Blockchain Hits Banking: Six Global Banks Unite to Create Digital Currency
Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street have joined forces to create the ‘Utility Settlement Coin’ (USC), a new form of digital cash for clearing and settling financial transactions built through Blockchain. The group expects to launch the digital currency at the end 2018. For the moment, they are in discussion with central banks and regulators.
“The distributed ledger is one of the most innovative technologies out there,” said Lee Braine from Barclays to the FT. “From reducing risk to improving capital efficiency in financial markets, we see that this project has several benefits.” According to UBS the promise of the Blockchain technology is transfers and ownership can be settled instantly.
Digital currencies are described as revolutionary as they do not require a central bank to issue them, nor intermediary financial institution to perform transactions and store money. Digital currencies can be traded and verified electronically by members of the connected network, offering a much more attractive alternative to the current financial system.
From Let’s Talk Payments
Moreover, digital currencies offer tighter security at a time when transactions are predominantly carried out online. The initiative is also an attempt by the group to strengthen data privacy and cyber security protection amidst increasingly cyber threats posed to banks and payments systems.
How does Blockchain work and what are the benefits
The move indicates that the banking industry is at last embracing digital currencies and setting foot into a new payment era. Blockchain is mostly known for being the technology underpinning Bitcoin, but in reality, a lot more.
It is a form of distributed ledger technology, where all transactions have originated from the same block, creating a connected network. In essence, Blockchain allows each transaction to be automatically recorded, verified and centrally accessible, thus making bureaucracy and intermediaries things of the past.
Merchants can benefit from a Blockchain payment system, particularly because of the security measures and the speed of transactions. Additionally, digital currencies are stored in an individual’s mobile wallet, making it convenient for merchants and customers to process payments and making it possible for businesses to expand their sales scope.
A survey recently revealed that 96% of consumers believe it is crucial for a business to offer multiple payment methods. So, merchants must be up to date with the latest technologies available on the market. British retailers have been doing well so far in this regard, leading the number of Bitcoin merchants, along with the US.
Online payments are vital for retailers to offer their customers convenient ways to pay whilst being secure to reduce fraud.
For those merchants, Secure Trading offers solutions such as card store and tokenization.