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The following guest post is courtesy of Marco Streng, CEO and Co-founder of Genesis Mining.
The relationship between bitcoin and the global financial market, particularly banking institutions, has historically been tense. Actually, pick the adjective: distant, acrimonious, spiteful, etc.
From the start the relationship was destined to be fraught with distrust. On the one hand, bitcoin had to take itself seriously by positioning itself as a legitimate competitor of traditional banking and regulated currencies. In response, banks needed little encouragement to work to marginalize cryptocurrencies.
But in recent years as both parties have realized they can live in the same world and even benefit from partnering, some banks have begun to investigate the potential that exists in bitcoin and blockchain. These are 5 such initiatives by some of the world’s leading financial institutions:
- Citibank. The world’s eighth largest bank recently announced that it has been researching and developing distributed ledger technology for the last few years. Kenneth Moore of Citigroup Innovation Labs was quoted as saying, “We have up and running three separate systems within Citi now that actually deploy blockchain distributed ledger technologies.”
- UBS. Swiss banks are highly regarded in the global financial market, so it is no small thing that UBS announced this year that it would open a research lab in London devoted to exploring the application of blockchain technology. Oliver Bussmann, the CIO of UBS, said in a statement, “Our innovation lab at Level39 will provide a unique platform to explore emerging technologies such as Blockchain and crypto-currencies, and to understand the potential impact for the industry.”
- Barclays. As we continue our tour of world banks, we move to one of Britain’s standouts. Barclays signed an agreement with European-based bitcoin company Safello to test applications of blockchain technology. Frank Schuil, CEO of Safello said, “If a Tier I bank signing a proof-of-concept with a bitcoin company isn’t a sign of the times then I don’t know what is … their attitude is changing and it is changing fast.”
- Goldman Sachs. This mega investing firm acknowledged the advantages and drawbacks of bitcoin as a currency in a report released in 2014, which suggested that while bitcoin has work to do, blockchain holds immense promise.
- Société Générale. A major French bank, SocGen made news recently for posting a job listing for an “IT developer on bitcoin, blockchains and cryptocurrencies”. This move, while newsworthy, is increasingly common as major banks around the world are quickly making moves to take advantage of potential blockchain benefits.
It goes without saying that the ice has thawed somewhat between major banking and the cryptocurrency world. If there is resentment and mistrust, bridges are quickly being built that are founded on innovation and a mutual interest in exploring new technology.
It will be interesting to see how the global financial market eventually adapts blockchain technology. The cryptocurrency world places a premium value on the unregulated nature of bitcoin and other altcoins, and custodial banking control is similarly distrusted. Major banks will have to prove they can utilize the technology in a way that meets with these expectations if they want to win over the bitcoin community.