Goldman Sachs Group Inc. has officially dropped out of the R3 CEV LLC blockchain group after letting its membership lapse on October 31, 2016. The investment bank entered the R3 group along with eight other founding companies in 2014, including Bank of America and JPMorgan Chase. The firm’s interest in cryptocurrency sets to explore the use of distributed database technology in the Wall Street infrastructure.
Banks like Goldman Sachs have a vested interest in blockchain tech because they can eliminate, reduce, and increase the speed of banking transactions. By increasing efficiency, banks and other financial institutions could potentially save billions in annual costs by essentially cutting out the middlemen who process transactions at a premium cost. Along with reducing operation spending, blockchain tech could increase security and beef-up the current banking infrastructure as a whole.
Goldman Sachs is currently researching patents for two blockchain-related inventions aimed at foreign exchange trading and digital currency. With investments in excess of 50 million dollars already spent on bitcoin and other blockchain assets, it’s safe to say that the investment firm still aims to explore the tech internally through restructuring as opposed to an all-out exodus.
Turnover is expected, an R3 spokesman said:
“Developing technology like this requires dedication and significant resources, and our diverse pool of members all have different capacities and capabilities which naturally change over time.”
Because blockchain provides an immutable record of transactions and identities, the tech has great potential to provide added security and transparency to banking and trading. Still in its relative infancy however, blockchain would need to meet financial regulator’s requirements for commercial use in the banking world. As of this date, Nasdaq Inc.’s Linq exchange is one of the only blockchain-based financial systems in use.