Banks were supposed to be frightened of Bitcoin. Last year, in a commentary for Fortune called “Why banks fear Bitcoin,” MIT business professor Trond Undheim wrote that “banks are afraid of Bitcoin because it would force them to innovate.”
Information overload stymies Canada’s banks in mobile payments battleground: ‘Things are changing so quickly’
As banks aim to stake their ground in the burgeoning mobile payments market, a U.K.-based software company says its efforts in Canada are being stymied by the hazards of innovation.
The mysterious inventor of Bitcoin, Satoshi Nakamoto, specifically challenged the idea of trusting banks as one of his justifications for creating the currency. “Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve,” he wrote in 2009. “We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.” In some countries, banks even banned any transactions connected to Bitcoin.
But lately, banks have been warming to the technology behind Bitcoin, called blockchain — using it to innovate, in fact — having recognized the advantages of the lightning-fast, decentralized transaction verification system as having broad applications for transactions involving everything from stock trades to money and property transfers.
“The concept is a network that guarantees the validity of a transaction,” said John Jason, a lawyer at Norton Rose Fulbright Canada LLP, who testified at recent hearings by the Senate committee on banking, trade and commerce on digital currencies.
Bitcoin merely served as “proof” of that concept, he said. Now, it is being recognized that anything that plays a “trusted intermediary role” in today’s world “could be replaced by blockchain technology.”
That’s why Victor Dodig, chief executive of Canadian Imperial