Bitcoin and the Copycat Bankers

Banks are eyeingBitcoin’s technology more closely than ever, the community says, as thetechnology behind it becomes a source for innovation outside crypto-currency.

Bankers far and widewere quick to dismiss Bitcoin, with their views in recent press ranging frominsults to casual musings on its long-term lack of prospects.

“It’s not a currency. I wouldn’t be surprisedif it wasn’t around in the next 10-20 years,” veteran investor Warren Buffett told CNBC in March, with his businesspartner Charles Munger even likening it to “rat poison”.

Cherry-picking?

Nonetheless, this hasnot stopped the industry from examining the technology behind Bitcoin with afine toothcomb behind the scenes.

“It's safe to say that every bank is looking atwhat's going on with Bitcoin and those types of technologies,” Steve Kenneally, a vice president of theAmerican Bankers Association told Bloomberg. “Mostof the larger banks are investigating it. The larger the banks, the furtheralong they are.”

Bloomberg reports onhow payments and accounts technology provider Fiserv Inc. “is examining Bitcoin’s use of encryption to ensure transfers aresecure,” while FIS, which makes payment handling systems for banks, “is examining whether a public ledger likeBitcoin’s could help securely move funds on existing networks.”

Fiserv president MarcWest is “especially interested” inthe cryptographical aspects of Bitcoin, which could be incorporated into thecompany’s existing products.

As governmentregulators adopt an increasingly critical approach to Bitcoin, the idea thatessential financial networks could adopt aspects of the technology in thefuture will be a bitter pill for many to swallow.

Nonetheless, news ofnew private-sector investment in Bitcoin appears every day, with Vaurum’srecent securing of US$4 million in seed funding being a particularly excitingexample.

Wedbush SecuritiesManaging Director Gil Luria, who envisages a concept of Bitcoin “successfully supplementing sovereign currencies” in the future, isconsiderably less averse to its mainstream adoption in some form than many.

“If banks were to transact with each other inBitcoin, that would be a large opportunity,” he told Bloomberg.


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