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French bank BNP Paribas says the technology underpinning bitcoin has the potential to make existing companies “redundant,” a huge admission from one of the world’s biggest banks.
Analyst Johann Palychata writes in the company’s magazine Quintessence that bitcoin’s blockchain, the software that allows the digital currency to function, “should be considered as an invention like the steam or combustion engine,” that has the potential to transform the world of finance and beyond.
The blockchain is an online ledger of all the bitcoin transactions that take place. It’s spread across thousands of computers and servers globally.
It lets people exchange bitcoin by spreading the record of exchanges and ownership history across a wide area. It adds a layer of trust that is essential to bitcoin — everyone can check a coin hasn’t been double spent and is actually owned by the person claiming to.
Palychata says that if this type of technology is applied to securities trading — the world of buying and selling company shares — then “existing industry players might be redundant.”
If investors can trade shares directly with each other in a system that has a layer of trust built into it then middle men — stock brokers — aren’t needed anymore.
That’s a huge thing for an investment bank to say, especially one of BNP Paribas’ size — it’s France’s biggest bank.