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Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology

Author

Listed:
  • Luisanna Cocco

    (Department of Electric and Electronic Engineering, University of Cagliari, Cagliari 09123, Italy)

  • Andrea Pinna

    (Department of Electric and Electronic Engineering, University of Cagliari, Cagliari 09123, Italy)

  • Michele Marchesi

    (Department of Mathematics and Computer Science, University of Cagliari, Cagliari 09124, Italy)

Abstract

This paper looks at the challenges and opportunities of implementing blockchain technology across banking, providing food for thought about the potentialities of this disruptive technology. The blockchain technology can optimize the global financial infrastructure, achieving sustainable development, using more efficient systems than at present. In fact, many banks are currently focusing on blockchain technology to promote economic growth and accelerate the development of green technologies. In order to understand the potential of blockchain technology to support the financial system, we studied the actual performance of the Bitcoin system, also highlighting its major limitations, such as the significant energy consumption due to the high computing power required, and the high cost of hardware. We estimated the electrical power and the hash rate of the Bitcoin network, over time, and, in order to evaluate the efficiency of the Bitcoin system in its actual operation, we defined three quantities: “economic efficiency”, “operational efficiency”, and “efficient service”. The obtained results show that by overcoming the disadvantages of the Bitcoin system, and therefore of blockchain technology, we could be able to handle financial processes in a more efficient way than under the current system.

Suggested Citation

  • Luisanna Cocco & Andrea Pinna & Michele Marchesi, 2017. "Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology," Future Internet, MDPI, vol. 9(3), pages 1-20, June.
    • Handle: RePEc:gam:jftint:v:9:y:2017:i:3:p:25-:d:102756
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    References listed on IDEAS

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    1. Luisanna Cocco & Michele Marchesi, 2016. "Modeling and Simulation of the Economics of Mining in the Bitcoin Market," PLOS ONE, Public Library of Science, vol. 11(10), pages 1-31, October.
    2. Urquhart, Andrew, 2016. "The inefficiency of Bitcoin," Economics Letters, Elsevier, vol. 148(C), pages 80-82.
    3. Adam Hayes, 2015. "A Cost of Production Model for Bitcoin," Working Papers 1505, New School for Social Research, Department of Economics.
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    Cited by:

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    2. Valentina Gatteschi & Fabrizio Lamberti & Claudio Demartini & Chiara Pranteda & Víctor Santamaría, 2018. "Blockchain and Smart Contracts for Insurance: Is the Technology Mature Enough?," Future Internet, MDPI, vol. 10(2), pages 1-16, February.
    3. Vincent Gramlich & Tobias Guggenberger & Marc Principato & Benjamin Schellinger & Nils Urbach, 2023. "A multivocal literature review of decentralized finance: Current knowledge and future research avenues," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-37, December.
    4. Luisanna Cocco & Roberto Tonelli & Michele Marchesi, 2019. "An Agent Based Model to Analyze the Bitcoin Mining Activity and a Comparison with the Gold Mining Industry," Future Internet, MDPI, vol. 11(1), pages 1-12, January.
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    7. Amrendra Singh Yadav & Nikita Singh & Dharmender Singh Kushwaha, 2022. "A scalable trust based consensus mechanism for secure and tamper free property transaction mechanism using DLT," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(2), pages 735-751, April.
    8. Alya Ayuniey Mohd Fairoh & Nurul Najihah Hussin & Nur Aina Arisha Jamali & MAZURINA MOHD ALI, 2024. "The Impact of Blockchain in Financial Industry: A Concept Paper," Information Management and Business Review, AMH International, vol. 16(1), pages 190-196.
    9. Komulainen, Ruey & Nätti, Satu, 2023. "Barriers to blockchain adoption: Empirical observations from securities services value network," Journal of Business Research, Elsevier, vol. 159(C).
    10. Rina Astini & Kehkashan Ishrat & Yanto Ramli & Tafiprios Tafiprios & Kwong Wing Chong & Ooi Chee Keong, 2023. "Nexus among Crypto Trading, Environmental Degradation, Economic Growth and Energy Usage: Analysis of Top 10 Cryptofriendly Asian Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 339-347, September.
    11. Dénes László Fekete & Attila Kiss, 2021. "A Survey of Ledger Technology-Based Databases," Future Internet, MDPI, vol. 13(8), pages 1-22, July.
    12. Radosław Miśkiewicz & Krzysztof Matan & Jakub Karnowski, 2022. "The Role of Crypto Trading in the Economy, Renewable Energy Consumption and Ecological Degradation," Energies, MDPI, vol. 15(10), pages 1-15, May.
    13. Jia, Zhenzhen & Tiwari, Sunil & Zhou, Jianhua & Farooq, Muhammad Umar & Fareed, Zeeshan, 2023. "Asymmetric nexus between Bitcoin, gold resources and stock market returns: Novel findings from quantile estimates," Resources Policy, Elsevier, vol. 81(C).
    14. Claudia Antal & Tudor Cioara & Ionut Anghel & Marcel Antal & Ioan Salomie, 2021. "Distributed Ledger Technology Review and Decentralized Applications Development Guidelines," Future Internet, MDPI, vol. 13(3), pages 1-32, February.
    15. Meennapa Rukhiran & Songwut Boonsong & Paniti Netinant, 2024. "Sustainable Optimizing Performance and Energy Efficiency in Proof of Work Blockchain: A Multilinear Regression Approach," Sustainability, MDPI, vol. 16(4), pages 1-38, February.
    16. Kjartan Sigurðsson & Grétar Þór Eyþórsson & Helga Kristjánsdóttir, 2023. "Digital Currencies, Swot Analysis," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 9(3).
    17. Vasiliy Elagin & Anastasia Spirkina & Andrei Levakov & Ilya Belozertsev, 2020. "Blockchain Behavioral Traffic Model as a Tool to Influence Service IT Security," Future Internet, MDPI, vol. 12(4), pages 1-12, April.

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