Wall Street is putting more money behind a blockchain technology which it once dismissed as a fad.
Some of the biggest companies in the financial sector have invested $30 million in Chain
Visa, Nasdaq and others invest $30 million in blockchain startup Chain
Inc., a San Francisco-based company that works with banks and other institutions to develop ways to trade and transfer financial assets using the system that underpins the virtual currency Bitcoin.
Investors include Visa, Nasdaq, Citi Ventures, Capital One, Fiserv and Orange.
A valuation for Chain wasn’t disclosed as part of the fundraising round, which Chain announced on Wednesday. The company also said former American Express CEO and venture capitalist Jim Robinson III has joined its board – according to the WSJ.
The investment is the latest sign of Wall Street’s about-face with Bitcoin, which banks and other financial firms initially said was unlikely to transform commerce. These financial companies don’t have any interest in using the actual currency. But they see the “blockchain” technology that lets Bitcoin users instantaneously make and record transactions as a potential replacement for what they say is a cumbersome, costly and less-secure process.
Vast bureaucracies exist inside banks and at third-party firms to verify and process the buying and selling of everything from foreign currencies to stocks.
The blockchain is a record of every transaction ever made using Bitcoin. But rather than being held in a central database or institution, it is spread out over a network of independent computers and verified continuously by participants in the network instead of a central authority. Other blockchains have been created unrelated to Bitcoin.
Its proponents say the technology might make it possible for a stock or other asset to change owners in the blink of an eye, instead of the roughly three days and several steps of intermediaries it takes now.
While the technology is gaining popularity among many on Wall Street, it could take years before a critical mass of financial institutions agree to throw their weight behind a new protocol for processing and clearing transactions.
There are also questions about whether blockchains can be secure enough to handle a huge influx of sensitive transactions and how easily legacy financial institutions could start making such a radical change to the way they operate.
The post Visa, Nasdaq and others invest $30 million in blockchain startup Chain appeared first on Payments Cards & Mobile.
