Though the industry has recently seen new attention from brand-name financial giants, one of the earliest institutions to embrace bitcoin and the blockchain was Estonia’s LHV Bank.
Since 2014, LHV Bank has been working to study use cases for the emerging technology, striking partnerships with startups like Coinfloor and providing banking services to Coinbase. In June of last year, LHV even went so far as to launch its Cuber Wallet app, a blockchain-based wallet that allowed users to send digital representations of real euros.
In 2016, LHV says it is set to expand its experimentations, indicating its ambitions are now bigger than "creating yet another wallet". In a new interview, LHV’s cryptocurrency product manager Jüri Laur expanded on the state of his firm’s current projects and evolving industry theses.
Laur told CoinDesk that LHV remains interested in both digital currency and distributed ledger applications for the technology:
"It's fair to say we support the core values of bitcoin - namely decentralization and open permissionless innovation. That being said, we are a bank and have to operate within a certain legal framework and take all regulations very seriously which limits our choices at times."
The firm's openness to digital currency use cases notably comes at a time when industry investors are betting less on startups with this focus, and simultaneously, major financial firms are openly disparaging the idea currency applications for the technology have merit.
Still, Laur suggested his firm isn't sold on the ideas of its peer institutions.
"I believe permissioned blockchains are suitable for certain use cases, but also lose a lot of the key qualities that make the technology so valuable," he added.
For his part, Laur says LHV is keeping its trials "blockchain agnostic", so that it would be able to adapt should an alternative blockchain become more widely used.
He noted, for example, that he is bullish on Ethereum and that LHV hosted its creator, Vitalik Buterin, during a recent visit to Estonia.
As for the size and scope of LHV’s internal initiatives, Laur said the bank has yet to build a separate department, but he noted that the company is taking active measures to ensure its employees are well-versed on the emerging technology.
"'Cryptocurrencies 101' is a part of onboarding training for all new staff. I'm fairly certain no other bank does that today," Laur boasted.
Laur further addressed LHV’s stance on the trend among major financial firms to form consortia aimed exploring use cases for distributed ledger applications of blockchain tech.
Owing to LHV’s early interest in the industry, he said LHV has so far stayed out of these headline-grabbing partnerships, and that it believes its actions have been beneficial.
"I believe one gets a much better understanding of the technology and it's potential by building its own proofs-of-concept," he said.
Laur added LHV would not "rule out" joining any consortia in the future, though it did not name any specifically it may consider.
Down the 'rabbit hole'
As for his own acumen with the technology, Laur said he first learned about bitcoin in 2010, but only last year began to see its potential.
A former billing and payments manager for Skype, Laur took over managing LHV’s cryptocurrency product in October.
Speaking to this background, Laur suggested that he understands why Internet companies like Netflix have voiced support for bitcoin. The payment systems used today, Laur says, "simply aren’t built" for online business.
"The challenge for the likes of Skype is to be able to provide a means to pay in almost every country in the world. And there isn't a single payment method that can do that today," he said, adding:
"Could bitcoin or another cryptocurrency solve this problem? Potentially yes."
Laur went on to call existing banking infrastructure "ancient".
The statements echo a trend recently emphasized by Aite Group, which found blockchain to be gaining steam among financial firms due in part to a drive to replace legacy systems.
Though Laur did not hint at any new POCs in development at LHV, he called the firm’s Cuber Wallet, a partnership with bitcoin firm ChromaWay, a "success" that the bank is eager to build on.
Laur said LHV is working to prepare the technology for commercial use, a process that may include expanding its API as it seeks develop the product for more use cases.
"Today we are live with the wallet product for our own account holders, but do aim to expand both our customer and product range this year," he said.
Laur went on to call its Cuber wallet foundational, but hinted at broader goals ahead, concluding:
"To keep it simple, my main goal for 2016 is to start solving real-life problems."
LHV Bank image via YouTube