by Joseph Young
In a seminar titled “Blockchain: The Financial Challenge of our Time” hosted by CNBC and the Singularity University, former JPMorgan executive and one of the most powerful women on Wall Street, Blythe Masters, gave an exclusive talk about bitcoin, its advantages, and its efficiency in settling transactions and payments.
The main reason for the banks’ increasing interests in blockchain technology is its efficiency in settling and processing transactions. For decades, financial institutions and banks have been required by regulators and government agencies to create reports and audits of sensitive transaction information records.
Masters began to realize the potential of blockchain technology, and its ability to disrupt the financial sector, soon after she decided to leave JPMorgan for a year to take a vacation. “The biggest challenge faced by many of the major financial institutions in the world today is the fact that they are tasked with processing, recording, reporting to regulators and otherwise, reconciling and auditing ever increasing amounts of sensitive transaction information. Infrastructure we used to do that is pretty outdated. It is centralized, it is protected by securities that have proven subject to repeated breach,” she explained.
In March of 2015, Masters joined a bitcoins startup called Digital Asset Holdings and was named the CEO of the startup two months after joining the company as the board.
“How seriously should you take this [bitcoin]? I would take it about as seriously as you should’ve taken the concept of the internet in the early 1990’s. It’s a big deal, and it is going to change the way that our financial world operates,” said Masters during the talk.
US Lags in Blockchain
In a conference organized by Coindesk, Masters explained that jurisdictions outside the US will lead the adoption of blockchain and will disrupt the financial sector. Today, the United States lags in the adoption of blockchain technology because of the lack of support from the government and the restrictions of laws like New York’s BitLicence.
“There are jurisdictions outside the US where it will happen quicker and that’s because there are markets where there is a vertical integration all the way from the exchange through to the custodian’s custodian if you will,” said Masters. “There the decision-making process is contained within a smaller number of bodies and there are a couple of jurisdictions with very supportive governments that are driving that. So I think you will see it outside the US probably before you see it meaningfully in the US.”
Her discussion on the blockchain technology also covered the inefficiency of the current stock market trading platforms, and its inability to transfer and settle assets quickly and securely.
“T+3 is not particularly satisfactory, but it isn’t profoundly broken. If you look at the loan market that is operating at a T+20 — plus plus plus — basis and the consequences of that are impacting the economics of the business materially and adversely, that’s going to have to change whether it’s distributed ledger technology that fixes it or not,” Masters added.
Watch the full video of the session here.