Although central banks and governments were dismissive of the rise of digital currencies when Bitcoin was introduced in 2009, now they are open to adopting not only the digital currencies but also the technology behind them—Blockchain. It is a digital ledger— which works as a shared spreadsheet—keeping record of each and every transaction. So, the digital records are distributed over a network of computers which all participants can see, obut nly a majority can alter.
While banks have been working on developing their own currency mechanisms, the benefits of the technology extend far beyond. Being a digital ledger, it eliminates the need for a central authority. For instance, if A, who has a bank account with X wants to transfer money to B, with a bank account in Y, the process just needs seconds to get approval from all parties. The transaction gets recorded for everybody in the network to see and track. Not just fast, it is also secure. As the system is spread over many computers any hacking attempt just affects one of the servers while the whole system is still functional, unlike banks where the whole system shuts down. Moreover, it can also help the insurance and loans industry, where banks are able to match needs of customers and provide niche products based on transactions. The only hindrance to its development is assimilation—how one chain interacts with another—but given that it has a cost benefit for banks—a Santander InnoVentures report points that it can save $20 billion in costs for financial institutions while Morgan Stanley in a report highlighted that the technology can help reduce costs by as much as 50% for traditional banks—and a time benefit for users, that may not be so much of a problem.