Though this is not the first time that such an opinion has come, this time it is different because this opinion is coming from one of the largest banks in the world as the French bank BNP Paribas says the technology underpinning Bitcoin has the potential to make existing companies “redundant.” It’s a huge admission from one of the world’s biggest banks.
Nonetheless, as analyst Johann Palychata writes in the company’s magazine Quintessence that Bitcoin’s blockchain, the software that allows the digital currency to function, “should be considered as an invention like the steam or combustion engine,” that has the potential to transform the world of finance and beyond; it is becoming clear they are extremely worried.
Palychata further wrote that if this type of technology is applied to securities trading – the world of buying and selling company shares – then “existing industry players might be redundant.” According to him if investors can trade shares directly with each other in a system that has a layer of trust built into it then middle men – stock brokers – aren’t needed anymore.
He also makes clear that banks are being forced to innovate. Similarly, his views about blockchain being applied to stock trading are not an outlandish scenario either as US exchange operator NASDAQ is currently experimenting with the tech. However, his “redundant” prediction is a worst case scenario.
Yes, Bitcoin is Disrupting the Traditional Banking System
Also, as he believes it’s more likely that stock broking firms will adopt the blockchain technology to trade among themselves, rather than offer it directly to consumers and even if a startup or coder builds a blockchain for trading shares and opens it directly to the public, Palychata thinks the security issues around keeping private keys.
According to him the access codes used to get digital assets traded on the blockchain – means current firms could develop a new role as the guardians of these keys. The mainstream adoption of Bitcoin has started to snowball and many financial institutions have taken note as they are going to face stiff challenge.
The P2P, decentralized, and open source, Bitcoin tech is even being applied to voting, music distribution, and DNS services. Additionally, Bitcoin is receiving quite a lot of popularity as it is now accepted by over 100,000 merchants with transactions averaging the equivalent of $78 million per day.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org