I am senior consultant and BA at Polar Cape and have been working in multiple product and software development projects at banks and financial service providers including Nordnet, Skandia, Nasdaq, Bambora and Nordax. Speculatively I hold some Bitcoin and Etherium of about equal amounts, although what emerges as the real success might be something else…
Blockchain technology could drastically change the financial industry, because a distributed cryptographically secured chain using proof of work could potentially do the same job much faster than large departments of people working with settlement. The slow process of exchanging money and assets that occurs after a trade has been made.
Several problems however remain to be solved. Bitcoin for example, the crypto currency which popularized the idea of the blockchain, has a big capacity problem in its current implementation. At about 15 transactions per second it would not be able to handle the numbers of transactions that VISA are processing, which average at 2000 per second. Implementing the changes necessary to increase capacity has so far turned out to be difficult because of bitcoins decentralized nature. If you are making changes that not everyone or the vast majority can agree on you can instead end up with two competing currencies, which is what happened with second largest crypto currency Etherium.
Etherium is closely linked to another use of blockchain technology called Smart contracts. A proof of this concept was made last year by an initiative called the DAO, short for decentralized autonomous organization. In concept the DAO would allow you create a kind of virtual corporations where the smart contract would be able to handle work contracts, pay out salaries when work was completed share profits with those who funded a project. The DAO took on much bigger proportions than was anticipated and ended up raising investments of 150 million dollar worth of the crypto currency Etherium. The project took a big hit when it later on was hacked and the funds where stolen because of a critical bug in the software. This illustrates that the technology is still in its infancy and that we are still dependent on centralized institutions for verification and safe keeping.See all blog posts