The “blockchain” technology R3CEV is working on underpins the internet-based bitcoin currency. The controversial “cryptocurrency” doesn’t have a central authority – its security comes from the network of all bitcoin users who share the same protocols, which together act as a distributed ledger to keep track of every transaction. Not having a central authority means that an internet-wide catastrophe would have to occur in order to compromise the integrity of the ledger.
The banks collaborating to make use of the blockchain technology in mainstream finance are JP Morgan, Commonwealth Bank of Australia, BBVA, Barclays, Goldman Sachs, UBS, Royal Bank of Scotland, Credit Suisse and State Street. They see it as a way of instantly updating payment ledgers and transferring money without relying on the trust of a central authority.
Many of those in the partnership have independently expressed interest in studying the much-hyped distributed ledger system, but this is the first time that a concerted effort has been made to work it into an industry-wide standard.
“If you’re looking to introduce applications with distributed ledger technologies to improve the financial markets, you can’t have each participant working to a different pattern,”