What's going on?

Nine of the world�s biggest banks have backed a startup called R3 to further develop Bitcoin�s underlying technology � known as blockchain � for uses in banking.

What does this mean?

Blockchain is basically a ledger where transactions can be tracked and recorded: it has the potential to make it much easier to keep track of financial transactions such as trading a bond. Banks are excited by a system that could be cheaper to operate, less error prone and more secure (according to State Street�s head of emerging technology). By cooperating with each other and investing in R3, the banks are encouraging the formation of a common platform and common standards that will probably be necessary for the technology to become widely adopted.

Why should I care?

1. While there is no immediate investable impact (e.g. stock prices won�t move on this news), it�s interesting to think how finance could be transformed. If it makes finance operate more efficiently then it is probably good for economic growth over the long term.
2. Blockchain technology is a huge area of potential growth for other startups. Many banks have pursued partnerships with others in the space so that they have more than one chance to develop the best technology.