Blockchain save the world

Bitcoin - a favorite currency anarchists and drug traffickers. But you know what? blockchain technology, thanks to which there cryptocurrency, can protect the global financial system from disaster, - writes Bloomberg View editorial column.

During the eight years that have passed since the collapse of the time, regulators have taken steps to strengthen the global financial system. But it is unstable. And to increase its resistance may be new technology. Including key technology for cryptocurrency blockchain.

Why the financial system is weak? Its key functions - payments and trading - controlled undercapitalized banks and other centralized hubs. Despite the best efforts of regulators, such losses hubs instantly spread throughout the economy. To make matters worse, regulators are working blindly. They do not have the tools to real-time to assess the situation and understand exactly where the risks occur. Blockchain solves both problems.

The main feature of the financial system - confidence. It is necessary to make payments between strangers. Financial institutions in many ways find answers to the questions, what belongs to whom and who owes whom. On the other hand, financial institutions have become centers of system vulnerabilities.

Blockchain provides assurance differently. It creates a so-called distributed registry. It has a record of all transaction participants in the system. Transactions confirms and records the network of millions of computers worldwide. There is no need to trust a single source. Information is stored in a huge amount of media. So huge that the question of its reliability and safety is ridiculous even to discuss. Now imagine a distributed register of the records of all transactions of the world: to pay in stores to derivatives. Anyone, including regulators, can real-time monitor the system and identify risks. If the bank system will have problems, the regulator will not have to puzzle over the collateral transaction. Governments do not have money to feed infinitely large banks to protect them from bankruptcy. Financial regulation will be much easier.

Utopia? Technologically, it is already at hand. Question - how to make fantasy a reality. The big banks and stock exchanges are working on different projects to create private blockchain. There are projects distributed registry of credit derivatives, shares of private companies ... The incentive for financiers - improving the efficiency of operations and reduction of back-office costs. Such handheld technologies like the side wheels for children's bikes. From the fall and can be saved, but will interfere at a decent speed.

Independent start-ups are developing applications for global blockchain. It looks much more promising, but the technology does not develop regulation. For example, to create a global payment system, the company will have to register the units in all countries where it is going to work. And to comply with local laws. But that's not all. In the United States requirements vary from state to state. This makes it pointless expensive experiments. And if not entirely deprived, it leaves too little air for technology development, global in nature.

The British Office of Financial Regulation and Control has found an elegant solution. It created so-called "regulatory sandbox." Companies that joined the project, can test ideas under the supervision of the regulator, but in gentle conditions. Such a step the US would repeat most of the world, fear of falling behind the progress.