Whenever you make a Bitcoin transaction, it's recorded on a public ledger called "blockchain." Now, a handful of big banks have partnered (PDF) with New York firm R3 to adopt the cryptocurrency's database system for use in finance. These nine banks, including Goldman Sachs, JPMorgan Chase & Co. and Barclays, will help the firm develop standards and agree on the underlying architecture that the sector will use. After that, they will decide where the software can be applied and then test it out to be sure. Due to the way blockchain works, it has many potential applications: for instance, it could speed up the process of tracking ownerships or the transfer of assets between two people.
The Senior Vice President of Emerging Technologies at State Street, Hu Liang, believes "these new technologies could transform how financial transactions are recorded, reconciled and reported -- all with additional security, lower error rates and significant cost reductions." For this new system to be effective, though, all banks and everyone else in the financial market must agree to use it. In addition to the financial sector, IBM has also been eyeing Bitcoin's blockchain technology: the corporation is also working to adopt it for use on a new international payment platform.
[Image credit: btckeychain/Flickr]