Barclays Signs Deal with Swedish Bitcoin Exchange

Barclays, the second largest bank in the UK, is exploring how to apply blockchain technology to everyday banking operations.

According to Finextra, the bank has signed an agreement with Safello, a Swedish bitcoin exchange that has a financial development project in London and is focused on applying blockchain technology to traditional financial services.

Finextra said Safello, which handles online bitcoin transactions, and its partnership with Barclays were based on a “proof of concept” in which they sought to demonstrate the effectiveness of their work by testing traditional banking operations.

Blockchain technology is the software that powers Bitcoin, facilitating each transaction while also automatically recording it — who paid whom and how much. In this way, money can be used multiple times and circulate without the supervision of a central authority.

Blockchain technology has many benefits for banks, but the two most important ones are speed and cost. If banks use traditional systems to operate, then transferring money internationally is often slow and costly. But if they use blockchain technology, they don't have to worry about the same.

Earlier this month, a report by Spanish bank Santander estimated that blockchain technology could reduce costs of banking infrastructure by up to $20bn (£12.8bn).

Of course, Barclays is not the only financial institution interested in blockchain technology. The United Bank of Switzerland (UBS) has set up a blockchain technology "lab" in London's financial district, while Santander is also experimenting with the technology. Recently, a senior executive of the Spanish bank revealed that Santander has identified "20 to 25 use cases."

Goldman Sachs has also invested in Bitcoin technology, while stock exchange operator Nasdaq is also working to adapt.

However, despite the strong interest shown by financial institutions, most still believe that blockchain technology will not be adopted quickly. Due to regulatory and scale issues, it often takes many years for banks to fully adapt to new technologies.

Recently, Stephen Pell, CEO of Bitpay, told Business Insider that he believes it will take at least five years for all banks to adopt blockchain technology.