These guys are pretty pumped. REUTERS/Jeff J Mitchell
You may have noticed that Wall Street has gotten pretty excited about blockchain.
Blockchain is the technology behind bitcoin. Wall Street wants to use blockchain to simplify the way it processes transactions.
It promises to improve security, lower costs and increase the speed of transaction settlement. You can read a fuller explanation here.
Goldman Sachs says the technology "has the potential to redefine transactions" and can change "everything." A bunch of financial firms have signed on with R3 , an industry-wide body trying to bring blockchain to finance. Autonomous Research has called the technology a "game changer."
According to a big report by Huw van Steenis over at Morgan Stanley, some of that excitement is justified. Blockchain, also known as distributed ledger technology, is an interesting development, and could help banks reduce costs.
But some of the current buzz is a little over the top, according to Morgan Stanley, not least because widespread use of the technology is some way away.
"There are a few misconceptions that may overstate quite how disruptive distributed ledgers could be," the report said.For example, the widespread rollout of this kind of technology is years away. Here is Morgan Stanley:We expect the financial institutions and their customers will adopt blockchain technologies asset class by asset class for validated proof of concepts (POC) efforts over the next 2-5 years in an iterative process that will likely last decades. Regulation means that new blockchain startups are unlikely to usurp banks, meanwhile. Here is MS:Not one bank nor policymaker that we have met with on blockchain gives even a second thought to an unpermissioned public network. KYC, AML and other considerations means it has to be a permissioned network. This reduces the risk that a new start-up will be able to disintermediate entire […]
