{"id":27169,"date":"2015-06-12T20:22:51","date_gmt":"2015-06-12T20:22:51","guid":{"rendered":"http:\/\/ci027cfe76e00226c3"},"modified":"2015-06-12T20:22:51","modified_gmt":"2015-06-12T20:22:51","slug":"ubs-bank-experimenting-smart-bonds-using-bitcoin-blockchain-1434140571","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/ubs-bank-experimenting-smart-bonds-using-bitcoin-blockchain-1434140571","title":{"rendered":"UBS Bank Is Experimenting with \u2018Smart-Bonds\u2019 Using the Bitcoin Blockchain"},"content":{"rendered":"
<\/div>
<\/figure>\n

During his talk at IDX Derivatives Expo in London, Alex Batlin, Director in UBS’s technology innovation, research and development team shed some light on what the financial institution has been working on in their innovation lab: smart-bonds on the Bitcoin blockchain.<\/p>\n

International Financing Review Asia<\/em><\/a> (IFR Asia) reported that the smart-bonds were described by Batlin as bonds where \u201crisk-free interest rates and payment streams were fully automated, creating a self-paying instrument.\u201d<\/p>\n

\u201cThe key attraction is that there is no middle or back office, and no registry, so clearly a major impact on costs,\u201d said Batlin.<\/p>\n

The Innovation Lab<\/h2>\n

Smart-bonds are one of the first publicly confirmed technologies the Swiss banking giant is said to be exploring since the launch of The innovation Lab in April to explore how blockchain technologies could improve the banking sector. The creation of the lab came after the publishing of an extensive report about the benefits of the blockchain by the international bank.When the report was published, UBS Group CIO Oliver Bussmann told the <\/a>Wall Street Journal<\/em><\/a>, \u201cI believe \u2013 and this is my personal view \u2013 that blockchain technology will not only change the way we do payments, but it will change the whole trading and settlement topic.\u201d<\/p>\n

Since then, that hypothesis has begun to get some traction as the Nasdaq OMX Group began experimenting with a pilot of blockchain technology as a record-keeping ledger for the Nasdaq Private Market, a small market launched in 2014 to handle the trading of shares belonging to private companies.Smart-bonds likely is just one of several technological applications of blockchains UBS\u2019 lab is exploring. The lab, which is located in the London offices of European fintech startup accelerator Level39, is meant to spur new innovations that can bolster the bank\u2019s long-term growth<\/p>\n

.\u201cBlockchain technologies can make banks more efficient \u2013 for example, through instantaneous settlement rather than the days it takes at present, lower costs and lower operational risk,\u201d said Batlin during the IDX Derivatives Expo in London. \u201cThe simple lesson for banks is that if we don\u2019t do it someone else will.\u201d<\/p>\n

Difficulties remain<\/h2>\n

Bitcoin\u2019s proof-of-work mining algorithm is responsible for the digital currency\u2019s unique characteristics of network security and decentralization, but as Batlin pointed out, it is also causes the system to be slow and expensive. Transactions on the Bitcoin blockchain often take a hour or move and require large amounts of electricity via miners who verify transactions. These hurdles eliminate the possibility of high-frequency or algorithmic trading, as least as it currently stands.<\/p>\n

\u201cAll kinds of revenue opportunities can emerge,\u201d said Batlin speaking of how these innovations could be monetized, \u201cbut it\u2019s still more expensive, so there is a way to go.\u201d \u201c<\/em><\/p>\n

UBS sign<\/a>\u201d by twicepix<\/a> \/ CC BY-SA 2.0<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

During his talk at IDX Derivatives Expo in London, Alex Batlin, Director in UBS’s technology innovation, research and development team shed some light on what the financial institution has been working on in their innovation lab: smart-bonds on the Bitcoin blockchain. International Financing Review Asia (IFR Asia) reported that the smart-bonds were described by Batlin […]<\/p>\n","protected":false},"author":3612,"featured_media":27168,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[548,3044],"class_list":{"0":"post-27169","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-london","9":"tag-ubs"},"author_data":{"id":3612,"name":"Jeffrey Maxim","nicename":"jeffrey-maxim","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/bitcoin-schmitcoin-promo-image-2-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/ubs-bank-is-experimenting-with-smart-bonds-using-the-bitcoin-blockchain.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/27169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3612"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=27169"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/27169\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/27168"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=27169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=27169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=27169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}