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Understanding and applying Blockchain technology in banking: Evolution or revolution?

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  • Buitenhek, Mark

Abstract

This paper explores the emerging technology of blockchain, the technology that underpins Bitcoin and other cryptocurrencies looking at what the technology is and its potential to disrupt and transform the financial services industry. It highlights the technology's characteristics and explains why these can have a profound impact on the entire financial sector in areas ranging from settlements, payments and identity services, as well as creating new products based on for example ‘smart contracts’. It will give readers an idea of what stage the technology is at—at the top of the Gartner hype cycle and therefore due to enter the ‘trough of disillusionment’ before useful applications start to emerge. The paper also highlights the work that the industry needs to do to make blockchain applications a mainstream part of the financial landscape. It stresses that this is not a technology that a single organisation can hope to perfect to gain an advantage over rivals. Rather, it can help the entire industry by speeding up transactions and making them more secure. But its full potential can only be realised if there is widespread collaboration throughout the sector to explore applications and create common standards.

Suggested Citation

  • Buitenhek, Mark, 2016. "Understanding and applying Blockchain technology in banking: Evolution or revolution?," Journal of Digital Banking, Henry Stewart Publications, vol. 1(2), pages 111-119, September.
    • Handle: RePEc:aza:jdb000:y:2016:v:1:i:2:p:111-119
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    Cited by:

    1. Kaniadakis, Antonios & Foster, Paige, 2024. "The role of fintech startups and big banks in shaping trust expectations from blockchain use in mainstream financial markets," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    2. Li, Dongxu & Ning, Yiran & Wang, Peng, 2024. "Attention to global warming, consensus transition, and crypto trading," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).

    More about this item

    Keywords

    blockchain; distributed ledger; smart contracts; collaboration; FinTech; finance; trade finance; settlement and payments;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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