Pointing to the blockchain potential to change centralized structures as the most salient feature of blockchain, Mohammad Talebi says financial systems need to undergo a major overhaul by the emergent technology.
“Financial systems across continents operate in a centralized framework which is monitored by a central mechanism,” he was quoted as saying on the website of the Monetary and Banking Research Institute.
He pointed to Swift, the global financial messaging service which monitors all transactions among countries, and central banks’ oversight of domestic monetary and banking affairs as instances of centralized financial entities operating within a centralized paradigm which he believes blockchain technology can change, Financial Tribune reported.
“Blockchain is the second important development after Internet and is expected to change all the structures created by Internet into a new paradigm,” he said.
Talebi added that the technology will transform the structure of financial monitoring bodies using its built-in tool also known as “distributed ledger technology.”
DLT is a digital system for recording transactions of assets in which transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
He said the emergence of blockchain raises the prospect of a “fascinating” world. Crowd-funding is one example of the newly-emerging financing mechanisms that will undergo fundamental transformation by blockchain technology, he said.
“I believe crowd financing will take a new form after blockchain. Blockchain employs supervisory tools differently and people’s investment and participation in a financial system will be more secure and more private.”
The CBI official expressed the hope that the highly advanced encryption system embodied in blockchain would help prevent forgery and frauds.
Talebi made the evaluation in the run-up to the eighth annual conference on Electronic Banking and Payment System scheduled for Jan. 29-30.
Blockchain revolution has been selected as the main theme of the meeting organized by the Monetary and Banking Research Institute.