itBit to launch 'clearing and settlement' network for gold market

itBit, a New York-based bitcoin exchange, is launching ‘Bankchain’ as a clearing and settlement network for the gold market, to help cut down settlement times and improve record keeping for institutional traders, later this year, Fortune reported.

“Bankchain is a new clearing and settlement network that leverages blockchain technology to reimagine how financial institutions execute post-trade”, the website reads.” The decentralized network is powered by itBit but fully governed by the member participants that join the platform.”

Bankchain is the first consensus-based ledger system exclusively for financial institutions, which will automate, accelerate and simplify post-trade processes across the financial services industry, saving institutions time and money. However, it would not use bitcoin to trade gold.

"It is a proprietary itBit protocol, not blockchain based, but is derived off of blockchain. We will also not be using bitcoin as the native token it will be an itBit proprietary token." Steve Wager, head of global operations for itBit told CoinDesk.

It needs to be mentioned here that itBit is the only bitcoin exchange in New York with a banking charter, which will allow the company to help its customers settle their transactions in U.S. dollars.

Bitcoin loyalists, however, are not much in favour of a blockchain-inspired technology that is privately owned. Commenting on the CoinDesk report, one reader said, “What good is a private consensus-based ledger system; if it is private and closed source, it can be manipulated by whoever owns it”, while another called it a “marketing gimmick,” arguing that itBit is “running a private database and they use a bunch of buzzwords to try to make it look like a new technology.”

Fortune said, “The bitcoin enthusiasts argue that itBit misunderstands what makes the blockchain a useful technology, but in reality they misunderstand why such a technology would be useful for an opaque market in which trillions of dollars in gold changes hands, figuratively speaking, each year...Whether or not Bankchain will be a success remains to be seen.”