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Wall Street’s largest bank, Goldman Sachs, is working on a blockchain network to integrate it with its trading instruments and keep a more effective record of its transactions.
Although America’s largest investment bank has been skeptical of investing directly in cryptocurrencies, blockchain technology has been seen as an opportunity to improve its financial services. Although the instruments they trade in are becoming increasingly sophisticated, the approval of transactions relies on old systems or software that has not been updated for years.
Blockchain technology facilitates the process of recording transactions and tracking assets in a trading network. In the cryptocurrency industry, blockchain works as a decentralized network, where many users independently approve transactions made on the network and keep a record of these in the code that supports the system.
The most significant advantage of blockchain is that it is an ideal technology for recording information since transactions can be verified almost instantaneously and are stored within the network code in an immutable and transparent way to all members. This feature makes blockchain ideal for banks, making it easier to track payments, accounts, and purchase or sale orders, among other things.
Unlike the blockchain network that operates in cryptocurrency systems, it would work differently on Wall Street, as access to the networks would be restricted and they would not be decentralized.
Blockchain is revolutionizing the banking business
Goldman Sachs points out that incorporating a blockchain network into its trading platform will reduce the risks associated with this financial activity. It can also make it easier for companies to keep track of who owns their shares on the stock exchange.
The first bank to venture into a blockchain system was JP Morgan in 2016 in a joint project with Ethereum.
Out of this first test pilot between the cryptocurrency company and the commercial bank came Quantum, a blockchain financial open service portal that allows its customers to create ecosystems to keep track of their transactions in their various business activities.
Companies outside the financial sector have used blockchain technology, such as Walmart, which uses it to track orders in its supply chain. In the real estate sector it is being used to register properties.
The creation of a blockchain network has the potential to lower Wall Street transaction costs. (EFE)
Although Wall Street has viewed cryptocurrencies and the blockchain network with skepticism for years, this attitude has changed in recent years.
With the push from Wall Street bankers comes new challenges stemming from implementing new technologies. The Basel Committee oversees financial practices across the globe and has indicated that it is working on new regulations for incorporating blockchain networks into traditional economic systems.
Although it is not yet known how much Goldman Sachs has invested in the creation of its blockchain network, according to The Wall Street Journal, the project has already launched a pilot project with the sale of a debt bond for more than $100 million, which was issued in the Ethereum ecosystem and then purchased by the European Investment Bank.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica