The technology likely to have the greatest impact on the financial services industry and the world of business has arrived. Not peer-to-peer lending, artificial intelligence, big data, robo-advisers or Apple Pay – I’m talking about the blockchain, the technology behind digital currencies such as bitcoin. Blockchain represents nothing less than the second generation of the Internet, and it holds the potential to profoundly transform the financial services industry.
Because the first generation of the Internet was built for moving and storing information, not value, it has done little to change how we do business or access financial services. When you send someone information, you’re really sending a copy, not the original. It’s okay to have a printing press for information – but not for money.
As a result, we rely on powerful intermediaries, such as banks, to establish trust. Today’s financial intermediaries also perform eight important functions in business and society: authenticating identity and reputation, moving value, storing value, lending and borrowing, exchanging value, funding and investing, insurance and risk management, and audit and tax. We call these the “golden eight,” and they will all be transformed through blockchain.