What Big Banks Can Learn From Bitcoin’s Technology

The systems the world uses for transferring money – vast, sprawling, complex and costly – are ripe for change. And change is coming, in the form of distributed ledgers, digital signatures, and virtual currencies. Banks, the traditional intermediaries in the movement of money, must now move quickly to figure out how to deal with this technological threat to their business.
Some $300 trillion in transactions flow through international transfer networks annually, generating $150 billion to $200 billion in revenues for the banks, Bain & Company estimates. It’s not hard to see why banks would be slow to alter a system that’s been such a steady source of fees.
Given the enormity of what’s at stake and the spotty track record of digital currencies, it’s understandable that banks would want to proceed with caution. In early August, for example, Bitfinex, a Hong Kong-based exchange where bitcoin is traded, was hacked, resulting in the theft of about $65 million. Bitcoin is underpinned by the blockchain, the best known distributed ledger.

This post was published at Forbes on SEP 9, 2016.