Mizuho Bank, in collaboration with Fujitsu Limited and Fujitsu Laboratories, has completed an operational trial using blockchain technology, the underlying system that facilitates bitcoin trading, to shorten the processing time for cross-border securities transactions.
Over the past three months, the joint Japanese operation saw Mizuho Bank provide its expertise with the securities settlement process, with Fujitsu Limited conducting the development, evaluation, and testing of the trial system and Fujitsu Laboratories undertaking the trial application of blockchain technology.
According to Mizuho Bank, the goal of the trial was to enable such transactions to occur almost instantly, with the use of blockchain making the operation practically impossible to tamper with. The bank also said using blockchain speeds up the process from its current three days to a same-day settlement.
Mizuho Bank confirmed that it was possible to shorten the time required in the post-trade process.
"Previously, there have been attempts to reduce the number of days required for settlement by eliminating this sort of complicated instruction checking process and sharing data through centralised management," Mizuho Bank said. "However, issues such as the large cost of system operations management made the initiative impractical."
Using the blockchain Open Assets Protocol, the three companies built a blockchain-forming system in Fujitsu's cloud environment, recording the information from a confirmation as one linked block.
The bank said that inside the system, continuously generated blocks containing trade information were chronologically linked as blockchain, which resulted in information that could not be tampered with.
Last month, computer giant IBM and investment bankers Goldman Sachs Group injected cash into fintech startup Digital Asset, contributing to the $60 million the blockchain firm has raised so far this year from the likes of Accenture, the Australian Securities Exchange (ASX), Citi, CME Ventures, Deutsche Börse Group, ICAP, and JP Morgan.
At the time, IBM fellow and blockchain vice president Jerry Cuomo said that blockchain technology holds real potential to transform a wide range of industries.
"We are excited to jointly develop distributed ledger technologies that will allow our clients to transform their business, and further strengthen our partnership with Digital Asset," he said. "IBM is committed to making it ready for business."
The ASX injected AU$14.9 million into Digital Asset in January, which gave Australia's stock exchange a 5 percent equity interest in the New York-based startup, as well as the right to purchase further equity and appoint a director to the board.
In December, Digital Asset and IBM, along with the likes of ANZ Bank, Cisco, Intel, and VMware partnered with the Linux Foundation in a bid to advance blockchain technology.
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," executive director at The Linux Foundation Jim Zemlin said at the time.
"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."
Not everyone shares the view that blockchain is the life-changing technology people are claiming it is, with Peter Williams, chief edge officer at Deloitte's Centre for the Edge, saying last week that people have an "irrational exuberance" for blockchain.
"I haven't seen anything as hyped in such a short period of time as blockchain ... The answer to every question seems to be 'blockchain'," he said. "I expect that at the next Miss World, 'What do you want to do?' 'I want to solve world peace by using a blockchain, and end poverty and world hunger as well."