While Jamie Dimon and Warren Buffett express doubts about bitcoin, executives running the financial industry’s back offices are looking at mimicking the virtual currency’s methods of moving money quickly and cheaply.
FIS, a provider of systems used by banks to handle payments, is examining whether a public ledger like bitcoin’s could help securely move funds on existing networks, Fred Brothers, the firm’s chief innovation officer, said in an interview. Fiserv Inc., a provider of technology for payments and accounts, is examining bitcoin’s use of encryption to ensure transfers are secure, said Marc West, a senior vice president.
Such interest shows how Wall Street could seek to reap benefits touted by bitcoin’s backers without using the virtual currency itself. Bitcoin, proposed by an anonymous programmer or programmers in 2008, has drawn entrepreneurs and retailers looking to popularize it as a low-cost alternative to established payment systems, supplanting credit cards to international wire transfers. Instead, a variety of financial firms might copy its underlying design.
It’s safe to say that every bank is looking at what’s going on with bitcoin and those types of technologies, said Steve Kenneally, a vice president at the American Bankers Association. Most of the larger banks are investigating it. The larger the banks, the further along they are.
Goldman Sachs analysts wrote in a March report that while bitcoins may not make a viable currency, the technology could hold promise. The software relies on a public record of transactions. When someone spends all or part of a bitcoin, the change in ownership is recorded by a global network of computers and posted to the register, ensuring individual units can’t be simultaneously held or spent by multiple people. Operators of computers solving and verifying transactions are rewarded with new bitcoins for their work.