Monday, 5 October 2015

Blockchains and Banks

There’s a conundrum concerning blockchains: Bitcoin bundled together various existing technologies in a unique fashion to create something genuinely new — an almost unhackable, replicated database with no master server, via updates which are based on quickly verifiable effort rather than permission. Blockchains (permissioned chains) remove the genuinely new bit, but they are the current focus of activity in the Financial Services sector. Why?

Bitcoin created an awareness of a mechanism that could conceivably disrupt both banks and existing banking infrastructure providers via a financial network without either middle men or trusted entities. This created the incentive for strategic investment to look into blockchain applications. These replace banking infrastructure providers with software that doesn’t need to be run by a separate entity (e.g. SWIFT), and lower internal costs but still keep the requirement for trusted entities (banks themselves).

What blockchains achieve could have been done before, albeit in a less elegant way, but there wasn’t the alignment of incentives to produce the applications that will create a de facto reality.
Even without the advantages of the Bitcoin (Blockchain) approach, this will stimulate the creation of Internet era banking infrastructure. With them, we could see the web of money and, more generally, any kind of contract.

Now, internet era Banking Technology has found its best ‘Ecosystem fit’ in the form of blockchains.

Read the full article By David Galbraith
Link Here 

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