Abstract
This paper looks at the challenges and opportunities of implementing blockchain technology across banking, providing food for thought about the potentialities of this disruptive technology. The blockchain technology can optimize the global financial infrastructure, achieving sustainable development, using more efficient systems than at present. In fact, many banks are currently focusing on blockchain technology to promote economic growth and accelerate the development of green technologies. In order to understand the potential of blockchain technology to support the financial system, we studied the actual performance of the Bitcoin system, also highlighting its major limitations, such as the significant energy consumption due to the high computing power required, and the high cost of hardware. We estimated the electrical power and the hash rate of the Bitcoin network, over time, and, in order to evaluate the efficiency of the Bitcoin system in its actual operation, we defined three quantities: “economic efficiency”, “operational efficiency”, and “efficient service”. The obtained results show that by overcoming the disadvantages of the Bitcoin system, and therefore of blockchain technology, we could be able to handle financial processes in a more efficient way than under the current system.
Highlights
Today, sustainable development, green house gas effects and climate change are among the major challenges faced by the mankind, and many organizations, such as financial institutions, are looking to both save money and reduce their carbon footprint.Information and Communication Technology (ICT) is an essential factor in tackling these challenges
We focus on the role of financial and cryptocurrency markets in sustainable development, examining recent trends in banking sector, and possible future events that could shape the role of the blockchain technology in the sustainable development of an integrated financial and cryptocurrency market
In order to provide food for thought about the potentialities of blockchain technology looking at them as a valid support for the actual financial system, we investigated the actual performance of the Bitcoin system with particular attention to its main limitations, such as its ecologically unfriendly protocol, and the high computational power required to run the system, which implies high mining hardware expenses, and the low number of transactions, and the block size limit
Summary
Sustainable development, green house gas effects and climate change are among the major challenges faced by the mankind, and many organizations, such as financial institutions, are looking to both save money and reduce their carbon footprint. Blockchains have the potential to bring great value to several financial service activities, from trade finance to payments, securities settlement, and regulatory compliance They could contribute to overcome some traditional banking inefficiencies, such as the foreign exchange (FX) transfer costs and times, to augment existing business networks, and to provide increased discoverability and trust working in cooperation with the banking payment and messaging systems. There is much concern about whether this technology will be able to achieve the processing speed of an automated clearing house, about the more computational power required to each participating block of a blockchain, and about the actual ability to lower costs compared to traditional payment systems when larger transaction volumes will be involved (see works by [2,6]).
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