Banks were supposed to be frightened of Bitcoin. Some years ago, in a commentary for Fortune called “Why banks fear Bitcoin,” MIT business professor Trond Undheim wrote that “banks are afraid of Bitcoin because it would force them to innovate.”
The banking business is largely based on trusted transactions between individuals, institutions and even governments. It’s a system that is built on banks as the trusted authorities required to verify and record them.
But blockchain has the potential to disrupt this with its “distributed ledger” approach that shares and quickly verifies transactions across a network of de-centralized computers. No middleman, such as a bank, is needed.
With Bitcoin, computer code stored entirely by computers verifies every transaction within minutes across the network on a public ledger, and prevents the currency from being spent more than once.