UBS CIO: Blockchain Technology Can Massively Simplify Banking
J Thoendell stashed this in Cryptocurrency
According to Oliver Bussmann, CIO of Swiss bank UBS UBSN.VX -0.96%, the biggest disrupting force is the blockchain – the underlying technology behind Bitcoin, the electronic-only currency which is created on computers and isn’t controlled by any government or centralized authority.
The blockchain is the open, decentralized online ledger which verifies transactions in the digital currency.
Almost any document can be digitized, codified and inserted into the blockchain, a record that is indelible, cannot be tampered with, and whose authenticity is verified by the consensus of a community of computer users rather than by the discretionary order of a centralized authority.
It is slowly making its way into international financial debate, with many embracing the idea that it can be adapted to verify and record a wide range of real-world financial transactions, such as transmitting international payments and other assets or clearing securities, all using a database that is distributed across the internet yet still held secure.
The Bank of England recognized the technology’s potential in a report in September, describing it as a “significant innovation” that could have “far-reaching implications.”
However, the association with bitcoin, which is reeling from a string of crises involving fraud probes and bankruptcies and has a reputation for facilitating payments on the so-called dark web – an online marketplace for anything from drugs and weapons to assassins for hire –means few executives inside large established financial institutions want to talk publically about it.
“I believe – and this is my personal view – that blockchain technology will not only change the way we do payments but it will change the whole trading and settlement topic,” said Mr. Bussmann.
He believes that blockchain technology has potential to trigger “massive” simplification of banking processes and cost structure.
He said: “When somebody with a strong brand and security level establishes it as a reliable service, then the whole industry will follow. That is my personal prediction.”
Stashed in: Bitcoin