Goldman Sachs is interested in implementing blockchain technology to transform traditional foreign exchange market.

According to a US Patent & Trademark Office (USPTO) application published on September 8, Goldman Sachs has highlighted the risks that are associated with current foreign exchange transactions and the benefits that a blockchain-based system could offer. The investment banking giant has described a ledger administration server that controls a ledger to allow a payment or foreign currency exchange transaction to occur in real-time or substantially real-time.

“The disclosed systems and methods are generally directed to a distributed computer network that includes a plurality of servers for maintaining and updating copies of a distributed ledger based on cryptographic authentication techniques. More particularly, the systems and methods track exchanges, such as currency exchanges, or other types of exchanges, that take place in substantially real time”, the patent reads.

The firm notes that while existing crypto-ledger systems such as Bitcoin and Ripple may conceal the identity of a specific party by using arbitrary account numbers that are not easily attributable to a specific real-world party, large financial institutions cannot rely on such obfuscation alone because the size and volume of their transactions may reveal their identity to the general marketplace. It added that existing cryptographic transaction systems, such as Bitcoin or Ripple, lack designed-in identity checks that help regulators with policing anti-money laundering (AML).

“As such, there is a need for new systems and methods that can process transactions as swiftly as Bitcoin or Ripple without sacrificing the privacy of the parties involved”, the patent reads.

The system described in the patent application records asset issuing authorities and stores redundant copies of the data tables, which include account information and account balances, at the ledger administration server and at asset validation servers associated with the asset issuing authorities. The distributed storage of the data tables provides additional protection from attempts to falsify information stored in the data tables of the ledger because more than one server would need to be compromised.

In addition, in order to perform know-your-customer (KYC) or anti-money laundering (AML) checks, the system uses authentication techniques to verify identifying information. It uses cryptographic codes to authenticate electronic signatures appended to data messages by comparing the electronic signatures to hashes obtained from processing the data messages with a public key of the signing party.