UBS and Barclays are front runners with Bitcoin 2.0 technology Ethereum
Ethereum is a not-for-profit organisation which offers an open-source distributed computing platform plus a value token – ether – which can be mined by its network like bitcoin.
The Barclays source said what the banks were doing with Ethereum was not happening “in any great depth”.
“You are talking about 100 or 200 people that are building stuff with this and some of them are from banks,” he said.
“It’s the beginning. It’s not even the end of the beginning. It’s the beginning of the beginning.”
Regarding Barclays, the source said there were “pockets of innovation” spread across the bank: the stuff at the innovation labs and accelerators which is about promoting social good, and the stuff happening at the investment bank which is about creating efficiency.
He said there were obvious problems when it comes to testing this type of technology at such a level. Ethereum for instance is not easy to debug. He said next generation ledger technologies can be tested as “shadows” alongside existing systems.
At a recent technology briefing on the eve of Ethereum’s Frontier launch, communications officer Ken Kappler said the platform was “the only game in town for banks looking to build blockchains”.
New ‘bank-friendly’ version of Ethereum
The source also said Ethereum is working on another version of its platform which he said would be “more amenable” to banks, suggesting a nod in the direction of permissioned ledgers.
He said this technology was running alongside, but was not actually part of, the firm’s Serenity roadmap. He said this would follow the same open access, not-for-profit strategy, like the rest of Ethereum.
An Ethereum spokesman said: “There are several groups not directly affiliated with Ethereum investigating such a thing.”
The source continued: “The whole value proposition here depends on banks being open and working together. They don’t really do this. They seem to be worried about being competitive. Whatever reason they give is bo***cks.”
Regarding other activities and progress being made within the world of banks, the source added: “Most banks are just looking at bitcoin technology; most of them have developed coins.
“Ironic really when you think they can’t offer the bitcoin start-ups that they are eyeing up bank accounts.”
He said the development of a “govcoin”, which authorities reckon could prevent some £4bn – £5bn per annum in over-payments and benefit fraud, could be the tipping point in respect of offering Bitcoin bank accounts – despite the fact that people in government at places like the Treasury have practically no understanding of the technology.
“The floodgates are waiting to be opened,” he said.
A spokeswoman for Barclays said the bank was looking at a number of blockchain technologies both internally and through partners, but would not comment on anything in particular at this stage. UBS said something similar.