Fintech company R3 CEV announced a large-scale test of the bond trading system based on blockchain technology. Forty of the global major banks are involved in creating standards and protocols for using this technology in financial services. The group experimented with five distributed ledgers (another term for blockchain technology), provided by hi-tech giants such as Ethereum, Chain, Eris Industries, IBM, and Intel.
In the course of the experiment, participants tested five different blockchains to issue, trade, and redeem a fixed-income product. “This development further supports R3′s belief that close collaboration among global financial institutions and technology providers will create significant momentum behind the adoption of distributed ledger solutions across the industry,” David Rutter, R3’s chief executive said in a statement. “These technologies represent a new frontier of innovation and will dramatically improve the way the financial services industry operates, in much the same way as the advent of electronic trading decades ago delivered huge advancements in efficiency, transparency, scalability and security,” he made a comment.
Blockchain technology was developed as a decentralized ledger of transactions with the cryptocurrency called Bitcoin. It means all operations can be executed directly without involvement of a central third party by means of cryptography. Operations are shared among several servers and have to be verified by each other. Banks are sure the technology could save them money by cutting out middlemen and streamlining operations. According to Santander’s estimates, banks could save almost $20 billion.
