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Bitcoin's ability to operate outside national jurisdictions may hep it solve an age-old economics paradox, Travis Patron argues.

Bitcoin trading has become listless and lacks direction. Perhaps the succession of two advancing waves and a return to the vicinity of the previous high has cooled down the market’s eagerness for additional advance. This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now and […]

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Two men in Ireland, one a bitcoin trader, pled guilty to selling drugs on the darknet to customers worldwide, according to The Irish Examiner. The bitcoin trader posted drug orders to different countries after trading bitcoin. He admitted to selling drugs on Silk Road and Agora. Police charged Richard O’Connor and Neil Mannion, both 34 […]

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Banks are going bananas for blockchain, the technology that underpins bitcoin.

Blockchain can revolutionize mainstream finance by ripping out huge amounts of processing cost, and millions of dollars are flowing into companies building the technology. 

A working group of 42 world-leading banks has been set up to establish standard practices, and top banks like UBS, Santander, and Barclays are tinkering with the technology themselves behind closed doors.

Blockchain is technology that uses a distributed ledger and complex cryptography to regulate bitcoin transactions. What that means in practice is if people want to trade or transact with each other online they can do it directly, rather than go through a middleman like a clearing house.

Cutting out the middle man makes things faster and cheaper, so banks are desperate to find a way to adapt the technology to traditional finance. Goldman Sachs says the technology has the potential to change "well, everything."

"The market for private blockchain 24 months ago was zero," says Jeremy Millar, a partner at boutique technology bank Magister Advisors. "Now we’re at a stage in the market where it has already gone into specialisation. This is a market that’s poised to scale incredibly rapidly."

Millar co-authored an extensive report on bitcoin and blockchain technology that came out this week. It's arguably the most extensive overview of the ecosystems surrounding the technology out there.

I got on the phone to him this week to hear how he sees the space evolving and one big take away is just how fast the blockchain space is growing.

"This is the fastest growing market that I have seen in enterprise technology since the internet," says Millar. "Adoption of these projects in the banks is going to be much faster than people think."

Everyone gets a win. It’s not just the uber-geek that gets the benefit.

Millar's report says almost $1 billion (£670 million) has been invested in bitcoin and blockchain-related technology over the past three years. Well-known financial firms like Goldman Sachs, Citi, and Nasdaq are all investing in the technology.

So why are banks moving so fast on blockchain? A big reason, Millar says, is because the benefits of the technology are so wide ranging.

"Everyone gets a win. It’s not just the uber-geek that gets the benefit. The CIO gets to replace very expensive, outdated mainframe infrastructure with something better.

"The business owner gets to release capital — this is very important. With the new regulations, post-2008 and Basel III, the collateral and capital that’s required against any trade has increased. Reducing settlement windows allows the banks to do more trades or release more capital."

Banks legally have to put cash aside to cover a trade until it's completed. That's to guard against the risk of a settlement house — the middle man — rejecting the trade, going bust, or any other potential risk.

But by cutting out the middle man the blockchain makes the settlement period — the time it takes to complete a trade — much shorter. That means you can get more bang for your buck from the money set aside to cover the trade, as the efficiency gains theoretically mean you can get more trades done in the same time period.

Millar adds: "The compliance team gets a win too because if everything is cryptographically signed on a blockchain, two things happen. One, you will spot misbehavior in real-time and two, after the fact no one can tamper with the evidence."

Millar expects the blockchain markets rapid development to continue for the foreseeable future thanks to the sheer level of money being pumped into the sector. He also expects more businesses to evolve around the technology, such as blockchain analytics.

"This is the banks internet moment," Millar says. "This is their moment in the sun. All of a sudden being a CTO (chief technology officer) or director of information at a bank is sexy."

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The banking dream team looking at blockchain — the technology that underpins bitcoin — is finally complete.

R3 on Thursday announced that 12 more banks have joined its project, taking the total number of banks signed up to 42. The doors are now closed on the first round of banking membership.

Here are the latest inductees:

BMO Financial Group, Danske Bank, Intesa Sanpaolo, Natixis, Nomura, Northern Trust, OP Financial Group, Banco Santander, Scotiabank, Sumitomo Mitsui Banking Corporation, U.S. Bancorp and Westpac Banking Corporation.

R3 is the startup convening the banking industry to develop sector-wide standards and use cases for the blockchain.

What's blockchain? Blockchain is a name for the software underpinning bitcoin that uses complex cryptography and distributed ledgers — copies of records in multiple places — to regulate, record, and enable transactions using bitcoin.

Right now, if you pay someone in pounds, one bank will have to get in touch with the other and tell them to update the balance. Then at the end of the day bulk transactions are moved between banks, via an intermediary, to make sure everyone has the right amount of cash.

With the blockchain, all that hassle is wiped out — you just pay another person directly into a digital wallet. 

Banks are hoping they can adapt this technology to let them deal directly with one another, making things faster, cheaper, and easier. This would involve either using bitcoin's blockchain or, more likely, building a replica system — a private blockchain.

New York startup R3, which launched in September, has taken charge of efforts to work out how exactly the world of finance will do this.

CEO David Rutter says in a statement today: "R3 has long believed that distributed ledger technology has the potential to impact the financial services sector the way the Internet changed media and entertainment."

R3 will now look to sign up non-bank financial institutions in the new years — asset managers and the like.

Here's the full list of banks signed up:

Banco Santander, Bank of America, Barclays, BBVA, BMO Financial Group, BNP Paribas, BNY Mellon, CIBC, Commonwealth Bank of Australia, Citi, Commerzbank, Credit Suisse, Danske Bank, Deutsche Bank, J.P. Morgan, Goldman Sachs, HSBC, ING Bank, Intesa Sanpaolo, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Natixis, Nomura, Nordea, Northern Trust, OP Financial Group, Scotiabank, State Street, Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Royal Bank of Scotland, SEB, Societe Generale, Toronto-Dominion Bank, UBS, UniCredit, U.S. Bancorp, Wells Fargo and Westpac Banking Corporation.

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It's another sign of just how crazy the British property market is right now.

More than 200 people a day in Britain are becoming millionaires (on paper), simply by owning a home, thanks to the insane growth of property prices that we've seen in the past few years.

Online estate agent Zoopla says that there are now 620,000 privately-owned flats and houses across the UK worth more than £1 million ($1.49 million). That is 75,000 more than there were when they last surveyed the million-pound property market in January. That's making a lot of people asset-rich.

The boom in so-called "property millionaires" — people who own bricks and mortar assets worth more than £1 million— is being driven, obviously, by London, where the property market is so hot that there are serious fears of a bubble that will could soon burst. More than 10% of London residences are now worth more than a million, Zoopla says.

Within London, the rise of the property millionaire is being fuelled by the increasing gentrification of many areas in the east of the capital. All six of the London boroughs with the most new millionaires are out East, according to Zoopla's research. Areas like Barking and Dagenham, Newham, Waltham Forest, and Redbridge, were, until very recently, were not exactly places people were clamouring to live.

However, as central London grows ever more expensive, people are looking further out, and East London is becoming increasingly attractive, pushing up prices and creating a huge rise in the number of £1 million houses and flats in these boroughs.

Redbridge has 56% more property millionaires than in January, Newham a huge 88% more, and Barking and Dagenham has seen its number nearly triple, growing by 288%. Although, in fairness, this is an increase from three to ten seven-figure houses.

Boroughs traditionally seen as upmarket, like Westminster, Kensington and Chelsea, and Islington, haven't seen big growth in the number of property millionaires, simply because most houses in those areas are already worth substantially more than £1 million.

Outside of the capital, the east of England, which gets a ripple effect from London property prices, has 28% more property millionaires than in January, while Yorkshire and the Humber is also doing nicely, seeing a 24% rise in £1 million homes. Every other region of the UK — except Scotland, which was hit by a new property tax in January — now has more property millionaires than at the start of 2015.

Zoopla's study follows a report from the National Association of Estate Agents that the price of a house in Britain is likely going to double in just ten years, and that by 2025 houses in London will be worth nearly £1 million on average.

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JPMorgan is "aggressively" investing in the next generation of technology like blockchain and robotics and its investment drive in these areas is part of its "major priorities" in 2016, according to an internal memo seen by Business Insider.

A note sent to employees by Daniel Pinto, head of JPMorgan's Corporate and Investment Bank, shows that the lender wants to ensure its $9 billion (£6 billion) investment in technology continues in 2016.

Blockchain, big data, and robotics are the focus for JPM. Working groups are also being pushed to develop "market-leading platforms," with no detail on what they might be.

Here's an excerpt from the memo (emphasis ours):

As we look ahead to 2016, one of our major priorities will be to aggressively pursue the innovative technologies that we have been making investments in. Internal working groups have made significant advances this year and will be provided even more freedom to develop market-leading platforms in 2016.

We have also established teams dedicated to areas such as blockchain technology, big data applications and robotics.

Blockchain is a name for the software underpinning bitcoin that uses complex cryptography and distributed ledgers — copies of records in multiple places — to regulate, record, and enable transactions using bitcoin.

Right now, if you pay someone in pounds, one bank will have to get in touch with the other and tell them to update the balance. Then at the end of the day, bulk transactions are moved between banks, via an intermediary, to make sure everyone has the right amount of cash.

With the blockchain, all that hassle is wiped out — you just pay another person directly into a digital wallet.

Banks are excited about the possibility of adapting this technology for use in traditional financial services, using bitcoin's blockchain or, more likely, a replica system — a private blockchain. This would allow banks to enjoy the benefits of the blockchain when dealing with each other.

JPMorgan has been instrumental in trying to bring blockchain to the mainstream, becoming one of the first banks to sign up to the R3 partnership. R3 is a startup convening the banking industry to develop sector-wide standards and use cases for the blockchain.

On Thursday, software nonprofit The Linux Foundation also "announced a new collaborative effort to advance the popular blockchain technology," involving JPM.

In his note to employees, Pinto expresses his "thanks and appreciation to all of you for the outstanding work," and says 2015 saw JPM evolve alongside the "momentous transformation" of the banking industry. This was done by radically growing investment in, and focus on, technology.

He goes on:

Being the industry leader means driving change, not following it, which is why we have also been working and investing alongside established technology companies, as well as ambitious, young start-ups that are looking at a wide range of technological advancements.

JPM has invested in peer-to-peer lender Prosper and payments startup Square, among others.

'The momentous transformation' of the banking industry

Pinto's memo fits with the warning from JPM's CEO Jamie Dimon in his annual letter to shareholders in April.

Dimon said that "Silicon Valley is coming" and if banks don't up their game, then tech companies will take over the industry's business.

"There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking," Dimon wrote.

"The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting.

"They are very good at reducing the 'pain points' in that they can make loans in minutes, which might take banks weeks," Dimon continued. "We are going to work hard to make our services as seamless and competitive as theirs. And we also are completely comfortable with partnering where it makes sense."

"Rest assured, we analyze all of our competitors in excruciating detail — so we can learn what they are doing and develop our own strategies accordingly," Dimon wrote.

Dimon's warning and JPM's push into blockchain, open data, and robotics come at a time where banks are starting to feel the pressure from the tech industry.

Ex-Barclays CEO Anthony Jenkins warned earlier this year that banks are facing an "Uber moment" that could reduce headcount by up to 50%. There are sign this could already be happening — 11 big banks have cut a combined 10% of their staff this year.

Analysis by The Financial Times showed that almost 100,000 banking jobs were cut this year, equivalent to 10% of the combined staff of the 11 big European and US banks that announced cuts. But much of this was due to a decline in client activity and cost-cutting in the face of stricter regulation.

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Nearly every day, U.S. financial institutions announce projects to better understand the blockchain, often partnering with technology startups. It would be a mistake to think their Japanese counterparts are far behind. Nomura Research Institute (NRI), a Tokyo, Japan-based provider of consulting services and system solutions, will develop a proof of concept (PoC) for implementing blockchain technology with banking in collaboration with SBI Sumishin Net Bank, Ltd., also Tokyo-based. Assisting them on the technology front is Dragonfly Fintech Pte. Ltd., a Singapore-based fintech technology startup, and Mijin, Japan’s first private block chain. PoC To Examine Business Scenarios The PoC will examine […]

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