Major bank admits bitcoin could destroy banks, brokers & exchanges

July 9 update:
3 days after posting, Visa acknowledged that Bitcoin has a future in payments. This is an understatement, of course. The bank described below goes a step further by acknowledging that the entire financial infrastructure may cave to cryptocurrencies.

burning-cashFrench bank BNP Paribas warned customers and investors that the technology behind bitcoin might one day overtake conventional, account-based financial institutions, thus rendering existing companies redundant (that’s British for “obsolete”).* It’s a tectonic acknowledgement from one of the world’s biggest banks.

Analyst Johann Palychata writes in the company’s magazine Quintessence that Bitcoin’s blockchain, the underlying architecture that allows cryptocurrency 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.

Check out the full story by Oscar Williams-Grut at Business Insider.

* Although Bitcoin will obsolete the current service mix of financial institutions, it is my opinion that for savvy governments and established businesses, it represents a long term opportunity rather than a threat.

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The author is Co-Chair of The Cryptocurrency Standards
Association [crypsa.org] and chief editor at AWildDuck.com

One thought on “Major bank admits bitcoin could destroy banks, brokers & exchanges

  1. I don’t agree that BNP Paribas predicts that the technology behind bitcoin will make existing companies redundant. In Scenario #1, he states “If this setup develops then existing industry players might be redundant.” He says “might”, not “will”.

    Paribas adds: “However, given the challenge of keeping the private key of the account safe, it is possible that investors will entrust an authority to safe keep the private keys. It is also possible that custodians will be responsible for the application layer over the blockchain or that they will launch their own network.

    In Paribas Scenario #2, existing players will still run the show: “The second scenario is an integration within the post trade ecosystem. … Existing actors will remain in charge in this scenario”

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