Banks and Brokerages Should Be Mining The Blockchain

The biggest new trend I am seeing in bitcoin/blockchain is the emergence of a number of companies building systems on the blockchain (including the NASDAQ) to handle the backoffice issues that banks and brokerage firms have to manage. The blockchain is an ideal platform to build these sorts of applications (clearing, settlement, etc) on.

One concern I hear, though, is that banks like to know who is managing their infrastructure and they are uncomfortable with miners they don’t know, located in parts of the world that make them nervous, providing the transaction processing infrastructure for these applications being built on the blockchain.

To me, that is the perfect reason for banks and brokerage firms to take a bit of their data processing infrastructure and point it to the blockchain and start mining it. They could even create a mining pool among the large money center banks. And it is relatively simple for a blockchain application to route its transactions to certain miners to process.

If you think of the blockchain as an open source, peer to peer, massively distributed database, then it makes sense for the transaction processing infrastructure for it to evolve from individuals to large global corporations. Some of these miners will be dedicated for profit miners and some of them will be corporations who are mining to insure the integrity of the network and the systems they rely on that are running on it. Banks and brokerage firms are the obvious first movers in the second category.

I wonder if the CIOs of the large money center banks are already doing this. If I was in their jobs, I would be all over this.