Earlier this month, UBS announced that it is in the process of creating a “settlement coin” that can be used for financial transactions. Is this yet another form of altcoin and will it rival bitcoin?
The bank plans on using blockchain technology to create this settlement coin but has clarified that it will not function as a store of value, unlike most cryptocurrencies. Instead, its application could focus more on storing data regarding trade settlement between financial institutions, banks, and clients.
Settlement Coin Applications
A number of other established firms have been looking into the potential use of blockchain technology in the financial industry. For one, online retail company Overstock has already started with its “cryptosecurities” and has made acquisitions that can bring the distributed public ledger to Wall Street.
Similarly, the UBS settlement coin or USC (utility settlement coin) aims to reduce transaction times and costs between counterparties. With the current system, trade verification can take some time to complete as this passes through clearinghouses or several middlemen who also charge fees. In using the blockchain with the settlement coin, these transactions can occur seamlessly, with added transparency and security.
Some experts say that this type of application could be