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Big Banks Buy into Blockchain

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UBS and a number of other big banks around the world are working together to develop a cross border trade settlement platform that uses blockchain technology. I’ve been skeptical of bitcoin and other crypto-currencies, but I have always maintained that blockchain technologies would prove the most valuable part of the crypto-currency revolution. Paul Vigna reports at The Wall Street Journal on this latest effort:

A group of financial firms led by UBS Group AG UBS -0.70% plans to start using a bitcoin-like token to settle cross-border trades, one of the biggest developments yet in the effort to make use of nascent blockchain technology.

The 14 firms—a group that includes big banks in the U.S., Europe and Japan—have created a new company to control development of the token, called the utility settlement coin, or USC. They have collectively invested £50 million ($63.2 million) in the company, Fnality International.

The launch of the USC project, four years in the making, may herald a new phase in the banking sector’s adoption of blockchain, the record-keeping technology that underpins bitcoin. A number of blockchain projects are moving out of the experimental phase and into production, a sign that the technology is becoming more integrated in the global financial infrastructure.

The USC token would function both as a payment device and messenger that carries all the information required to complete a trade, potentially cutting down on a transaction’s time and cost.

Processing a trade can involve multiple parties, especially if it includes a cross-border trip. Trades can take days or weeks to clear, and failed trades, in which one party ultimately doesn’t complete its end of the deal, are common.

With a blockchain-based system, all the functions performed by intermediaries are baked into the transaction itself.

Read more here.

You can find some of my past writings on blockchain technologies here:

Originally posted on Your Survival Guy. 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.