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Blockchain technology in banking and fintech is not a new thing. The sector has been working on implementing the distributed ledger technology into its operations for more than a year now. As they make progress, the Wall Street clearinghouse has decided to hop on the bandwagon by adopting blockchain technology.
According to reports, Depository Trust and Clearing Corporation – DTCC has announced its intentions to start using Blockchain technology on a trial basis. DTCC is a leading firm offering back-end trading services to many Wall Street companies. To start with, DTCC will be replacing one of its central databases with distributed ledger.
The DTCC blockchain project will be spearheaded by the Information Technology powerhouse, IBM. The process of development and implementation is expected to start soon to ensure a fully functional platform by early next year.
The coverage on one of the leading newspaper quotes the CEO of DTCC saying,
“This is a real tangible step into what could be a very different future for Wall Street.”
The acceptance of Blockchain technology by Wall Street institutions is driven by both cost benefits and increasing competition from the mainstream cryptocurrency industry. The banking and financial institutions woke up to the possibility of using blockchain technology after they felt that the growth of Bitcoin may threaten their business. By implementing blockchain technology into their existing operations, they will not only be able to offer services at the same speed as Bitcoin transactions but also reduce the overhead costs by including automation and eliminating third party fees.
DTCC is not the first trading infrastructure provider to consider the use of blockchain technology. NASDAQ has already created LINQ and working on further improving it. Similarly, driven by Digital Assets Holdings, the Australian Securities Exchange has also implemented blockchain based automated clearing system for trades.
In the case of DTCC, the platform will not be using Bitcoin blockchain, but a distributed ledger which shares similarities with the blockchain. If the trial turns out to be successful, DTCC may also consider using the technology for fund transfers in addition to record keeping operations.
The increasing interest among large corporations in Blockchain technology will soon drive more businesses to do the same. This will eventually end up making distributed ledger technology, an industry standard.
Ref: NYTimes | Image: NewsBTC