It was announced today that Visa Europe Collab, part of Visa Inc, will be partnering with the world’s first publicly listed blockchain company, the BTL Group, in order to test out a proof of concept on running interbank settlements through blockchain.
Backed by Visa, which has been exploring the potential applications of the technology for about eighteen months, the tests will use BTL’s settlement platform Interbit for the project.
There will be up to six European banks participating in the proof of concept, according to BTL Group CEO and co-founder Guy Halford-Thompson, who founded the company a little over a year ago with his brother Hugh after the two sold QuickBitcoin, the bitcoin trading company responsible for one of the first bitcoin ATMs in the UK.
“Sending money [via European banks] is still a process that relies on trust that doesn’t inherently exist, so there’s a lot of overhead and credit risk,” said Halford-Thompson. “That’s one of the great benefits on a platform like this; settlement is instant. A transaction either happens, or it doesn’t.”
The proof of concept by BTL and Visa will have a focus on both domestic and cross-border transactions, so the platform supports multiple currencies. It will also explore the use of smart contracts, which have the potential to automate many of the regulations that currently slow interbank transaction times.
A number of banks and related companies are focusing efforts on blockchain at the moment, most notably the recent partnership of Santander, BNY Mellon, UBS, and Deutsche Bank for the creation of the digital asset the “utility settlement coin,” which would be issued on blockchain.
The announcement of that partnership brought to light some of the issues that have to overcome if blockchain is ever going to be actually implemented as a solution in banking, including its privacy, its scalability, and most notably, whether or not multiple banks would actually get along long enough to agree on the immutability of transactions that would take place on the chain.
Running all of the transactions through a service like Visa is one of the possible ways to solve the scalability and trust issues between banks, according to Halford-Thompson, who cites Visa’s involvement as a major advantage to the project.
“What’s really unique about this project is that we have a platform that is fully developed and is backed by a partner like Visa,” said Halford-Thompson. “In the past two years we haven’t really seen anything tangible [come out of other blockchain experiments] and this is that opportunity. Visa’s motives align with ours, which really makes it possible for us to innovate a lot faster than others.”
As yet, the project does not have an announced start date and there’s currently not a list of banks signed up to participate in the proof of concept, but Halford-Thompson has promised to keep us all updated.
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