The information on this website does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, any services to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful.