Citigroup Using Blockchain Technology For Fiat-Backed Digital Currency

Quite a few major banks around the world are looking into Bitcoin and blockchain technology with growing interest.  This doesn’t mean these major banks will suddenly start accepting Bitcoin as a form of money, but the fact they want to embrace the blockchain from a technological point of view is good news.  The latest major bank to explore blockchain technology is Citigroup.

Citigroup – Exploring Fiat-backed Digital CurrencyCitibank

Bitcoin and other virtual currencies are not backed by fiat currency or precious metal, making them stand out from money as everyone knows it.  Many people see this as a weakness while it is, in fact, one of virtual currency’s strong suits.  No backing means there is no central authority to exert capital controls in the world of Bitcoin.

Citigroup, one of the largest banks on the planet, has noticed how competitors are experimenting with blockchain technology in recent months.  It was only a matter of time until Citigroup decided to jump on the blockchain bandwagon and come up with their own “pet project”.  According to a spokesperson, the banking and financial service provider wants to look into using blockchain technology for Citigroup’s own issued fiat-backed digital currency.

“On the blockchain, there are two parts that interest us.  One is, today we are one of the largest movers of money – up to $1 trillion or more on a daily basis – because we’re the only bank that actually operates in 100 countries.  So, there is obviously an opportunity around our own general ledgers.” – Citigroup’s Aditya Menon told the media in an interview.

Despite Bitcoin being attractive to individuals because of its “unbacked” status, it also creates a lot of price volatility.  This is one of the few reasons why Bitcoin is not being seen as a global payment method just yet.  Merchants do not want to list prices in Bitcoin only, as the price volatility could be quite catastrophic for them.

It is not the first time that rumours have circulated regarding Citigroup’s own digital currency, as a report in July mentioned a new currency called CitiCoin.  The main purpose of CitiCoin is to use blockchain technology and linking fiat value to digital currency circulating within the centralized ecosystem of the bank itself.

Lots Of Opportunities To Explore

“Blockchain gives you the ability to not only update a distributed ledger but settle it, which otherwise is a laborious process especially if you’re doing it across multiple countries and times zones, etc.  So there is one opportunity there.” – Citigroup’s Aditya Menon continued to explain.

Citigroup’s blockchain experiments are originating from Dublin, Ireland and a dedicated team of developers and engineers are constantly evaluating the progress being made.  Blockchain technology can be adapted to suit any financial settlement need and desire, at very low costs and by offering a level of transparency never experienced before.

“There is a last-mile hostage situation where money, documents need to change hands.  So, if you use a distributed ledger to actually record ownership of title of the goods and then that changes hands based on the payments – that’s a great example of how you can use blockchain technology to facilitate a trade transaction, which otherwise has been done in a very manual – intense way.” – Aditya Menon concluded.

Source: Economic Times

Images courtesy of Citigroup, Shutterstock