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Contribution Details

Type Bachelor's Thesis
Scope Discipline-based scholarship
Title Blockchain and its Prospects for the Banking Industry
Organization Unit
Authors
  • Bernadette Leuzinger
Supervisors
  • Philipp Christian Gamper
  • Alexander Wagner
Language
  • English
Institution University of Zurich
Faculty Faculty of Economics, Business Administration and Information Technology
Number of Pages 94
Date 2016
Abstract Text Whereas Bitcoin is now widely known in society, few are talking about the technology behind Bitcoin: The blockchain, the distributed ledger on which every bitcoin transaction is recorded. However, the potential of this new technology is slowly being recognized. Notably the banking industry, an industry not known for being especially forward thinking, is now investing enormous amounts to commercialize the blockchain and explore the feasibility of this new technology. Goals At present, it is still unclear how precisely and to which extent the blockchain can be used for actually generating revenue or diminishing costs. The original idea behind the blockchain – a decentralized, fully transparent peer-to-peer system without the need of any authority or trust in a third party – is now being questioned as big banks, stock exchanges, and auditing firms invest huge sums to explore blockchain based use cases and the development of proprietary blockchains for their own purposes. In the following chapters the ecosystems of blockchains are explained. Firstly, Bitcoin is put into context by comparing it to the traditional monetary system, giving a brief overview of its history, and elaborating on the underlying technical principles. Although there are many other cryptocurrencies, Bitcoin was chosen as it was the first and has, at the time of this writing, still the highest market capitalization. Afterwards, the blockchain should be examined in more detail. Moreover, current projects are inspected and the concept of private and public blockchains is explicated. To complete the picture, an overview of current regulatory is then given. Finally, the last part attempts to provide an outlook into developments in the near and further future. Methodology The blockchain technology is still at its very beginning, this paper is primarily based on recent developments. As the technology is relatively complex and still not widely known in society, this paper is focusing on giving an overview of the current state of knowledge. The focus lies thereby on the banking industry, companies already using or developing the blockchain technology, and the legislative authorities. The available literature is backed by a few opinions from experts, conducted via interview. Findings Although blockchains have gained extensive news coverage over the last few months, the technology is still relatively new and mostly unproven. Especially as a technology underpinning large organizations. Blockchain have the potential to change everything, the way any business works. Nevertheless, the identification of actual use cases and proof of concepts are only starting to appear. Huge amounts of money are being invested which is an indicator that companies are serious about the technology. Currently, the focus is shifting away from the Bitcoin-like currency aspects towards the simplification and automation of the collaboration between companies. Especially financial institutions are currently focused on projects but governments, insurance companies and many other industries are starting to follow. Nevertheless, only time will tell if the blockchain technology is only a temporary hype or if its disruptive potential is paradigm changing. For a further analysis, it would be important to follow future developments closely. When more proof of concepts have taken place and an open standard as aspired by the Hyperledger foundation is becoming accepted, the potential future of the blockchain can be estimated more precisely.
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