By While blockchains are seen as the shared ledger technology behind facilitating and tracking cryptocurrency transactions, Wall Street bankers are starting to explore its use in trading and beyond, even as they duck direct crypto investments.
The country’s largest bank, J.P. Morgan, has already started processing some trades on blockchain networks. Goldman Sachs is actively exploring it, as are other big banks, The Wall Street Journal reported Monday (Aug. 22).
Because the system that Wall Street is currently operating across is outdated and slow, bankers are eyeing blockchains as a less expensive, faster alternative with the potential to add up to bigger profits, per the report.
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The blockchains, which are also known as distributed ledger technology, use a central ledger to keep track of assets, transactions and ownership. Blockchains used on Wall Street would be permissioned networks with a central party controlling who is allowed on.
“Blockchain technology is going to rewire all financial services,” Tom Farley, the former president of the New York Stock Exchange, told the Journal.
Read more: PYMNTS Intelligence: Evaluating the ROI of Blockchain Technology
Companies on Wall Street have been trialing projects on blockchains for about five years, but the report noted that so far, the impact on financial transactions has been minimal. Goldman and others have said that handling trades across blockchains will likely lower some risks and make it easier to pinpoint shareowners.
The report noted that Mathew McDermott, who runs the digital asset group at Goldman, was originally leery of blockchain technology. However, he told the Journal his stance has shifted, saying, “I’m not doing this just to satisfy my curiosity. Everything has a commercial driver.”
Outside of banking, other companies are also exploring the tech. For example, Walmart is using blockchains to track its supply chains, and the Journal noted that in real estate, title companies have started exploring blockchains’ use in recording home ownership.
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