Spain’s Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), a multinational Spanish banking group, has officially become the first global bank to issue a loan using Bitcoin’s underlying technology, the distributed ledger — hailing the event as a “significant advance in the exploitation” of the technology.
BBVA is Banking on the Blockchain
The loan in question is a €75m corporate loan. As reported by Financial Times, the entire loan process was processed using a mutually distributed ledger, including the negotiation of terms and the actual signing of the contract.
Using similar technology that’s one of the underlying components of Bitcoin and other cryptocurrencies allowed all parties involved to remain instantly up-to-date during the process.
But wait, isn’t that called a database?
Well, according to the global bank, the distributed ledger technology allowed for the loan to be negotiated in a matter of hours, as opposed to days, and called the event a “significant advance in the exploitation of [distributed ledger] technology.” Carlos Torres Vila, BBVA chief executive, also stated:
Blockchain can offer clear advantages for all sides in the corporate loan market in terms of efficiency, transparency, security. It’s another strong example of how disruptive technology can be used to add value to financial services, something that is central to our strategy.
As noted by Financial Times, BBVA’s chief executive also claims the major bank has “several more transactions in the immediate pipeline,” as well as a pilot with Indra, a Spanish telecoms giant with aspirations to be the country’s undisputed leader in the world of blockchain-based applications.
FT also notes that Indra’s director of financial services, Borja Ochoa, has claimed that the blockchain is “destined to become one of the technologies that will change the way we interact with products and financial services” and that the pilot between the two partners “strengthens the position of BBVA and Indra as leaders in the practical application of blockchain technologies.”
The pilot project uses a private blockchain for contract negotiation before registering the completed contract on Ethereum’s public blockchain. Said Ricardo Laiseca, BBVA’s head of global finance for corporate and investment banking:
BBVA is involving its clients in project processes such as requirements definition, development and implementation. In this way, BBVA provides its customers with not only the best financial solutions, but also the most advanced technical and innovative capabilities.
BBVA’s successful project illustrates the push by traditional financial institutions to co-opt Bitcoin’s disruptive technology for their own purposes, helping to push back against that which threatens to make their traditional business models obsolete.
What do you think of major global banks using distributed ledger technology for their own operations? Do you think blockchain-based banking will be the norm in the future? Let us know in the comments below!
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