205

Blockchain and Banking

Cherukupally (2020) argues that in the real world, peer-to-peer transactions can

occur without the notice and intervention of a trusted third party between finan­

cial sources, especially money between two individuals. With the growth of the

Industrial Revolution 4.0, the rapidly evolving environment is closely connected to

the digital world. A responsible third party, such as a bank, still manages money

between two online business entities and financial institutions. As suggested in the

Bitcoin cryptocurrency strategy by Nakamoto (2009), which was seen as a turning

point that began to shape the notion that peer-to-peer transactions could be imple­

mented into the digital world, Bitcoin has become increasingly popular but not yet

fully embraced as a means of liquidity.

Many previous studies have analyzed the benefits of blockchain, and they can be

categorized into three key advantages, as suggested in Figure 12.2: (i) Decentralization

of the process when money can be exchanged instantly between the parties without

going through a bank, (ii) it cannot be changed or manipulated because the distrib­

uted ledger can be spread around a computer network, and (iii) transparency; every­

one can see all transactions. According to Nakamoto (2009), blockchain technology

would bring several benefits, such as increased transparency of data, increased trans­

action accountability and ease of control, high reliability level, etc. Transactions are

transactions without intermediaries, so transactions are swift, and transaction costs

are minimized, allowing the financial and banking industries to make the most of

this new technology.

Garg et al.’s (2020) research assesses the potential market advantages of the bank­

ing and finance industries’ adoption of blockchain technology. In particular, data is

collected on blockchain consultants, blockchain marketing experts, CEOs, business

directors working in the banking and finance sectors, security assessment, value

systems and objectives. For banking, standards are essential. The research results

confirm that blockchain technology’s recent developments could impact research

outcomes when technology such as blockchain is in its early stages. Besides, Garg

et al. (2020) also say that developed instruments will provide decision-makers with

a basic understanding of how to assess the advantages of incorporating blockchain

technology before deciding to incorporate it into their current systems.

The first industrial revolution:

mechanical system appearance

when using steam energy at the

end of the 18th century (in 1784)

The second industrial

revolution: mass production

powered by electricity was

introduced in the 19th century

(in 1870)

The third industrial revolution:

advances in computing led to

machine programming (in

1969)

The fourth industrial

revolution: first online mass

production (in 2014)

Industrial

Revolution

FIGURE 12.1  History of industrial revolutions. (Synthesis by authors.)