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Six Banking Giants Just Decided to Partner to Create a New Cryptocurrency

Undoubtedly, the top concern of banking and finance is security. Banks have the duty to offer a secure storage for money. At the same time, an effectively functioning bank should allow room for a fast verification process when transactions are done and keep the transaction records safe.

Given the apparent success of the cryptocurrency ecosystem, many financial institutions and banks are currently paying a closer attention to the blockchain technology, the engine that drives the cryptocurrency, Bitcoin. In essence, blockchain is merely a distributed digital ledger technology that offers a decentralized support for Bitcoin. The huge success of Bitcoin in 2017 has seen six banks presently making partnerships to rip the benefits of blockchain by developing their unique cryptocurrency.

The name that the banks have proposed for their new digital asset is “utility settlement coin.” Notably, the conceptualization and development of utility settlement coin date back to 2015 when experts from the financial services firm, UBS, decided to create a digital asset that would enable global clearance and settlement of transactions via a blockchain. The six banks involved in this project are State Street, HSBC, Barclays, Canadian Imperial Bank of Commerce, Credit Suisse, and MUFG. However, these are not the only banks that will take part in the actualization of the new digital coin. They will simply join the other banks that are already in the project, including BNY Mellon and UBS.

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According to Lee Braine from Barclays Bank, “The distributed ledger is one of the most innovative technologies out there.” “From reducing risk to improving capital efficiency in financial markets, we see several benefits of this project.”

The utility settlement coin is set for a limited back end run come 2018. To ensure a smooth adoption of the new digital asset, the banks continue to hold talks with various central banks regulators.

The cryptocurreny market is steadily growing by the day. In fact, the chances are high that the cap can be more than even $200 billion towards the end of 2017. Perhaps, the explanation for the expanding cryptocurreny market is that blockchain finds use in many areas, such as tracking electricity in the grid, fighting climate change, and offering distributed aid. However, blockchain still has room for expansion in the sphere of finance. The expectation is that the utility settlement coin will help in testing the technology in a bigger scale. For that reason, the development and actualization of the utility settlement coin will be a beneficial move for not only the banking sector but also the cryptocurrency ecosystem.

Source: “Six Banking Giants Just Decided to Partner to Create a New Cryptocurrency.” Futurism, 2 September, 2017. https://futurism.com/six-banking-giants-have-decided-to-partner-to-create-a-new-cryptocurrency/

About Geofrey Raballah

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