Goldman Sachs: Blockchain is ready for the big stage

The blockchain technology is ready for the “big stage”, says a new report by banking giant Goldman Sachs.

The bank, which participated in the Circles $50 million financing round at the beginning of the year, writes in its “Emerging Theme Radar” to its customers that the Bitcoin may only be the “prelude” to blockchain technology.

The equity analysis team’s report says about the Bitcoin revolution:

“When you look at the underlying structures of Bitcoin revolution, this technology is … a new tool to reduce costs and attack the broker’s profit, with the promise of making centralized institutions superfluous. This review of the Bitcoin revolution is aimed not only at end-users, but also at much more lucrative companies.”

The author of the report, Robert D. Boroujerdi, quickly noted, however, that the “hype continues” and that the “blockades” of the blockchain technology are still standing in the way and therefore the full potential cannot yet be exploited.

Excluding the middleman
Boroujerdi emphasized the decentralized nature of the Bitcoin blockchain compared to traditional account book systems.

If you exclude the middleman, it means that the blockchain technology can work more efficiently, more securely and at lower cost than current systems, Boroujerdi writes. In addition, you could reduce the risk of the counterparty and offer the possibility of obtaining direct information about transaction risks and costs.

The report highlights a few examples of how Blockchain technology can be used, ranging from office work to government paperwork at banks to authenticate alternative goods such as art or credentials.

It is written in the Bitcoin loophole report:

“This decentralized, cryptography-based Bitcoin loophole solution excludes the middleman. It has the potential to redesign Bitcoin loophole transactions and internal services across a wide range of industries.”

Blockchains without Bitcoin

The report also addresses some possible problems with the blockchain technology. Among these is the limited scalability that stands for the Bitcoin blockchain at an unfavorable seven transactions per second and for VisaNet at 47,000 per second. It also takes into account that the question of public or private blockchains can lead to friction, slower deployment and increased fragmentation.

Boroujerdi points to a healthy start-up ecosystem that benefits from the “exponential” growth of the equity capital invested, but he also stresses that there are players behind this ecosystem who could bring this technology to the big American corporations.

Far from startups, Goldman is working closely with the R3CEV banking consortium (of which Goldman is a member); IBM’s ADEPT project, which seeks to combine the Internet of Things and Blockchain technology; and Nasdaq, which has built its Linq Private Market platform on a Blockchain.

Can blockchains exist without Bitcoin? According to the report, the answer is a clear yes:

“Those who have written off Bitcoin seem to have missed the golden egg – an underlying technology driver that, possibly, is designed to streamline a variety of businesses. Simply put, the blockchain can live outside a world of Bitcoin.”

Goldman’s client report comes after Goldman filed a patent last month for a securities settlement system based on a new crypto currency called SETLcoin.

This spring, Goldman’s analysts reported extensively in a multi-part report on “The Future of Finance”.