Newspaper article International New York Times

Envisioning Technology of Bitcoin at Banking Core ; A Concept Introduced by Virtual Currency Could Lead to Cheaper Services

Newspaper article International New York Times

Envisioning Technology of Bitcoin at Banking Core ; A Concept Introduced by Virtual Currency Could Lead to Cheaper Services

Article excerpt

The World Economic Forum predicts that the blockchain concept introduced by the virtual currency could help banks offer cheaper, faster and more secure services.

A new report from the World Economic Forum predicts that the underlying technology introduced by the virtual currency Bitcoin will come to occupy a central place in the global financial system.

A report released on Friday by the forum, a convening organization for the global elite, is one of the strongest endorsements yet for a new technology -- the blockchain -- that has become the talk of the financial industry, despite the shadowy origins of Bitcoin.

"Rather than to stay at the margins of the finance industry, blockchain will become the beating heart of it," the head of financial services industries at the World Economic Forum, Giancarlo Bruno, said in a statement released with the report.

The term blockchain originally referred to the database where all Bitcoin transactions are recorded and stored.

Unlike existing financial ledgers or databases used by banks and other institutions, the blockchain is updated and maintained not by a single company or government. Instead it is run by a network of users. It's akin to the way Wikipedia is maintained by users around the globe.

Initially, bank executives shied away from endorsing Bitcoin because it had been used for drugs and crime. Now, however, many have focused on ways to create blockchains without using Bitcoins for transactions in any way.

This is attractive because blockchains -- or "distributed ledgers," as they are often described -- could offer a new way to move money and track transactions across borders and other networks in a more secure, transparent and effective way than the current system.

Distributed ledgers are often viewed as most attractive to industries with businesses that lack a central institution they can trust to keep their records.

The World Economic Forum report notes that most developments are likely to happen behind the scenes. So consumers won't see the changes to infrastructure, but the changes could lead to cheaper and faster financial services. …

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