Goldman Sachs' goal: to develop its own Bitcoin

[Abstract] As early as last year, this New York financial giant had applied for a patent for Setlcoin, a new type of virtual currency, with the aim of facilitating the secure trading and settlement of this currency.

Velvet Gold Mine · 2015-12-08 08:00

Author: Velvet Gold Mine Image source: Dazhi

Goldman Sachs Group Inc. has developed its own settlement system for trades in stocks, bonds and other assets, according to a recently published patent application.

As early as last year, the New York financial giant had applied for a patent for Setlcoin, a new virtual currency, with the aim of facilitating the secure trading and settlement of this currency. (Due to the usual lag in public information from the US Patent Office and the Trademark Office, the application for the new currency patent was not published until recently.) Although the trading technology used by the trading platforms of the world's top financial institutions is relatively advanced, it still takes several days for the promised cash and securities (such as stocks and bonds) to change hands.

For traders, there are risks in the time difference between when a trade actually takes effect and when the trade is settled. (It is very likely that the person you are trading with will go bankrupt before he can transfer the cash or securities you deserve to you.)

In its patent application, Goldman Sachs said SetlCoin promises traders a transaction where “trading and settlement are completed almost simultaneously.”

Although SetlCoin is also a virtual currency, it is not the Bitcoin we are familiar with. This undoubtedly shows that the financial industry is really interested in the technology behind Bitcoin, not Bitcoin itself. This technology is what people know as "blockchain."

Blockchain startup R3 is working with a global consortium of banks to promote the use of blockchain technology in global finance. American Express also recently invested $12 million in Abra, a startup that specializes in using blockchain technology for global remittances. In September, blockchain startup Chain received a total of $30 million in Series B funding from several large companies, including Visa, NASDAQ and Citigroup. Goldman Sachs is also actively involved in exploring the development of Bitcoin.

Goldman Sachs recently invested $50 million in Circle, a payments app that also uses blockchain technology and can use Bitcoin.

Goldman Sachs’ patent application for SetlCoin is a reminder that banks and financial institutions will soon be able to improve their own blockchain development as they gain a deeper understanding of the technology.

JPM compiled from
Quartz, Goldman Sachs Wants to Create Its Own Version of Bitcoin, by Ian Kar.