How Disruptive Will the Block Chain Really Be For Financial Institutions?

Why are so many financial institutions investing in block chain innovation labs? Will the block chain, with its promise of rapid, secure and inexpensive transactions, really make many existing financial institutions obsolete as some have claimed? Thomas F. Dapp and Alexander Karollus examined the block chain’s impact on traditional financial institutions in a “talking point” article for Deutsche Bank Research, which provides macroeconomic analysis for Deutsche Bank Group. The article is titled, “Blockchain – attack is probably the best form of defence.”

1_Blick auf die Türme und den neuen EingangThe authors noted that the block chain, because it constitutes a decentralized ledger system which can manage transactions in a secure manner, has ignited a vigorous discussion in both online and offline media.

Bitcoin is the best-known example of a P2P technology application, the authors noted. However, the P2P network can also process fully automated and/or programmable agreements known as “smart contracts,” which bypass intermediaries, national borders and regulators. This capability was the idea proposed by Satoshi Nakamoto, the mysterious programmer who initiated the first bitcoin transaction in the P2P network in 2009. The log of

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