It is easy to see why bankers get excited about distributed ledgers. Instead of having to keep track of their assets in separate databases, as financial firms do now, they can share just one. Trades can be settled almost instantly, without the need for lots of intermediaries. As a result, less capital is tied up during a transaction, reducing risk. Such ledgers also make it easier to comply with anti-money-laundering and other regulations, since they provide a record of all past transactions (which is why regulators are so keen on them—see article)
NORMALLY, it is Simon Taylor’s job to persuade sceptical colleagues at Barclays that rapid technological change will disrupt the bank’s business. So it comes as something of a surprise to have to dampen the excitement about the blockchain. “It’s quite silly. I get ten invitations to speak at a conference every day,” he says. “The technology will have real impact, but it will take time.” The blockchain is the technology underpinning bitcoin, a digital currency with a chequered history. It is an example of a “distributed ledger”: in essence, a database that is maintained not by a single actor, such as a bank, but collaboratively by a number of participants.