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Will Bitcoin Replace the BIS?

from The Daily Bell:

Blockchain technology could reduce role of banks, says BIS … Blockchain technology could reduce the role of intermediaries such as banks and settlement houses, the Bank for International Settlements – or “the central bankers’ central bank” – said in a report on Monday. Blockchain technology – or distributed ledger technology, as many financiers prefer to call it – is what underpins bitcoin, a controversial web-based “cryptocurrency.” It is a massive ledger of every bitcoin transaction made that is verified and shared by a global network of computers. – Reuters

Dominant Social Theme: It would be a shame if banks became less important.

Free-Market Analysis: Actually, it wouldn’t. And we’re not sure the BIS is really worried about it. The report may simply be an exercise in predictive analysis. After all, if you are the dominant force in your industry, you have to anticipate challenges.

Of course, there is the theory that digital currencies like bitcoin were actually the product of intelligence operations, which means the BIS has even less to fear. But nonetheless, the report seems to make some good points:

The data that can be secured by the blockchain is not restricted to bitcoin transactions. Any two parties could use it to exchange other information, including stock deals, legal contracts and property records, within minutes and with no need for a central authority to verify it.

Basel-based BIS’s Committee on Payments and Market Infrastructure (CPMI), made up of central bankers from across the world, said it could challenge banks’ role – but if the technology became widespread it was unclear who would then provide credit and savings facilities.

How about the market itself? That would not occur to the BIS, which also worries that technologies like bitcoin do not conform to current regulatory models. However, banks are nothing if not adaptive, the Reuters article hastens to reassure. Some digital currency technology can sure be utilized by banks even within the present paradigm.

Read More @ TheDailyBell.com

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