"Not only will Satoshi Nakamoto's contribution change the way we think about money, it is likely to upend the role central banks play in conducting monetary policy, destroy high-cost money transfer services…eliminate the 2-4 per cent transactions tax imposed by intermediaries such as Visa, MasterCard and Paypal, eliminate the time-consuming and expensive notary and escrow services and indeed transform the landscape of legal contracts completely," he adds.

Advantages for tax evasion

But even if one agrees with Chowdhry that bitcoin is a "brilliant, path-breaking invention", there is a hitch with his choice of nominee.

Satoshi Nakamoto is a pseudonym, and no one knows the true identity of bitcoin's inventor, or inventors. A spokesman for the Royal Swedish Academy of Sciences has said that the nomination will not be considered unless Nakamoto reveals his identity, because the prize is never awarded anonymously.

But even if Nakamoto doesn't win the Nobel Prize, Wall Street is showing a grudging recognition of his genius.

When bitcoin first made its appearance on the internet in 2009, it was primarily embraced by rebel geeks and cyber-anarchists who saw it as an alternative to the capitalist financial system.

Oligarchs, organised crime, drug traffickers and arms dealers also recognised bitcoin's potential advantages for money laundering and tax evasion.

As a result, bitcoin had a chaotic ride. Its price, which was trading at $US13 in January 2013, soared to $US1124 by November that year, before plunging back to below $US200 at the beginning of this year.


Blockchain has wider appeal

But bitcoin has been climbing in 2015 and is now trading at around the $US350 level, with several million transactions recorded each month. After six and a half years of existence, bitcoin finally appears to be gaining traction.

And the banking industry, long disdainful of the idea of a digital currency, has started examining its possible uses.

More precisely, financiers are interested in the information system underlying bitcoins: the blockchain, a distributed ledger that everyone can access but which no single user controls. The record of every bitcoin transaction is preserved in the computers of the participants, and is updated with every new entry. This greatly reduces the risk of fraud and errors because the only way to tamper with the distributed ledger would be to seize control of most of the computers holding the blockchain in their memories.

Enthusiasts also argue that blockchain allows for the direct transfer of ownership of securities almost instantaneously. Encrypted, digital representations of share certificates could be inserted into minute bitcoin transactions, facilitating an immediate, verifiable transfer of shares from seller to buyer.

Nasdaq is trialling blockchain in its Private Market, a platform for trading shares in tightly held private companies. The hope is that blockchain will enable trades to be cleared in less than an hour, compared with the laborious process that requires three days for shares, and up to several weeks for more complex financial products.

Some see blockchain as the key to achieving the longstanding dream in the securities market of achieving real-time settlement. This would help reduce risks that counterparties will fail to complete the transaction, as well as freeing up billions of dollars that are tied up during the settlement period.

Banks back transfer project


For the world's capital markets, where assets worth hundreds of billions of dollars are swapped daily, blockchain technology also offers the potential for huge savings by replacing laborious back-office processes.

Not surprisingly, more than 20 of the world's largest banks, including Goldman Sachs, JP Morgan, Credit Suisse along with Australia's Commonwealth Bank and National Australia Bank, are backing a project aimed at developing common standards for a system that banks might use to transfer funds or information.

The major global banks will provide data, ideas and financial backing to a New York-based start-up called R3CEV, which hopes to create a blockchain framework to use in the financial industry.

NAB chief executive Andrew Thorburn last month described the project as "an opportunity for banks to learn together about something that could have a very significant impact on our business in future years. It could be a virtual banking system".

The digital currency also scored a major victory last month when Europe's highest court ruled bitcoins should be exempt from value-added tax in the same way as banknotes and coins.

With or without a Nobel Prize, Nakamoto can console himself with the idea that bitcoin is now on a more equal footing with mainstream money.