As is said in Michael Casey and Paul Cigna’s, “The Truth Machine,” and in Satoshi Nakamoto’s original post on Bitcoin in 2013, trust is what we lack in our traditional currencies.
With this in mind, from the inception of the space, it can reliably be said that the success of the Blockchain has at least largely hinged on the idea that it can give us back that trust.
Furthermore, it can also be extrapolated that the first iteration of the Bitcoin network was meant to serve as an example of how a currency can increase our trust if it exists in a public way, free of centralized control.
Recently, Cointelegraph published an analysis that attempted to examine the possibility of the Blockchain directly preventing the coming of the next global financial crisis. Inside of this analysis, lies the foundational assumption that the root of the 2008 crisis was our high level of trust in our financial institutions.
Inside of the same assumption, the analysis even goes as far as suggesting that we never truly questioned why these institutions were doing what they were doing or how they achieved the record profits that they achieved, just before we were hit with the full extent of the industry’s near collapse.
As with any logical argument, there is nothing wrong with basing one’s conclusions on foundational assumptions. Therefore, as Coindesk says, if we accept it to be true that trust was the issue here, then the Blockchain could be the solution.
Even so, does this also mean that it is the roadblock that can stop the crisis train?
First of all, given that there continues to be a strong resistance in the banking space towards actively using the Blockchain, it can be said to be logical that the idea that banks created the Blockchain on purpose does not really make sense.
Secondly, the same resistance that gives credence to the idea that banks could not have engineered this industry, gives credence to the idea that they are wary of it because they believe it is a major risk to their future success.
Reports like “How Blockchain Could Disrupt Banking” by CBInsights, specify this risk with statements like that a large survey that was run by the International Securities Association indicated that 55% of the companies polled are currently examining the possible benefits of the Blockchain to what they already do.
With this, one should also keep in mind that given the name of the surveying organization, the companies involved were in the traditional finance industry, for the most part.
What is perhaps the second most important benefit that was mentioned by the same survey is the possible utility of smart contracts to the banking space. In discussing this point, CBInsights pointed out the ability of such tech to automate many of the time consuming, paper-based processes like any sort of insurance or mortgage claims.
With these possible benefits, the fear of the traditional finance players related to the Blockchain, and the existence of the main technology as a trust-less entity, it is safe to say that bigger changes are coming, although the true extent of them remains to be seen.
By: BGN Editorial Staff