Citibank testing own Bitcoin alternative, Citicoin
So far most banks have played with Bitcoin, essentially to see if it warrants serious attention.  For most the conclusion has been that the underlying technology, Blockchain, is what can offer a serious uplift in productivity and security across financial services.  Yet this article suggests that Citibank has actually gone a couple of steps further than its peers, by creating its own digital currency, dubbed Citicoin, and that it is actively testing the cryptocurrency in various locations around the world.  Citi has apparently spent the last few years testing Bitcoin and Blockchain and "have an equivalent to Bitcoin up and running, again within the labs, so we can mine what we call a 'Citicoin', for want of a better term".

One of the more surprising aspects about bitcoin is the interest it’s garnering from the financial services community. Banks and insurance companies around the world are beginning to pay attention to the digital currency, in some cases even starting experimental projects to leverage the key underlying technologies.

Banks Get Inventive With Bitcoin

Rather than just develop a new currency base, banks are learning how to create new ways for people to directly exchange money or other assets such as stocks and bonds, all without having to pay for a long series of financial middlemen or accumulating transaction fees. For example, one technique under investigation by Nasdaq is to allow stocks in private companies to be traded using a blockchain, which would allow a public accounting visible to everyone to be used before these stocks become public. This could replace the trading of paper certificates, which take weeks to move around.

Rather than simply buying and selling bitcoins, these new banking apps are more focused on how to move funds around the world quickly and with low to no fees — with the help of bitcoin-inspired technology, of course. It is an odd place for the banks to be, but a promising one.

Certainly, time has made a difference. A few years ago, bitcoin was more of a whipping boy and was widely slammed by banking executives. Now you don’t have to look too far to see new digital currency beachheads popping up.

Citibank Leads the Way

Citibank is perhaps the furthest along. It has an equivalent technology up and running that it calls Citicoin. While this is still under wraps and not for actual public use, the bank is seriously testing it across various labs around the world. While it can mine their Citicoins and see what happens, the goal is to “make sure we are at the leading edge of this technology and that we can exploit the opportunities within it,” Ken Moore, the head of Citi Innovation Labs, told IBTimes UK. So far, the bank developed three different blockchains as part of the experiments.

According to CoinDesk, other banks are already using bitcoin or experimenting with the technologies. Some of these include:

Security Implications

Given all these projects, should IT managers be concerned about the security implications of digital currency and its related processes? Certainly — and for that reason, it is worth keeping an eye on these demonstration projects to see what happens.

If your company does a fair amount of foreign exchange, it might make sense to learn more from your business bank regarding how it plans to support virtual currencies and use blockchain technology.