Cryptocurrencies could eliminate banking’s easiest moneymaker

If the measure of a currency’s importance is how much it’s used to actually buy and sell things, digital currencies like Bitcoin and Ethereum have barely gotten off the ground. And Facebook’s proposed entry, Libra, has run into a wall of skepticism.

But don’t be misled, says Darrell Duffie, professor of finance at Stanford GSB. Unless banks come up with much faster and cheaper ways to transfer money, he predicts, digital currencies in one form or another are likely to upend the industry’s business model within the next decade.

“The future is coming, and it will be very disruptive to legacy banks that don’t get with the program,” Duffie says.

The disruption won’t necessarily come from the likes of Bitcoin. It’s more likely to come from a “stablecoin” that’s pegged to the dollar or some other major currency. It could also come from a digital…