This article discusses the issues with our current financial systems, mainly the prevalence of intermediaries. The more steps there are in a process, the more vulnerable they are to error or fraud. The article notes that “45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year”. It blames this high fraud rate on an entirely inefficient system that tries to digitize old paper procedures rather than utilize uniquely digital functions.
The authors mainly focus on how blockchain’s decentralized and secure structure can, and is, revolutionizing finance. They point out that incumbent financial intermediaries don’t need to see blockchain as a threat, but rather a next step. I think this is naive of the authors. Because of the lack of regulations and general newness of blockchain, established firms are going to be wary of transitioning until blockchain is proven. Most companies are reluctant to dramatically change their processes because they don’t see their customers asking for change. Financial institutions are going to be especially hesitant because people are extremely sensitive about their money’s security. If blockchain catches on, it will be disruptive to current financial intermediaries even if that doesn’t necessarily need to be the case.