Disruptive potential
\n<\/strong>The holy grail for a new technology (or, in this case, the reemergence of an existing one), can be boiled down to one of the tech industry\u2019s favorite buzzwords: disruption. Everyone wants to know what this technology is capable of doing to upend the way business is done.<\/p>\nThe potential implications of blockchain and distributed ledgers as they pertain to transactions in commercial banking are intuitive, but as Liang and others have alluded to, these technologies threaten established practices well beyond.<\/p>\n
Coincidentally, around the same time bitcoin was emerging, investment banks and other financial entities were engaged in an arms race to maximize compute power and, therefore, the speed with which they received information about the markets. Just as computers replaced phone calls and turned minutes into seconds on the trading floor, high-performance computer power was turning seconds into fractions of seconds, providing the edge to those who get the information first\u2014even if that lead time is literally the blink of an eye.<\/p>\n
The compute power is still of vital importance, and virtualizing the ledger process would theoretically speed up transactions even more by freeing bandwidth that could be reallocated to processing incoming data.<\/p>\n
On a more micro level, the best disruption analogy is third-party payment services, which offered the first viable set of alternatives to cash or credit. PayPal gave users the first option for decoupling their bank accounts or credit cards from their online purchases. Mobile payment services from Google and Apple took this concept to smartphones, and Venmo extended it to person-to-person transactions.<\/p>\n
Blockchain and its associated capabilities can have a similarly disruptive effect by redefining the process by which these transactions take place. By being agnostic to the endpoints of the transactions, the technology would eliminate the need for a payment company to be in the middle of every transaction.<\/p>\n
Of course, the major question that remains as to how to get the different players in a competitive market to work together to develop the level of interoperability necessary to make this blockchain-backed ledger system a reality\u2014a tall order, indeed.<\/p>\n
When\u2019s the last time Google and Apple worked together to make something interoperable?<\/p>\n
It was certainly longer ago than the current collaboration among Bank of America, Wells Fargo and 28 of their competitors. Raise your hand if you ever thought of a scenario in which banks were more visionary than tech companies.<\/p>\n
That might be the real magic trick.<\/p>\n","protected":false},"excerpt":{"rendered":"
Pay no attention to the man behind the curtain. Dorothy and her travel companions didn\u2019t listen, of course, and peeked behind that curtain to find out that the great wizard was just a man with a machine. The financial industry is experiencing the inverse, as it examines a machine that is run by a \u201cman\u201d […]<\/p>\n","protected":false},"author":631,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[85,87,86,89,88],"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts\/1627"}],"collection":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/users\/631"}],"replies":[{"embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/comments?post=1627"}],"version-history":[{"count":0,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts\/1627\/revisions"}],"wp:attachment":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/media?parent=1627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/categories?post=1627"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/tags?post=1627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}