Bank profits are the price of trust, and bitcoin proves it
One way to think about part of the profits that banks make is that it’s the cost of providing trust. But first you need to understand how blockchains work.
2008 was a big year. The iPhone 3G ushered in the smartphone era. The worst financial crisis since the Great Depression gripped the world. And the pseudonymous Satoshi Nakamoto invented the blockchain, and a digital currency called bitcoin.
Nakamoto was troubled by centralised authority. The conventional way to provide trust in, say, financial transactions is to have a financial institution maintain a centralised ledger.
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Richard Holden is Scientia Professor of Economics at UNSW Business School. Connect with Richard on Twitter.
