Blockchain and the future of money and finance : a qualitative exploratory study of blockchain technology and implications for the monetary and financial system

Abstract

Bitcoins original idea proposed a trustless monetary system, without the need of
\nintermediaries. In recent years, these very intermediaries it originally tried to circumvent, have
\ngained an increased interest in Bitcoin’s underlying technology, the Blockchain. It presents a
\ndecentralized database technology, suitable for exchanging value in an untrusted environment.
\nConsequently, it introduces an innovation in both economics and information technology.
\nIn this explorative study, we aim to investigate how Bitcoin and Blockchain technology may
\nimpact the monetary and financial system. By conducting 20 in-depth interviews from a broad
\nrange of stakeholders and a literature review in this new topic of interest, we have identified
\ntwo main themes introduced with this new technology. First, we seek to understand how the
\nfuture of money could unfold with Cryptocurrencies and Central Bank issued Digital Currency
\n(CBDC). The former is recognized to have a series of specialized architectures, spanning from
\nsimple monetary transactions to complex platforms enabling a decentralized economy to
\nevolve. CBDC is not necessarily reliant on blockchain technology, but the of digitally issued
\ncurrencies and blockchains introduces new fiscal and monetary policy toolkits. There are
\nhowever a series of intricate questions that needs to be addressed before CBDC could act as a
\ncomplement or replacement for physical currency. Lastly, we explore how the future of
\nfinance will be affected by blockchain technology and the cryptoeconomy. Banks may be
\nfacing increased competition from new entrants, where blockchain technology may facilitate
\nreduced costs in terms of regulatory compliance, efficiency in transactions and settlement, and
\nreconciliation. Moreover, new financial services are introduced by financial technology
\ninnovation. This might change the business model of banks and other financial institutions
\ndrastically. Furthermore, cryptocurrencies introduce new funding possibilities and enables
\norganizations to evolve with no governing body. This might facilitate a new economic system,
\ncalled the cryptoeconomy.
\nDevelopment in blockchain technology is mentioned to be at the same maturity stage as the
\nInternet by the early 1990s. There are several uncertainties regarding its future applications.
\nHowever, smart contracts seems to be an interesting application, facilitating automation in a
\nrange of applications.