Super database offers wealth of possibilities

Blockchain makes transactions faster and more reliable

Blockchain has the potential to change today’s financial landscape dramatically. Below, we outline what blockchain is and what we can do with it.

Blockchain is a system of accounting records shared between multiple parties, enabling them to carry out transactions safely, such as payments between banks. The concept is akin to a single large shared Excel spreadsheet. As each of the banks has its own copy of the shared accounting records, they can check that no one changes or accidentally removes payments. And if anyone adds anything, the others can see this immediately.

A copy of the blockchain accounting records is thus on every computer that is part of the blockchain network. This can consist of several dozen to several thousand computers. Every few seconds, the system adds a small file, or 'block', to the records, containing all new transactions. These blocks jointly form a 'chain', which is why this technology is called 'blockchain'.

Reliability guaranteed

Smart algorithm controls data in the blockchain. This ensures that the transactions are executed reliably, without any possibility of interference. That is because all computers in the network must continually agree on the new transactions that are added to the blockchain. If the network has not reached agreement, the transaction cannot take place.

The technology will then by default block any transactions that are not entirely correct. Therefore, checkers are no longer necessary and the question whether or not someone can be trusted hardly plays a part any longer. Technology takes over a big part of the human role of supervisor.

Applications for Rabobank

Blockchain is a complex technology. In order to examine thoroughly whether it can be genuinely useful for Rabobank, the bank is experimenting extensively in its own Blockchain Acceleration Lab and examining dozens of test cases. There are various potential blockchain applications for the bank:

  • Mortgages
    Many signatures or documents from various businesses and institutions are normally required for a mortgage. With blockchain, there will be a single shared set of administrative records containing all the information. The parties involved in the mortgage can view and check the blockchain on their own computer.
  • Verifying personal data
    In order to ascertain the authenticity of documents, such as a diploma, you can automatically request information from an educational institution via the blockchain. You will not have to submit time-consuming applications or contact the institution personally.
  • Smart contract handling
    Contracts, for instance for issuing a bank guarantee, now pass through countless hands. Flesh-and-blood people place ticks for approval on each form. That is a time-consuming activity. In the blockchain, all checks – for instance, whether the right person has signed the right document – will take place fully automatically.
  • Programmable money
    Consumers can programme every cent in their current account for certain expenditures. For instance, you could programme that your child’s pocket money can only be spent once a month at the cinema. Or determine in advance what to spend the money in your joint account on.

How fast does is it go?

Blockchain innovation has a lot of potential, but it will take some time before we encounter the technology everywhere. The technology is not yet fully developed and companies in various sectors still have to come to an agreement to adopt certain applications together. The first products will be on the market in the next few years, after which the number of applications will gain momentum.

What does this mean for clients?

There will now be transparency in many sectors on payments and the authenticity of documents. This will enable businesses to cooperate reliably with each other. At the start of 2018, Rabobank will make the first blockchain application available for its clients: we.trade. This is an international trading platform on which a buyer states what he is buying, from which seller, what the agreed terms of payment are and how it is to be transported. The seller is automatically paid at an agreed time, for example when the order has arrived. This makes trading significantly less risky for both parties.

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