Blockchain Technology: 5 potential uses
Ashley Kindergan, editor and writer at Credit Suisse, wrote in a new piece that even though the bitcoin network cannot be hacked, it does have its soft points, including the fact that both exchanges and wallets are vulnerable and the network is difficult to scale.
“Bitcoin is not the end of cash, debit cards, and digital payment systems such as PayPal,” European Tech analysts from Credit Suisse’s Global Markets Research department say. The real disruptor is the technology behind this cryptocurrency — blockchain.
Kindergan concluded that blockchain could change these segments for the better:
Credit Suisse believes “interbank payment systems (such as SWIFT) are ripe for disruption because they are old, inflexible, slow, and increasingly prone to cyberattacks.” However, the global financial services company does not consider blockchain as a threat to Visa and MasterCard.
Spending and saving
According to Credit Suisse, “banks spend 14 percent of the GDP they generate on information technology.” Luckily, blockchain might be able to reduce that number since the use of one shared ledger would greatly diminish IT and compliance costs. Tracing asset ownership to comply with anti-money laundering, anti-terrorism, and know-your-customer regulations would, therefore, be easier.
One potential use for blockchain technology is in stock exchange. According to Kindergan, the technology behind bitcoin could speed up the process which occurs after an order is placed on the stock market (“trades take a few days to settle”).
The European Union plans to get rid of physical stock certificates by 2025, so “the next logical step is to digitize and combine the individual ledgers that brokers, exchanges, clearinghouses, registrars, central securities depositories, and custodians keep to make reconciling trades cheaper, faster, and, for clearinghouses that hold assets while waiting for trades to settle, less risky.”
However, Credit Suisse believes that humans will not be excluded from the equation because “the financial system will still need brokers or exchanges to reverse accidental trade orders, registrars to match online blockchain identities with real-life traders, and central counterparties to net trades.”
Reduce piracy worldwide
Credit Suisse estimates that roughly $6.1 billion could be added to incremental revenues for global music companies if piracy was no longer an issue. This is where blockchain comes into play: it could create “a world in which all content and its metadata (information identifying those with legitimate revenue claims…) is transparently, accurately and immutably stored,” thus making it harder to pirate.
Government red tape
The British Government Office for Science wrote in a recent paper that distributed ledgers could one day be used to collect taxes, pay out government benefits, issue passports and driver’s licenses, and create a single database of government identifications.
Credit Suisse analysts believe that “the implications of this, if ever implemented, could be profound in terms of the eradication of bureaucracy and the acceleration of process speeds.”
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(Source: Gabriela Motroc, jaxenter)