The digitalization in the financial sector and the development of bitcoin are closely related. The crypto currency is a symbol of new digital applications and processes in the industry.
Convinced that he wanted to create an unregulated, decentralized payment system, a mysterious person named Satoshi Nakamoto published a white paper in 2008 in which he presented their ideas. The key to the idea was that two parties can make direct payments without having to involve an institution that both trust.
The missing trust instance is replaced by technology. More specifically, a cryptographic proof replaces the instance. Therefore trust is digitized.
Digitalization does not stop at trust
Basically banks have been under pressure since the idea of bitcoin. In 2008 there has already been an approach to digitalize the most important asset of many banks: trust. The technological progress didn’t even stop there. But while the financial crisis raged in 2008, there were supposedly more threatening disruptors to the banks. The idea of the group around Satoshi Nakamoto was still far from the consciousness of the decision makers. Digitalization was far behind on the agenda since the priority was to survive the financial crisis without damage. Nobody could imagine in 2008 that trust could be replaced by digitalization.
Blockchain as a lever
The crypto currency bitcoin became technically possible due to the blockchain technology. The close to tamper-proof technology is based on the fact that the information is stored decentrally worldwide. Within the blockchain the information is arranged in chronological order. Each data block contains all relevant information about the transfer, the transferor and much more. This information is unchangeable and can be viewed in a public database at any time. This unprecedented degree of transparency creates trust. Internet users can always understand where a bitcoin comes from.The approach of digitizing trust will put great pressure on intermediaries such as banks. The technological possibilities are already applied. Bitcoin is a practical example. Regardless of how things go for bitcoin, the proof that trust can also be represented in purely digital form is provided.