Some of the world’s largest banks and tech companies are teaming up to test blockchain-based applications in an attempt at modernization.
Barclays, Citigroup and IBM will be participating in the LedgerConnect proof-of-concept, the companies said Monday. Barclays and Citigroup are the founding members and IBM is the software partner, Reuters reported.
The LedgerConnect blockchain app store will make it easier and faster for banks to get access to the applications by focusing on making it less complex and cheaper than an individual distributed network.
Blockchains are more popularly used in cryptocurrencies like Bitcoin, but they can also be used in other transactions such as contracts, records and other information.
They work like this: an individual makes a transaction request; that request is processed in a person-to-person network of computers, called “nodes;” nodes then validate the transaction; once the transaction is validated, the network creates a new “block,” which is attached to all other transactions; and then the transaction is complete.
What makes blockchains unique are the nodes and the blocks. The network is completely decentralized through the use of nodes and blocks, and because every node has the same record of transaction it makes fraud much more difficult.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value,” wrote “Blockchain Revolution” authors Don and Alex Tapscott.
Many banks have begun testing blockchain-based applications, however, few have gone into production, Reuters reported.
“Barclays is participating in the LedgerConnect proof-of-concept so we can gain an understanding and experience of a new network for blockchain applications – and also test some candidate use cases on that network,” wrote the chief technology office of Barclays’ investment bank, Lee Braine, in an email to Reuters.