Technology Behind Bitcoin Could Totally Replace the Stock Market

Bitcoins may not be the best investment these days, but no matter where you stand on their future potential, you have to admit that the technology behind Bitcoin is pretty impressive. With the exception of gold and silver, never before in history has a currency been able to seamlessly operate without any form of centralized control. And that same decentralizing technology may very well move beyond the currency market someday, and leave its mark on other sectors of the economy.

Earlier this year I wrote about the CEO of Overstock.com, and his plan to issue stocks with Bitcoin’s blockchain technology. Doing so would cut out the central controllers of the stock market, and create something that is much closer to a truly free market. Blockchain based stocks would basically end Wall Street’s crony grasp on the stock market.

Now it appears that the idea is beginning to pick up steam in the financial world. Recently, an analyst for the French bank “BNP Paribas”, one of the largest banks in the world, suggested that the technology behind Bitcoin could totally replace the stock market as we currently know it.

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.

Most banks have been keen to play down the competition from financial technology, or fintech, startups, saying new technology presents opportunities rather than threats.

Falling technology costs and the disruption that followed the financial crisis of 2008 have lead to a wave of innovation and competition for banks. Bitcoin and the blockchain are some of the most cutting edge financial experiments we’ve seen.

It looks like the writing is on the wall for Wall Street. Technology is quickly making them obsolete, and there’s really nothing they can do about it.

Banks like Santander and Barclays are investing in and experimenting with financial technology of their own, saying it’s a good chance to improve their own services.

But the truth — as Palychata makes clear — is these banks are being forced to innovate. While its unlikely that any one of hundreds of startups currently springing up will replace Santander or Barclays, banks face death by a thousand cuts as startups attack different parts of their businesses from multiple angels. If they don’t do something soon it will start to affect the bottom line.

So say goodbye to the Gordon Geckos of the world. They had a good run at the top of the pyramid, but now they’ll have to make room for markets that are actually free.