Topic: Why would banks use a blockchain? (Read 2855 times)

This is the best answer, the blockchain can make the companies run in automation on his beneficial structure.
With accounting 2.0 with fully automation and they can save a lot of bucks.
That's why the entethalliance has made.

Ask rather, "Why would banks use accounting."

The way I describe to non-technical people is, "It's accounting 2.0."

Traditional two-entry accounting can span thousands of ledgers for sufficiently large corporations. A blockchain is a single, distributed ledger, an immutable record, fully auditable, and best of all, math!

There's an article about this in the Financial Times called, "Big banks plan to coin new digital currency". I had written about this in another post. Currently, four large banks are working on building their own digital currency, and the technology they're planning to use is built on Bitcoin. Here's a link to the article: https://www.ft.com/content/1a962c16-6952-11e6-ae5b-a7cc5dd5a28c

Sometimes a subscription page is shown when you click on the link, You can find the article by doing a Google search for it.

It's not so easy. There are two different things:
- Banks would use blockchain, because it will be faster and cheaper: Yes, it's blockchain, not Bitcoin
- People are using blockchain: Yes, because people use Bitcoin which is blockchain too
- People will search for banks who have implemented the blockchain technology: No, because people won't mind what's behind the scenes in banks' system, is it a blockchain or not, they only want cheap and quick service, and they don't care about how banks solves this inside their systems. If banks can solve it with blockchain or without blockchain, people usually don't care
- Banks should use blockchain as soon as possible: Yes, because they can cut their costs on international transfers  (with blockchain and not with bitcoin). National transfers and intra-bank transfers are quick and cheap without blockchain, so banks won't develop this. International transfers are mainly used by companies (most of the people start international transfers really rarely, few times a year). People won't choose a bank depending on the usage of the blockchain for international transfers, because this is not their main interest. It's only companies (export-import companies) who can benefit from switching to blockchain, but really big companies has discounted fees at banks, so it's only the time that can be the real benefit for them (nowdays international transfer takes 2-3 days, with blockchain, it could be some hours, but in this case all the banks should use the same blockchain system)

Banks would use blockchain because it is more affordable and also it can expand the number of its users because those people who are using blockchain will try banks that use blockchain too. Blockchain is much cheaper than the traditional system and it also offers fast transaction, So i think banks should use blockchain as soon as possible.

Yup.  Customers want to use blockchain assets like bitcoin and so financial services providers (aka banks) will need to use a blockchain to enable these services. 

Don't misunderstanding between bitcoin and blockchain. Maybe bank refuse bitcoin, but they can use blockchain as their infrastructure

Blockchain guarantees that transactions won't be fake and etc, all transactions will be publicly available but that's what banks don't want. Not only banks but even countries have to use blockchain, if you searched, you may know that georgia is first country which turned into blockchain system.
Also it will be a great step against money laundering.

I've read the linked ethereum post and found it pretty interesting, thanks.
In connection with the above mentioned in-bank blockchain, I don't think that a kind of solution like that will be implemented at all. My opinion is that banks don't need a blockchain like solution just for intenal purposes. They already have their own system that's accurate, fast and has security functions implemented. In-bank transfers usually complete in a second, or even less, it's just modifying 2 values in a database.
Making the system redundant (2 server farms in the country) can provide enough security for disaster recovery purposes with a proper backup procedure implemented and used. If they create a new blockchain solution to eliminate the 2 server farms and they provide dedicated computers in each branch to keep the database always up-to-date and updated, they can save the price of the server farms but current blockchain solutions will lead to slower service, which is unacceptable now.
Blockchain solution is needed in case of inter-bank transfers because the current system is relatively slow. In my country, transfers (same currency, same country) completes in an hour usually, but in peak time it's a bit more. This could be done faster using a restricted blockchain, used by the banks in the same country. Blockchain for international transfers can be a real challenge.

I have thought a bit about that question. At a first glance, it makes no sense for a bank to use neither a centralized blockchain - because it would offer no advantage to traditional database accounting systems - nor an open blockchain with PoW or other consensus mechanism - because they would give up control about the transactions and expose them to certain risks.

An interesting post has been written in the Ethereum blog. There are two main categories where "restricted" blockchains could make sense.

First as an "inter-banking" transfer mechanism ("consortium blockchain") where the trust between institutions can be lowered a little bit (blocks must be signed by the majority of connected institutions, but not by all, and one malbehaviouring node - e.g. after a hack - would not be able to bring down the system).

And then as a private "in-bank" blockchain - but such private blockchains would not be actually very different from the traditional databases, only that they would add a kind of "cryptographic proof" for the state of the system. It would be a kind of additional security layer. The author of the blog post, however, thinks that with less complex measures like libsnark that could also be achieved.

What would have to be analyzed if these two ways really represent a more efficient approach to security than already known traditional security mechanisms. I think the real benefit of the blockchain is that it enables decentralized systems to work - so "bank applications" would only be a side-effect and not be at all important for Bitcoin.

I can imagine that the usage of a blockchain brings a big plus of security to banks.
Bitcoin which is based on blockchain technology is very difficult to hack.
Banks could adapt this system to their own necessaritys and make the digital flow of money even more safe from attacks.

i think currently the banks do not feel the need to use it but as time pass we can see that the modern countries are adopting the technology and that is why we can say that after some time all the countries the modern or the backward will start start using bitcoin. because it is the need of the time.

May be you have miss something or you are a bit confused about bitcoin and blockchain. Blockchain is a blessing that is, a gift and not a threat even for the banks too. Blockchain can operate not only with bitcoin but for many other usages like as smart contracts, digital assets, records etc. Banks are welcome to buy bitcoins like as any other organization and individuals too. So they can sell their bitcoin stash anytime they want like the rest investors. There is no reason banks secretly to mine bitcoins and is completely mindless running mining software from their offices. The mining software is free for everyone even he wants to use the GPU of his laptop to mine what? bitcoins only in 2009. If banks want they can invest money to create mining pools like as any entrepreneur. On the other side they really want blockchain because as an idea is revolutionary, innovative and cost effective as some forum members already have posted.

They have no choice to jump in the train if they won't to follow the trend. better for them to use instead to be obselete in some years from now. It can aslo i guess reduce their costs. (operations, maintenance, ect)

The only answer is profit. Everything that banks do is only because they see the opportunity to earn money and make profit. They see in blockchain new technology they could easily use in they business, lower the costs and run profitable business. Simple as that. But the fact that banks will implement blockchain technology will not influence Bitcoin in negative way.

Why do the banks wanted to upgrade their system? The answer is not just about accuracy but the answer will lead to profit. Why are there banks, the banks are existing because of profit. Banks always mean business and business means profit. And so you cannot separate their integration of blockchain technology to profit since they are alive and operating because they are gaining profit.

Blokchain is a threat to the banks.
Banks act as a third party to regulate the trade between 2 people
 and charge their commission.
Where as in block chain the  people who have to do the transaction only are present and no third party.
This is a threat to the banks.
If bitcoins in the coming years progresses in the same way than banks may start closing.
And at a time there may be no banks.
But banks can use blokchain to purchase bitcoins form the money they have and sell it at a higher price later and earn.
Banks might secretly also may set up mining computers in  their offices and earn then.
Thus   there are very few things a bank can do with blockchain

I just think if the blockchain can remove a lot of the middleman, blockchain have various advantages.
You mean about public and private blockchain. Fully automation in the future.
https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/

I agree that blockchain and profit are two different things.  Blockchain is like a ledger and more likely bank will have a private ledger (blockchain) if they are to use it.  Though I can say blockchain can be possibly manipulated if it is private and no one can verify it and all nodes connected to it approved the manipulation.

I do not know much about it, but closed blockchain is able to access by particular people, and open blockchain is what bitcoin uses.

so it will make banks easier to record the data because sometimes the employer makes mistake in counting the money.