A new paper on blockchain technology has been released by the head of interest rate and credit models at Banca IMI , an investment banking and capital markets subsidiary of Intesa Sanpaolo. The paper highlights “real business cases” for the technology, arguing that financial services need to be reformed and not simply improved.
There has been some misunderstanding at the root of the debate around digital currencies and finance: the idea that digital currencies are based on a new “technology” that can be applied to financial markets as they are.
Massimo Morini, who penned the paper, “ From ‘Blockchain hype’ to a real business case for Financial Markets” recently spoke to Bitcoin Magazine and said that things are different.
“Digital currencies have displayed a radically new business model for transactions, where the use of cryptography and a single distributed ledger makes many passages in the process less reliant on trust in the counterparty,” he said. “The same is true for the logic of smart or automated contracts that many people in finance are investigating.”
It is only by making the business process less reliant on trust that banks can fruitfully exploit the lessons surrounding digital currencies. In the debate around digital currencies and finance, the concept of trust is typically used in a black-and-white sense: a totally trustless model vs. a model based on absolute trust. However, Morini adds that this is another mistake to avoid.
“This is not real. Different business models involve different levels of trust other than zero or full trust,” he said. “The financial industry does not need to remove trust as much as Bitcoin, since the financial players are identifiable off-chain and are usually already committed in the market, within a precise legal framework.”
They could, Morini added, benefit from removing trust from many passages of their business model, which […]
