Swiss Bank is Going to Study Bitcoins


04/02/2015

Swiss bank UBS study the prospects for the use of Bitcoin technology in the financial sector. This work will take a special team, which will begin in London later this month.



In April 2015, the largest Swiss bank UBS in London will bring a team of experts from the financial and technology sectors. Their task will be to find new technologies to solve the problems of the financial market and improve the efficiency of financial institutions.

One such technology, according to UBS, can be a blockchain similar to that used in the system Bitcoin. A significant part of the team will be devoted to analyzing this technology.

UBS will deputize the commission to study the possibility of using chains of blocks in the banking sector. The Bank believes that this technology can significantly reduce the cost of processing transactions, and make transactions more transparent and increase the reliability of the financial system.

Blockchain is the basis of the cryptocurrency Bitcoin and its alternatives. This chain is an analog of decentralized public books of account-operations. It records data on all transactions made by users of Bitcoin.

Since Bitcoin and other similar Cryptocurrency are decentralized, that are not controlled by any single body, such as the central bank, public financial institutions took them negatively.

At the same time, some financial institutions have realized that the technology, underlying the Bitcoin, can be used to improve the efficiency of the public finance system, without renouncing its centralization, i.e., maintaining control over the flow of funds.

Bank of England turned out to be one of these organizations.
 
- The private virtual currency have important drawbacks and therefore have high volatility. Nevertheless, the idea of ​​a decentralized open book credit and debit transactions underlying these systems has good prospects, - the report of the bank, published in February 2015.

The Bank of England earlier this year agreed to provide $ 15 million for research in the field of virtual currencies.

Meanwhile, it is only a small part of the funds that industry of financial technology (FinTech) attracts. According to Accenture, in 2014, investment in the FinTech industry, including all kinds of Bitcoin-startups, amounted to more than $ 12 billion, compared with $ 4 billion in 2013.

The easiest way to understand the operation of the system Bitcoin is to imagine account-book operations. Imagine that this book lies in the center of the table, at which sit a few people. The balance of everyone, who sits at the table, is written in the book. And any of these people can freely borrow a book from the table and see the balance of any person, as this information is open to all. If one decides to transfer means to another, he declares this intention aloud to all sitting at the table. After that, they all take a decision on the application and, if agreed with it, together record in the book that the first man had such a sum deducted and the second had exactly the same amount added.

In such a system banknotes and coins are missing and never appear. In this case, no one can spend the money twice, because there is the account being a clear of how and where money go. So Bitcoin system works. However, its members are not at the table but around the world. All of them are connected to the network and transfer funds using addresses, not names. The accuracy of the address is verified using public key encryption. In this case, the payer and the recipient's identities remain secret.