Former JP Morgan credit default swap pioneer, Blythe Masters, believes that distributed digital ledgers have the potential to empower business models and will fundamentally change how our financial world operates.
Speaking at Exponential Finance 2015, Blythe Masters, former Head of Global Commodities at JP Morgan, presented her views on how blockchain technology and public ledgers can disrupt current business models, and why major financial institutions and regulators should explore their potentials.
"Economic transactions on a digital ledger can be programmed to record virtually anything of value," she started off in a speech in New York on June 2.
According to Masters, the ability to record information on a token, "information that represents or evidences title to, for example, a financial instrument like an equity, or a bond, or even a loan," has the potential to disrupt and empower business models "in terms of making them lower cost, more efficient and less risky."
In practice, this means that the whole lifecycle of a trade can occur at the trade entry level, she said. "That's much earlier in the stake of process than what you are accustomed to seeing in mainstream financial infrastructure."
However, there is still a long way to go before distributed ledgers are universally adopted, she said. And while this won't be done overnight, we will eventually get there.
"How seriously should you take this? I would take it about as seriously as you should have taken the concept of the Internet in the early 1990's. It's a big deal. And it is going to change the way our financial world operates."
Masters, who was recently appointed CEO at Digital Asset Holdings, a fintech startup that intends to build a software platform for financial institutions to settle trades made on third-party sites in digital currencies and in digitized versions of more traditional financial assets, follows the trend of bankers ditching Wall Street for the more promising fintech industry.
Obviously, Masters isn't the first Wall Street veteran to believe in the revolutionary potential of the blockchain technology. More than a dozen of big banks and tech firms are reportedly interested in distributed ledgers, among which Nasdaq, Overstock, IBM, Samsung, UBS, Intel, Western Union and Banco Santander.
Organized by the Singularity University and CNBC, the Exponential Finance Series aim to bring together leaders from the financial industry to inform them how technology is imparting their business. This year, the two-day conference included among its speakers former CTO and co-founder of PayPal, Max Levchin, CEO and co-founder of BlockCypher, Catheryne Nicholson, direct of engineering at Google, Ray Kurzweil, as well as top executives from Citi and Deloitte Consulting.
Watch Blythe Masters' brief highlights: