The future of the cryptocurrency phenomenon called bitcoin is a much-speculated topic, and its implications for the financial industry is slowly being felt. Worldwide, bitcoin is met with both derision and support. Its role in stock markets is viewed as negative though, what with its frequent lapses and exchange instabilities due to security loopholes.
An argument raised by a professor from New York University at the first Financial Tech academic conference hosted by Imperial College, London is about to change speculator's opinion. The gist of the paper presented by Professor David Yermack, chairman of NYU's finance department, argues that blockchains will undergo an evolution in the coming years, a change so drastic that it will affect capital markets and change the landscape of stock market speculation as it is currently known.
As reported by CoinDesk, Blockchains serve as the anonymous and virtual ledger of all bitcoin transactions, in which all sorts of settlements and payments are done publicly, even without the need for a central trust authority.
Currently, the use of blockchain in the finance sector is limited as alternative forms of remittance and online funds exchange. There are services like BitPay for merchants, client management and invoicing platforms like BitWage, and even trading platforms like Bitfinex. Digital wallet subscriptions are also available, but PayPal, the leading electronic transfers system in the world, seems shy when talk of bitcoin integration comes up.
The recent devaluation of bitcoin as a currency at par with other world currencies and exchanges is cited as a main reason why stock market pros are wary of the new player. Advocates like Yermack also place a measured view regarding public blockchains, they are also aware of the limitations surrounding the new technology.
These limits are based on bitcoin's proof-of-work consensus system. They create a narrower channel for the currency's worldwide throughput, even if the amount of bitcoin production is exponentially decreasing every year, as explained in this article by its founder, Satoshi Nakamoto.
In an increasingly digital world full of internet-connected things, financial security and stability are prime concerns when it comes to digital transactions. It remains to be seen whether bitcoin will be able to provide industry-level solutions despite its decentralized mode of production.
Take a look at this informative video and see why some people are not so sure about bitcoin.
