Top banks are now embracing the use of Bitcoin blockchain technology. The leading banks in the world are opting for the technology used to underpin the virtual currency, Bitcoin. Some of the banks that are considering this option include Goldman Sachs, Barclays, and six more. The system records who spends what Bitcoins in a computer that is about a ledger. The reason why banks are considering this method is because it is not easily hacked or interfered by fraudsters. The system also promotes transparency, and it speeds up the trading system.
The Blockchain Bitcoin technology project
The scheme to test the Blockchain Bitcoin technology is spearheaded by R3. R3 is a financial technology firm that is well known around the world. Also, it has included nine major banks to the projects. Other than Barclays and Goldman Sachs, R3 has signed BBVA, Commonwealth Bank of Australia, Credit Suisse, Royal Bank of Scotland, State Street, JP Morgan, and UBS.
The members have held technical meetings to discuss how the system can be used to the trading arms of the banks.
Bitcoin uses the blockchain technology as a worldwide ledger that records the transactions. Each person that is associated with the virtual currency influences the verification of each deal by the system. Since more people are involved in the system, it becomes challenging for a single Bitcoin user to get fake deals approved.
In spite of the advanced system, Bitcoin has had several thefts and scandals. However, most of the hackers utilized the weakness that is on the exchanges when the coins are traded. They also exploit the digital wallets, where the coins are stored.
It is said that banks are more concerned with the technical architecture that underpins the blockchains that could be applied in their systems. The blockchain system can be used to record who bought which shares or stocks and when they bought it. It is not clear when the technology will start to take course, but it could be sooner than expected.
What is Bitcoin?
This is a digital currency that is created and managed automatically. It doesn’t have a person controlling it, and they are not printed like the standard notes. Rather, they are produced by people and use software that are used to solve mathematical questions. This is a system that is called crypto currency, an advanced money category.
How different is it from the standard currencies?
They can be used to buy things over the internet. They are more like conventional euros, dollars or yen that are traded electronically. The most common characteristics of bitcoins are their decentralized feature. This is one thing that makes it different from the regular currencies. They are not controlled by a single institution. For this reason, people will be relaxed, and it will mean that even the biggest banking institution ill is not able to control the money.
Who created Bitcoins?
The system was developed by Satoshi Nakamoto, who developed a software and called it bitcoin. The software was an electronic payment system that was based on the mathematical evidence. The notion of this system was to develop a currency that was independent of a central authority. It was also supposed to be transferable automatically, with low transaction fees.
Who prints the bitcoins?
Generally, no one prints them. They are not physically printed like by a central bank. It also makes its own rules. The banks can produce more money that will cover the national debt, for that, it will devalue the currency. The bitcoins are created electronically by a group of people that is open to joining. They are mined through a computing power in a network that is distributed. The network will process the transactions that are made with the bitcoins, which makes bitcoin an independent payment network.
What are they based on?
The regular currency has been based on silver or gold. When you give out a dollar at a bank, you will be given gold in exchange, though it was not practical. The Bitcoins, on the other hand, are not based on the gold. Instead, they are based on the mathematics.
People use software to track down a mathematical formula that helps to produce the bitcoins. These formulas are available for free, to allow any interested person to have access to them. The bitcoin software is an open source that can be accessed by anyone who is interested.