Banks find block chain technology difficult to implement

The unprecedented transparency of trade has unnerved financiers.

To cut costs, banks are racing to adopt block chains (the underlying technology of bitcoin), but technicians and business people have to make drastic changes to keep this radical technology in line with the rules of the banking world.

E-currency Bitcoin was invented in 2009 to create a monetary system that is not controlled by governments and central banks. Although bankers do not believe in the concept of Bitcoin, the underlying block-chain technology is still considered to have many useful features.

There are many Bitcoin users, so it is impossible to turn off or hack the network of bitcoin; transactions are not reversible; transactions are transparent, and anyone on the network can view or verify transactions.

At first, these features were attractive to financial services companies, but they were discovering that the technology was hard to implement. Unprecedented trade transparency has unnerved some bankers who want to obscure private information. They plan to separate the block chains from the targets advocated by Bitcoin.

"The problem that Bitcoin wants to solve is the central bank's currency. Simon Taylor said Fintech consulted 11:fs's co-founder and former Barclays Capital Bank block chain owner. "But if you're a bank or a central bank, it's not what you want." ”

The prevailing view of the current banking industry is efficiency. Tighter regulation, competition from technology companies and continued low interest rates have forced banks to tighten their belts, and every place where spending can be cut is worth studying.

The good news is that the use of database sharing technology (such as block chain) can increase the speed of transactions, through a banking sector sharing system automatic clearing function, can reduce the cost of settlement and liquidation.

"Before 2008, even if we could save 100 million dollars, no one in the industry would want to share it," he said. But now 100 million dollars is a lot of money and the industry is trying to cut costs. Said Richard Lumb, CEO of the financial services firm, Essen.

However, there is a problem to be solved. If you set up a shared trading system like Bitcoin, you can peek at each other's activities by competing with the bank.

In addition, the possibility of creating an immutable database increases the likelihood that, for example, a misoperation would suddenly add an extra 0 to the back of a transaction, which, if not reversible, would result in an unexpected potential loss.

The problem with extensibility is that it can become too complex to replicate all the bank data with a shared billing system (a bitcoin model).

"The more data expands, the slower the system becomes." "Setl, chief executive of the company (headquartered in London, which sets up a block chain and distributed ledger for financial services), said Peter Landre.

As a result, the discussion of block chain technology in financial services always involves diluting Bitcoin's original dream. The phrase "chunk chain without bitcoin" has a high frequency. Mr. Taylor of 11:fs says the difference is not so simple.

He said the analogy of replacing a car with an engine was not appropriate, and the more appropriate analogy was the difference between a car and a ship. "Maybe we still have this point: A driver, a starter, an engine, but this time we don't put it on land, we put it in the water," he said.

An idea is being discussed: Make sure only traders, regulators, and other stakeholders can view the details of the transaction, not all participants can share the data.

The worry about not being able to change may be a bit exaggerated. Mr. Randall, Setl, said the answer was simple "do a reverse transaction".

Supporters say the end result is not as radical as the Bitcoin proponents initially envisioned.

"If you're a businessman, you can compare the current architecture with the new architecture and ask yourself if you're building a big database." Charlico Cooper, general manager of R3, said the R3 block chain Alliance had attracted 60 financial services organizations.

In fact, in the eyes of some critics, Bitcoin is just another form of database, grandstanding, and some of the "cool" features persuaded the cost-conscious bankers to unite, rather than technology, marketing.

But Mr Taylor does not think so, he said: "There used to be a distributed database, but there is no mathematical proof to prevent tampering with the distributed database." ”

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