Tag: blockchain

Tech needs open data barks watchdog

Canada’s top securities watchdog  has barked that open access to data is essential to developing financial tech solutions using innovative technology such as blockchain.

The Ontario Securities Commission (OSC) paper was the product of a “hackathon” it hosted in November aimed at finding new financial technology solutions to old problems such as regulatory processes, identity authentication, and transparency.

Blockchain, or distributed ledger technology, underpinned most solutions proposed at the hackathon, according to the paper. Blockchain is a tamper-proof, decentralised database.

Pat Chaukos, chief of OSC LaunchPad, a regulatory “sandbox” created last fall as part of its efforts to modernize and support innovation said that Blockchain has the potential to create solutions for problems in an open and scalable way,

But it needs open-access data before you can get to the innovation.

The European Union is ahead on this sort of thing. Its Payment Services Directive 2 (PSD2), for example, set to come into effect in early 2018, will allow a third party to access banking data with the customer’s permission.

“We’re going to support the facility of access to data. … It is very much a live discussion for all regulators, and I would actually even say for government,” said Chaukos.

Requiring financial institutions to make core information about a client available to other parties could potentially make signing up for financial services simpler, for example.

Open data would eliminate duplication and streamline manual regulatory processes, including how information is verified, collected and analysed, the paper said, improving auditing, and oversight, and making compliance checks faster.

The move would also increase competition and offers tangible benefits for investors, Chaukos added.

Blockchain gains as software giants form alliance

PMorgan Chase, Microsoft,  Intel and more than two dozen other companies have teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum.

The move is seen as the latest push by large firms to move toward distributed ledger systems and a considerable move forward for the bitcoin based tech.

The Enterprise Ethereum Alliance (EEA) will work to enhance the privacy, security and scalability of the Ethereum blockchain, making it better suited to business applications, according to the founding companies.

Members of the 30-strong group also include Accenture, Banco Santander, Credit Suisse Group  and shedloads of other bankers and financial groups. The EEA joins a growing list of joint initiatives by large companies aiming to take advantage of blockchain, a shared digital record of transactions that is maintained by a network of computers rather than a centralised authority.

Companies in a wide range of industries are hoping that it can help them streamline some of their processes, such as the clearing and settling of financial securities.

Ethereum, a type of blockchain that can be used to develop decentralised applications, was invented by 23-year-old programer Vitalik Buterin. Several banks have already adapted Ethereum to develop and test blockchain trading applications.

Alex Batlin, global blockchain lead at BNY Mellon, one of the companies on the EEA board, said over the past few years banks and other enterprises have increased collaboration with the Ethereum development community, facilitating the creation of the EEA.

SThe EEA will collaborate with the non-profit foundation that promotes the development of Ethereum, the companies said.

Dubai and IBM working on Blockchain

blockchainThe government of Dubai and Biggish Blue are launching a scheme using blockchain computing technology to process financial transactions and keep track of goods being shipped.

The initiative will provide real-time information about the state of goods and the status of their shipment to Dubai’s customs and trade agencies and companies involved in the trade process, IBM said.

Dubai registered $176 billion of non-oil trade in the first half of 2016, has cemented itself as one of the largest re-export centres for goods flowing between Asia and the Middle East and Africa.

IBM said it was also working with companies including du, a United Arab Emirates-based telecommunications firm, Dubai’s largest bank Emirates NBD, Spanish lender Banco Santander, Dubai-based logistics firm Aramex and an unidentified airline on the scheme.

Blockchain works as an electronic transaction processing and record keeping system that allows all parties to track information through a secure network, with no need for third-party verification.

Proponents think it could make transactions faster and safer, and have a wide range of applications.

The Dubai deal follows a plan announced in February 2016 by the government there to become a f blockchain centre.

IBM said the two banks taking part in the project would use blockchain for trade finance transactions involved in the scheme.

Accenture tinkers with blockchain

blockchainAccenture is changing a feature of blockchain by patenting a system that will allow data processed and stored using the technology to be edited.

This will effectively kill off a defining feature of the technology which makes it impossible to change. The consultancy said data would only be edited under “extraordinary circumstances,” to resolve fat-finger-type human errors and meet legal and regulatory requirements and address wrongdoing.

Obviously some blockchain users thought this idea was pants.  Blockchain is the latest investment by the financial services industry in the nascent technology, which promises to cut costs, reduce settlement times and increase transparency.

Normally the blockchain underpinning digital currency bitcoin is kept secure by data being shared across a global network of computers, which are incentivized by competing to win new bitcoins by data “mining”.

Technologists say that not being able to edit the technology makes blockchain unique and that without it, the term becomes meaningless.

Gary Nuttall, founder of blockchain consultancy Dislytics said that an editable blockchain was just a database. The whole thing about blockchain is that it’s immutable, so this just defeats the object.”

Because so-called “permissionless” blockchains like bitcoin’s have no centralized authority, it is essential that transactions cannot be tampered with.

Accenture claimed its prototype would be for the private “permissioned blockchains” favoured by banks, which would have designated administrators who manage the network under agreed governance rules.

Richard Lumb, Accenture’s group chief executive for financial services said that for financial services institutions faced with a myriad of risk and regulatory requirements, absolute immutability is a potential roadblock.

Banks moving to blockchain technology

blockchainTwo financial outfits are planning to simplify their trading process using blockchain technology.

For those who came in late, blockchain is a distributed database that maintains a continuously-growing list of data records which are protected from tampering and revision. Both HSBC and R3 have said separately that they had created ways of using blockchain technology to simplify trade finance processes.

The two banks said they had joined with the Infocomm Development Authority of Singapore to emulate a letter of credit (LOC) transaction. This is important because those Letters of credit are one of the most widely used ways to reduce risk between importers and exporters, helping guarantee more than $2 trillion worth of transactions.  Using blockchain would remove the need for this to be a huge time consuming paper trail.

R3 said more than 15 of its consortium member banks have also designed self-executing transaction agreements, known as smart contracts, on R3’s distributed ledger platform to process accounts receivable purchase transactions, known as invoice financing or factoring, and LOC transactions.

By putting the transaction on a distributed ledger, the importer and its bank, together with the exporter and its own bank, can see the data in real time.

The money men and women have been tinkering with blockchain technology. The theory is that it could save billions of dollars in costs and speed up transaction times. It also underpins the digital currency bitcoin, which creates a shared database in which participants can trace every transaction.

 

Android man could save the banks with his blockchain

blockchainA British Google engineer, whose speech recognition software is used in more than a billion Android smartphones, has launched a company that uses blockchain technology to build a better operating system for banks.

Paul Taylor from Cambridge University started working on the system, called Vault OS, two years ago. His blockchain technology has already won the hearts of bankers, which is odd because few people thought they had any. The reason it is so good is that it has the potential to shake up how markets operate. The technology, which shares ideas with the digital currency bitcoin, creates a shared database in which participants can trace every transaction ever made.

The ledger is tamper-proof and transparent, meaning that transactions can be processed without the need for third-party verification.

Taylor’s idea is that the banks are using software which was written in the 80s and 90s, and they just are not ready for the security-conscious internet app age. But blockchain provides a very secure way of storing transactions. It means that there is no need for in-house data centers because everything is on the cloud.

He said that high-street banks were spending around $1.3 billion a year on computer technology, much of which he said was being used for propping up the current “legacy” systems rather than on any innovative technology.

Blockchain could be five to 10 years away from widespread adoption. It street cred was damaged by its association with bitcoin, but it is working with ten banks and a trial of the new system will start in August.