The Linux Foundation has partnered with financial and tech giants in a bid to advance blockchain technology, the underlying system that facilitates bitcoin trading.
The collaboration, which the foundation said will develop an enterprise grade, open source distributed ledger framework, will include companies such as ANZ Bank, IBM, Cisco, CLS, Credits, Digital Asset, Fujitsu, IC3, Intel, London Stock Exchange Group, Mitsubishi UFJ Financial Group, State Street, SWIFT, VMware, and Wells Fargo.
According to The Linux Foundation, the open ledger partnership is expected to help identify and address important features and requirements that are missing when it comes to having a cross-industry open standard for distributed ledgers. The foundation believes such a standard can transform the way business transactions are conducted around the world.
"Distributed ledgers are poised to transform a wide range of industries from banking and shipping to the Internet of Things, among others," Jim Zemlin, executive director at The Linux Foundation said.
"As with any early-stage, highly-complex technology that demonstrates the ability to change the way we live our lives and conduct business, blockchain demands a cross-industry, open source collaboration to advance the technology for all."
Blockchain is a digital technology for recording and verifying transactions; and a distributed ledger does not require a centralised point of control, as is the case with many platforms banks currently utilise.
The foundation said that with distributed ledgers, virtually anything of value can be tracked and traded, adding that companies are able to settle securities in minutes as opposed to days.
According to the Linux Foundation, applications of the technology stretch beyond the financial sector with companies able to manage the flow of goods and related payments or enable manufacturers to share production logs with regulators to reduce things such as product recalls.
IBM is committing to contributing tens of thousands of lines of existing code, significant intellectual property, and full-time developer resources to the effort; whilst Digital Asset is contributing its Hyperledger platform, as well as code and developer resources.
"A broad, cross-industry, and open source approach is critical to advance the potential for blockchain and make it mainstream," Arvind Krishna, senior vice president and director, IBM Research said. "Even beyond building out standards, creating common code will allow organizations to focus on creating industry-specific applications that enhance the value of this technology."
The Linux Foundation said specific commitments from the other companies involved will be announced as the project progresses.
Last month, a report from consultancy firm Accenture highlighted that financial services will look at investing in blockchain, cloud, and online security technology in the near future.
Greg Carroll, senior managing director and head of financial services for Accenture in Australia and New Zealand, said the investments financial services companies are making in these areas signal that they recognise the growth opportunities in fintech.
"Banks across Australia are looking at ways to incorporate the underlying technology, blockchain, into their systems," he said. "This opens the door for innovation and that's where fintech startups may find an opportunity in Australia."
Speaking in Adelaide in September, Greg Medcraft, chairman of the Australian Securities and Investment Commission (ASIC) said blockchain technology could potentially change the financial system in four main ways: Automate the entire buy and sell process, including removing the waiting time to settle trades; eliminate the need for third-party intermediaries between buyers and sellers; reduce transaction costs; and improve access to cross border trading.
At the time Medcraft said harnessing the potential of the technology will depend on its integrity and stability, adding it will depend on the industry's willingness to invest in it and harness its potential.