ESCHBORN, 22-Mar-2016 — /EuropaWire/ — A new technology is causing a stir in the FinTech community: Blockchain has many market experts believing that it is the greatest achievement of the past decade for financial technology and the most important digital innovation since the internet protocol TCP/IP.
With Blockchain, all transaction participants share a data base, the same data pool and each transaction is recorded – similar to a bank statement, but on a distributed ledger which is maintained by a network of computers. The special feature of Blockchain is that data is transmitted peer to peer, that is without a central instance, and transactions are verified by Blockchain users themselves.
Blockchain emerged as the underlying technology of the cryptocurrency Bitcoin, however market interests have largely shifted to the technology itself over time. Major banks and stock exchanges are now examining ways to integrate the technology and thus make their own processes faster and more cost-efficient.
The name Blockchain is derived from the way that transaction information is held and stored. A certain number of transactions are bundled in a block, and every block also bears a so-called hash of the previous block, which is an unforgeable key linking each block with its predecessor in order to ensure that the chain is documented and traceable back to the first block.
Blockchain has been gathering increasing interests from the financial sector. A company called R3 CEV has been researching the possibilities of Blockchain since September 2015. The fact that it is backed by 42 major banks, among them Citi, Bank of America, Morgan Stanley and Deutsche Bank shows the high degree of interest this new technology. As a leading markets infrastructure provider, Deutsche Börse Group is also exploring the potential of Blockchain for our customers. Building on the initial task force of YouNovate and the Cross-Divisional Innovation Circle, – our in-house innovation programs – a new formal cross-divisional Working Group led by Group Product Development has sounded out the technology’s potential for the Group, which has, among others, resulted in cooperation with the non-profit Linux Foundation.
This and a number of other pilot projects were launched in 2015 in the financial industry. It is now anticipated that the first “live” applications of Blockchain will take place in the coming years. What is known for a fact is that Blockchain is being examined, tested and adapted but no one is able to predict exactly what the future industry landscape will look like.
”Blockchain has the potential to bring significant changes to the way the financial industry operates, yet with uncertainty and complexities to be tackled before wider adoption. And I believe that cost efficiency could be achieved where the advances of the technology are properly applied and aligned with key market principles such as regulatory requirements, legal certainty, risk mitigation”
– Ashwin Kumar, Group Head of Business and Product Development, Deutsche Börse Group –
Additionally, collaboration with leading Blockchain providers is being built. For example, Deutsche Börse Group recently invested in Digital Asset Holdings, a developer of Distributed Ledger Technology for the financial services industry. Ashwin Kumar, Global Head of Product Development of DBAG, is a member of the Board of Directors of Digital Asset Holdings.