BBVA: Blockchain Tech Could Replace Centralised Finance System


Blockchain technology could be used to bypass today’s centralised financial infrastructure entirely, according to a report by BBVA Research US.

The report, titled Blockchain Technology: The Ultimate Disruption in the Financial System notes that the application of blockchain technology would first be useful in the payments space, where it would eradicate the need for any intermediaries and significantly reduce costs for banks.

However, decentralised public ledgers could disrupt the financial system as a whole, adds the report. “Given that the majority of financial assets such as bonds, equities, derivatives and loans are already electronic it may be possible that someday the entire system is replaced by a decentralised structure.”

Touching upon smart contracts, the report also noted how being able to register and trade assets on a decentralised register increases efficiency.

It adds:

“In this environment, the current system where financial institutions record individual’s accounts in a centralised fashion and the bank’s reserves are stored by the central bank would be replaced by the ‘Internet of money’ or the ‘Internet of finance’ – a fully decentralised financial system.”

Challenges and risks

The possibility of a decentralised public ledger replacing the current centralised system, the report says, also comes with various risks

Read more ... source: CoinDesk