***Seven hundred years ago, the Medici family figured out something so clever and transformative it's like sci-fi to imagine the global economy without it. The Florentine bankers realized it wasn't necessary to own all the businesses (along with all the risk) to be wealthy and powerful; it was much better to keep track of their debts and credits, loan them all money and then take a slice of all their transactions. Risk was greatly reduced, banks did well in bad times and good, scale and opportunity for growth were limitless.
And lo, the modern bank — and banking business model — was born.
Canadians are really good at banking. In 2015, the World Economic Forum ranked our banks as the soundest in the world (for the eighth consecutive year), and in Q3 2016, our five biggest delivered almost $10-billion in profit. They're also global: TD Bank now has more branches in the U.S. than Canada.
But now, another innovation is poised to shake up the banking world on an almost unimaginably larger scale.
You've likely heard of bitcoin, which is cryptocurrency (essentially digital money). For now, forget everything you have read, heard or assumed about bitcoin; think instead about the software that makes bitcoin and other digital currency possible. It's called "blockchain," and inside of a decade, blockchain will upend the familiar order established by the Medici family in the 14th century.
Blockchain is open-source software (free to anyone who wants to code with or improve it) that provides unhackable, authenticated and indelible records of transactions — something that, until recently, only banks could approximate at scale...***
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