Precious Metals Trading Group Dips Toes Into Blockchain Tech
The move by the London Bullion Market Association to consider blockchain technology as a way to track supply chains highlights an interesting dichotomy for a technology usually associated with the volatile cryptocurrency sphere.
Traditionally, the blockcahin has been associated with highly volatile forms of currency, like bitcoin, Ethereum, or Ripple.
But an association that represents currency that is very much not considered volatile appears ready to hitch its wagon to the blockchain, too. The reason? Security.
The London Bullion Market Association (LBMA), which supports the world’s largest gold market, says that it is currently analyzing ideas to potentially use blockchain technology as a way to trace where precious metals came from, with a goal of preventing issues of conflict minerals, money laundering, and terrorism funding.
Sakhila Mirza, the association’s general counsel and an executive board director, says that blockchain, considering its potential, has to be part of the conversation.
“Blockchain cannot be ignored,” she told Bloomberg this week. “Let’s understand how it can help us today, and address the risks that impact the precious metals market.”
She added that the goal is to track “everything that ends up in an LBMA good-delivery refiner” within its supply chain.
If the association dips into the blockchain, it would represent a forward-thinking modernization for LBMA, which has relied on paper and the telephone at times. However, it would fit right in with other recent suggested uses of the blockchain’s electronic ledger functionality in financial markets. The news outlet notes that commodities like crude oil, diamonds, and tomatoes have found benefits from the blockchain.
The revelation largely received positive nods from the cryptocurrency sphere, with Bitcoinist writer Samuel Rae suggesting it underlined the potential of mainstream acceptance.
“The potential application of blockchain technology to the asset ownership and tracking use cases has long been an application touted as being a key driver behind mainstream (enterprise-level) adoption,” Rae wrote in his article. “To see an entity as large as LBMA announce an active move into the space, however, is a big deal for blockchain technology adoption as a whole.”
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