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Blockchain and Banking
How Technological
Innovations Are Shaping
the Banking Industry

Pierluigi Martino
Blockchain and Banking
 Pierluigi Martino

Blockchain
and Banking
How Technological Innovations Are Shaping
the Banking Industry
Pierluigi Martino
Department of Economics and Management
University of Pisa
Pisa, Italy

ISBN 978-3-030-70969-3 ISBN 978-3-030-70970-9 (eBook)

https://doi.org/10.1007/978-3-030-70970-9

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and
retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc.
in this publication does not imply, even in the absence of a specific statement, that such
names are exempt from the relevant protective laws and regulations and therefore free for
general use.
The publisher, the authors and the editors are safe to assume that the advice and informa-
tion in this book are believed to be true and accurate at the date of publication. Neither
the publisher nor the authors or the editors give a warranty, expressed or implied, with
respect to the material contained herein or for any errors or omissions that may have been
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and institutional affiliations.

Cover illustration: © Melisa Hasan

This Palgrave Pivot imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
 Contents

1 Introduction: The Rise of Fintech 1

References 6
2 Blockchain Technology: Key Features and Main
Applications 9
2.1 Introduction 9
2.2 The Fundamentals of Blockchain Technology 10
2.3 Blockchain Types and Classifications 17
2.4 Blockchain Applications 20
References 27
3 Blockchain Technology and the Banking Industry 33
3.1 Introduction 33
3.2 Blockchain as a Potential Risk for Banks 34
3.3 Blockchain and Banking Efficiency 38
3.4 Blockchain as a Source for New Products and Services 46
3.5 Blockchain and Financial Inclusion 47
3.6 Conclusions 48
References 49
4 Blockchain and Banking Business Models 53
4.1 Introduction 53
4.2 Technological Development and Business Model
Innovation 54

v
vi CONTENTS

4.3 Blockchain and Innovation in the Banking Business

Models 55
4.4 Banks’ Approach to Blockchain’s Challenges 64
4.5 Conclusions 66
References 67
5 Regulation of Blockchain Technology: An Overview 71
5.1 Introduction 71
5.2 Regulatory Issues and Cryptocurrencies 72
5.3 Regulation of Cryptocurrencies 73
5.4 Regulatory Issues and Blockchain’s Distributed Ledger
Technology 84
5.5 Regulators’ Approach to the Adoption of Blockchain
Technology 84
5.6 Conclusions 92
References 94
6 Final Remarks 99
References 103

Index 105
 List of Figures

Fig. 2.1 Example of a blockchain 12

Fig. 4.1 The business model canvas (Osterwalder and Pigneur 2010) 56
Fig. 4.2 Status of adoption of blockchain’s distributed ledger
technology by EU banks (Source Own processing
of data from the EBA’s [2019] risk assessment report
of the European banking system) 65

vii
 CHAPTER 1

Introduction: The Rise of Fintech

Abstract Advances in telecommunications and information technology

have had a significant impact on the banking industry over the past
few years. The rise of the financial technology (fintech) sector has also
played an important role, with new technologies like blockchain having
the potential to change the whole banking industry in faster and more
disruptive ways than ever before. This chapter outlines the context of this
study, presents the book’s structure and objective and highlights the main
themes of all the other chapters.

Keywords Technological innovations · Fintech · Blockchain

technology · Banking

The banking industry has undergone considerable changes over the past
few decades, especially because of the boom in technology that has
resulted from advances in telecommunications and information tech-
nology (IT). These advances have transformed banking products, services
and processes (Berger 2003; Frame and White 2014; Frame et al. 2018).
Faster computing and the widespread adoption of the Internet have
produced a more efficient payment system with new payment tools and
banking services (e.g. automated teller machines (ATMs), credit cards,
electronic payments, Internet banking, etc.), while advances in IT (both

© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2021
P. Martino, Blockchain and Banking,
https://doi.org/10.1007/978-3-030-70970-9_1
2 P. MARTINO

hardware and software) have led to more efficient and sophisticated ways
for banks to leverage vast quantities of consumer and company data.
Nevertheless, as (ECB 2019) notes, we are entering a new digital
age with technologies that have the potential to change the whole
banking industry in faster and more disruptive ways than ever before. In
particular, recent technological developments have brought about finan-
cial technology (fintech) sector, which covers digital innovations and
technology-enabled business model innovations in the financial arena
(Philippon 2016; He et al. 2017; Frame et al. 2018).
According to the Financial Stability Board’s (FSB) (2017) working
definition of fintech, it is a “technologically enabled financial innovation
that could result in new business models, applications, processes or prod-
ucts with an associated material effect on financial markets and institutions
and the provision of financial services”. Examples of such innovations
include distributed ledger technologies (DLTs), digital currencies, new
digital advisory and trading systems, artificial intelligence and machine
learning, peer-to-peer lending, equity crowdfunding and so on. According
to Philippon (2016, p. 2), “such innovations can disrupt existing industry
structures and blur industry boundaries, facilitate strategic disintermedi-
ation, revolutionise how existing firms create and deliver products and
services, provide new gateways for entrepreneurship, democratize access
to financial services, but also create significant privacy, regulatory and
law enforcement challenges”. The European Banking Authority (EBA)
(2017) also underscores the potential for these new technological inno-
vations and points out that they may create many benefits for consumers
and organisations, including access to credit, improved comparability
of products, access to a wider product range, availability of up-to-date
information, tailored product offerings, reduced costs and consumer
convenience. Thus, these innovations may contribute to a decline in costs,
a reduction in information asymmetry and an increase in efficiency and
competition and provide broader access to financial services by developing
new ways to obtain funds. At the same time, however, these technologies
can also pose new risks to the financial system, which policymakers, regu-
lators and supervisors should consider to ensure the financial stability,
safety and soundness of financial institutions, as well as consumer and
investor protection.
Given the potential of fintech technologies and products, the industry
has evolved significantly over the past few years and experienced a massive
year of investment in 2018, with total global investment (across venture
 1 INTRODUCTION: THE RISE OF FINTECH 3

capital (VC), private equity (PE) and mergers and acquisitions (M&A)),
more than doubling from $54.4 billion in 2017 to $141.0 billion in 2018
(KPMG 2020). This rise was driven mainly by the United States, Europe
and Asia, as reported in KPMG’s report (2020) on global investment
trends in the fintech sector. The positive trend also continued in 2019,
with global investment hitting $135.7 billion, a slight drop from the
2018 results, but still more than double any year before 2018, thereby
highlighting the strength of the global fintech market.
An innovation that is central to the current fintech space is blockchain
technology (Guo and Liang 2016; Philippon 2016; Iansiti and Lakhani
2017; Frame et al. 2018), the distributed ledger technology behind
Bitcoin (and other cryptocurrencies). It represents a key investment area
of fintech (KPMG 2020).
Blockchain has widely been acknowledged as a disruptive technology
and a key source of future financial market innovation (Lewis et al.
2017) that could revolutionise our society and the new world economy
(McKinsey 2016; Peters and Panayi 2016; Ross 2017). Born as the tech-
nology underlying Bitcoin (Nakamoto 2008) to record cryptocurrencies
transactions, blockchain has become a technology that can facilitate the
process of recording any transaction type and track the movement of any
asset, thus finding applications in multiple areas (Ulieru 2016; Iansiti and
Lakhani 2017; Yermack 2017; Tapscott and Tapscott 2017).
Although the initial scepticism about blockchain’s original idea, i.e.
blockchain used to launch cryptocurrencies, several financial institutions
(including banks, insurers, etc.) around the world have focused on the
DLT behind blockchain (i.e. blockchain without cryptocurrencies) over
the past few years to examine how it may affect most of their business.
Particularly for the banking industry, the reason for the growing interest
in blockchain technology is its potential to create new opportunities for
banks and because it poses new threats to their business (Buitenhek
2016; McDonald et al. 2016; Peters and Panayi 2016; Holotiuk et al.
2017; Lindman et al. 2017; Martino 2019). Many scholars and practi-
tioners (Buitenhek 2016; Guo and Liang 2016; Peters and Panayi 2016)
suggest that some of the problems linked to activities in financial services
(e.g. the rising cost of operations, efficiency bottlenecks, transaction lags,
fraud and operational risks) can be solved by applying blockchain’s DLT.
In particular, by enabling smart contracts, maintaining immutable logs
of transactions and facilitating the real-time execution of transactions,
blockchain can be used to change how banks provide financial services
4 P. MARTINO

and, consequently, offer potential advantages (in terms of cost, speed

and data integrity) over traditional methods of proving ownership. In
turn, this may enhance traditional financial institutions’ competitive edge
(McKinsey 2016; KPMG 2017; Yermack 2017). Several of the world’s
biggest banks are looking for opportunities in this area (i.e. blockchain’s
DLT) by investing in and researching innovative blockchain applica-
tions. However, other studies (McDonald et al. 2016; Holotiuk et al.
2017) regard blockchain—particularly blockchain used to launch cryp-
tocurrencies—as a new competitor that can threaten banks’ business.
According to these studies, blockchain technology and cryptocurren-
cies may allow consumers and suppliers to connect directly and form
online networks, thus removing the need for “middlemen” like a bank
(Holotiuk et al. 2017) and potentially undermining banks’ traditional
role in verifying and enabling transactions such as payments. Moreover,
blockchain may provide new gateways for entrepreneurship by making it
possible for (especially fintech) start-ups to provide banking services at
lower costs (Philippon 2016; Tapscott and Tapscott 2017). This means
that blockchain can increase competition in the industry and potentially
undermine banks’ profitability (Yeoh 2017).
Thus, existing literature suggests that blockchain may present new
challenges and not only create opportunities for but also pose threats
to banks. This is pushing banks to rethink their operations, business
models and strategies. However, relevant literature is in still its infancy,
and we have no clear understanding of blockchain technology’s poten-
tial implications for banks (Zhao et al. 2016). This book expands
the literature on blockchain technology in banking by providing new
insights into the developments, trends and challenges of blockchain in the
banking industry. Building on the results of a previous study I conducted
(Martino 2019), this book aims to shed more light on the implications of
blockchain technology for banks, exploring the potential impact on tradi-
tional banking business models. To this end, the book is structured as
follows.
Chapter 2 provides an overview of blockchain technology and high-
lights its key features, benefits and disadvantages. It also examines the
different types of blockchain (i.e. private vs public blockchains), as well as
their evolution (i.e. blockchain 1.0 vs blockchain 2.0 onwards). Finally,
the chapter discusses the topic of cryptocurrencies and smart contracts,
which are the two main applications of blockchain technology.
 1 INTRODUCTION: THE RISE OF FINTECH 5

Chapter 3 explores the potential implications of blockchain technology

for the banking industry. This chapter builds on the results of a previous
study I conducted,1 which used qualitative-based interviews with three
professional bankers from different European banks that are dealing with
the challenges of blockchain, and discusses the advantages and risks that
blockchain technology can hold for banks. It also identifies the main
banking areas that can be affected by adopting this technology.
Chapter 4 explores the potential impact of blockchain’s DLT on
traditional banking business models. Building on the Business Model
Canvas framework developed by Osterwalder and Pigneur (2010), this
chapter discusses how blockchain technology can affect all the elements
of a bank’s business model, namely how banks generate profits, which
customers they serve, which distribution channels they use and so on.
Moreover, the chapter provides an overview of the current status of banks’
adoption of the technology and highlights their approach to handling the
challenges of blockchain.
Finally, Chapter 5 addresses regulatory issues for blockchain tech-
nology, given the crucial role of regulation in the development of this
technology. In particular, the chapter outlines regulatory responses to
blockchain around the world, with a specific focus on how US and
EU authorities are tackling the key risks (e.g. privacy issues, financial
crime, hacking, etc.) associated with this new technology. The chapter
makes a distinction between the regulatory issues that derive from banks
applying the DLT of blockchain when providing their services and the
use of blockchain to launch cryptocurrencies, as they have very different
implications.
The final section (Final remarks) provides a concluding discussion of
the study by highlighting the main findings.

1 Martino, P. (2019). Blockchain technology: Challenges and opportunities for

banks. International Journal of Financial Innovation in Banking, 2(4), 314–333.
https://dx.doi.org/10.1504/IJFIB.2019.104535. Inderscience Enterprises Ltd. retains
the copyright of the original article.
6 P. MARTINO

References
Berger, A. N. (2003). The economic effects of technological progress: Evidence
from the banking industry. Journal of Money, Credit and Banking, 35(2),
141–176.
Buitenhek, M. (2016). Understanding and applying blockchain technology in
banking: Evolution or revolution? Journal of Digital Banking, 1(2), 111–119.
EBA. (2017). Discussion paper on the EBA’s approach to financial technology
(FinTech). Available at: https://eba.europa.eu/sites/default/documents/
files/documents/10180/1919160/7a1b9cda-10ad-4315-91ce-d798230eb
d84/EBA%20Discussion%20Paper%20on%20Fintech%20%28EBA-DP-2017-
02%29.pdf.
ECB. (2019). Lending and payment systems in upheaval: The fintech challenge.
Speech by Yves Mersch, Member of the Executive Board of the ECB, at
the 3rd annual Conference on Fintech and Digital Innovation, 26 February
2019, Brussels. Available at: https://www.ecb.europa.eu/press/key/date/
2019/html/ecb.sp190226~d98d307ad4.en.html.
Frame, W. S., & White, L. J. (2014). Technological change, financial innovation,
and diffusion in banking. In A. N. Berger, P. Molyneux & J. O. S. Wilson
(Eds.), The oxford handbook of banking, second edition (pp. 1–5). Oxford
University press.
Frame, W. S., Wall, L. D., & White, L. J. (2018). Technological change and
financial innovation in banking: Some implications for fintech. Federal Reserve
Bank of Atlanta, Working paper series. Available at: https://www.frbatlanta.
org/-/media/documents/research/publications/wp/2018/11-technolog
ical-change-and-financial-innovation-in-banking-some-implications-for-fin
tech-2018-10-02.pdf.
FSB. (2017). Financial stability implications from FinTech. Supervisory and regu-
latory issues that merit authorities’ Attention, 27 June 2017. Available at:
https://www.fsb.org/wp-content/uploads/R270617.pdf.
Guo, Y., & Liang, C. (2016). Blockchain application and outlook in the banking
industry. Financial Innovation, 2(1), 24.
He, M. D., Leckow, M. R. B., Haksar, M. V., Griffoli, M. T. M., Jenkinson,
N., Kashima, M. M., … & Tourpe, H. (2017). Fintech and financial services:
Initial considerations. International Monetary Fund. Available at: https://
www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2017/06/
16/Fintech-and-Financial-Services-Initial-Considerations-44985.
Holotiuk, F., Pisani, F., & Moormann, J. (2017). The impact of blockchain
technology on business models in the payments industry. In Proceedings of
13th International Conference on Wirtschaftsinformatik, St. Gallen, 12–15
February, pp. 912–926.
Iansiti, M., & Lakhani, K. R. (2017). The truth about blockchain. Harvard
Business Review, 95(1), 119–127.
 1 INTRODUCTION: THE RISE OF FINTECH 7

KPMG. (2017). Blockchain in financial services: A threat or an opportunity.

Available at: https://home.kpmg.com/ng/en/home/insights/2017/06/blo
ckchain-in-financial-services--athreat-or-an-opportunity.html.
KPMG. (2020). Pulse of Fintech H2 2019, February 2020. Available
at: https://assets.kpmg/content/dam/kpmg/xx/pdf/2020/02/pulse-of-fin
tech-h2-2019.pdf.
Lewis, R., McPartland, J., & Ranjan, R. (2017). Blockchain and financial
market innovation. Economic Perspectives, 41(7), 1–17, Federal Reserve Bank
of Chicago.
Lindman, J., Tuunainen, V. K., & Rossi, M. (2017). Opportunities and risks of
blockchain technologies—A research agenda. In Hawaii International Confer-
ence on System Sciences (HICSS). Available at: https://hdl.handle.net/
10125/41338.
MacDonald, T. J., Allen, D. W., & Potts, J. (2016). Blockchains and the bound-
aries of self-organized economies: Predictions for the future of banking.
Banking beyond banks and money (pp. 279–296). Cham: Springer.
Martino, P. (2019). Blockchain technology: Challenges and opportunities for
banks. International Journal of Financial Innovation in Banking, 2(4), 314–
333.
McKinsey & Company. (2016). How blockchains could change the world. Avail-
able at: https://www.mckinsey.com/industries/high-tech/our-insights/how-
blockchains-could-changethe-world.
Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Available at:
https://bitcoin.org/bitcoin.pdf.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook
for visionaries, game changers, and challengers. John Wiley & Sons.
Peters, G. W., & Panayi, E. (2016). Understanding modern banking ledgers
through blockchain technologies: Future of transaction processing and smart
contracts on the internet of money. Banking beyond banks and money
(pp. 239–278). Cham: Springer.
Philippon, T. (2016). The fintech opportunity (No. w22476). National Bureau
of Economic Research working paper series. Available at: https://www.nber.
org/system/files/working_papers/w22476/w22476.pdf.
Ross, E. S. (2017). Nobody puts blockchain in a corner: The disruptive role of
blockchain technology in the financial services industry and current regulatory
issues. Catholic University Journal of Law and Technology, 25(2), 7.
Tapscott, A., & Tapscott, D. (2017). How blockchain is changing finance.
Harvard Business Review, 1(9), 2–5.
Ulieru, M. (2016). Blockchain 2.0 and beyond: Adhocracies. In Banking Beyond
Banks and Money (pp. 297–303). Cham: Springer.
Yeoh, P. (2017). Regulatory issues in blockchain technology. Journal of Financial
Regulation and Compliance, 25(2), 196–208.
8 P. MARTINO

Yermack, D. (2017). Corporate governance and blockchains. Review of Finance,

21(1), 7–31.
Zhao, J. L., Fan, S., & Yan, J. (2016). Overview of business innovations and
research opportunities in blockchain and introduction to the special issue.
Financial Innovation, 2, 28. Available at: https://doi.org/https://doi.org/
10.1186/s40854-016-0049-2.
 CHAPTER 2

Blockchain Technology: Key Features

and Main Applications

Abstract This chapter provides a general overview of the fundamentals

of blockchain technology and how it works. The goal is to make it clear
why this technology is considered disruptive. In particular, the chapter
discusses the key features of blockchain technology and its various types
and categories; it also highlights their different characteristics, advantages
and risks. Moreover, it explores the two main applications of blockchain,
namely cryptocurrencies and smart contracts.

Keywords Blockchain · Distributed ledger technology ·

Cryptocurrencies · Smart contracts

2.1 Introduction
Many scholars and financial players agree that blockchain is a disrup-
tive technology and a key source of innovation in financial markets in
the future and that it could revolutionise our society and the new world
economy. Since its start as the technology underlying Bitcoin and its use
in recording cryptocurrency transactions, blockchain has become a tech-
nology that can both facilitate the process of recording any transaction
type and track the movement of any asset. Its application is widespread
and in different areas.

© The Author(s), under exclusive license to Springer Nature 9

Switzerland AG 2021
P. Martino, Blockchain and Banking,
https://doi.org/10.1007/978-3-030-70970-9_2
10 P. MARTINO

This chapter provides a general overview of the fundamentals of

blockchain technology and how it works. The goal is to make it clear
why this technology is considered disruptive. In particular, the chapter
discusses the key features of blockchain technology and its various types
and categories; it also highlights their different characteristics, advantages
and risks. Moreover, it explores the two main applications of blockchain,
namely cryptocurrencies and smart contracts.

2.2 The Fundamentals of Blockchain Technology

Blockchain is a digital, decentralised and distributed ledger that is
constantly updated. This technology makes it possible to record trans-
actions and track assets in a given network (Swan 2015; Crosby et al.
2016; Walport 2016). The word “blockchain” comes from the transac-
tions being grouped into “blocks” (as a data package), which are linked
to the blocks that precede them to form a chronological “chain” of
blocks. This blockchain provides a trail of the underlying transaction and,
thus, represents a complete ledger of the transaction history (Holotiuk
et al. 2017; Nofer et al. 2017). However, unlike traditional ledgers,
blockchain combines several computer technologies, including a digital
ledger, distributed data storage, point-to-point transmission, consensus
mechanisms and encryption algorithms (Guo and Liang 2016; Holotiuk
et al. 2017; Lewis et al. 2017), which offer potential advantages in terms
of cost, speed and data integrity. In particular, it is possible to iden-
tify some key features that underlie blockchain and make it a disruptive
technology (Bohme et al. 2015; Iansiti and Lakhani 2017; Tapscott and
Tapscott 2017; Zheng et al. 2017; Martino et al. 2019).
First, blockchain is a “distributed ledger” of a network’s participants,
and all the participants have permission to access it. “Distributed” means
that every participant can share a ledger that is updated every time a
transaction occurs and has simultaneous access to view the information1
(Natarajan et al. 2017). Thus, transparency is assured in blockchain as
the complete transaction history is stored by all the participants on a
network and is visible to anyone with access to the system (Fanning and

1 Basically, there is only one version of the ledger, and each network participant owns
a full and up-to-date copy of the entire ledger. As a result, every addition to the ledger
by a network participant is propagated to all nodes; upon validation, the new transaction
is added to all the relevant ledgers to ensure data consistency across the network.
22 P. MARTINO

just a few. It is worth noting that some of these new cryptocurren-

cies solve many problems inherent in Bitcoin, thus enabling significant
improvements and advancing the development of cryptocurrencies in
general (Martino et al. 2019).
The market for cryptocurrencies has grown massively since 2008 in
terms of the number of new currencies, as well as the consumer base and
the transaction frequency (Dyhrberg 2016). As reported in the Payment
Methods Report (2019) by the European Payments Council, the number
of payments made by using cryptocurrencies is constantly on the rise,
with several companies (Microsoft and Expedia, among others) accepting
Bitcoin and other cryptocurrencies, and others allowing customers to
make Bitcoin payments via crypto payment gateways such as BitPay. The
potential of cryptocurrencies, which can explain their current economic
value, is substantial and linked particularly to the fact that they may ease
financial transactions by providing more flexibility and speed in interna-
tional transfer than other currencies managed by banks (Dyhrberg 2016).
As the main determinant of the value of cryptocurrencies, literature points
to: the high speed and low cost of transactions because of the elimination
of intermediaries, for example; greater accessibility to everyone connected
to the Internet, which fosters financial inclusion for unbanked and under-
banked populations (the former are people without a bank account; the
latter are people with limited access to traditional banking services and
products); and greater privacy, which guarantees anonymity and security
when making payments (Richter et al. 2015; Jacobs 2018; Giudici et al.
2020).
However, there are several factors—including inefficiency in transac-
tions (technical/sscalability problems) and high volatility (Ciaian et al.
2016)—that currently limit the potential for broad adoption in day-to-
day payments (UBS 2018). Hence, cryptocurrencies have to compete
with other systems in terms of costs, speed and scalability. For example,
new transaction technologies (such as SEPA Instant Credit Transfer)
and fund transfer systems (such as Transferwise) make it possible to
reduce costs and time in money transfer (the Instant scheme allows pan-
European credit transfers, with the funds made available in less than 10
seconds). The security and privacy of cryptocurrencies have also been a
topic of discussion. With respect to security issues, cryptocurrencies may
be subject to theft and hacker attacks (e.g. if someone stole the user’s
private key and could then tamper with the user’s account). Regarding
privacy issues, Bohme et al. (2015) note that Bitcoin transactions are not
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tea-things when Angel walked in.
He looked at Jimmy inanely, fiddling with his watch chain, and he
looked at the girl.
“Awfully sorry to intrude again,” he said, “but I got a wire at the little
postoffice up the road telling me I needn’t take the case at
Newcastle, so I thought I’d come back and tell you, Jimmy, that I will
take what I might call a ‘cemetery drink’ with you to-night.”
“I am not going,” said Jimmy, recovering his calm.
“Not—not going?” said the astonished Angel.
“No,” said the girl, speaking over his shoulder, “I have persuaded him
to stay.”
“Ah, so I see!” said Angel, stooping to pick up two hairpins that lay
on the hearthrug.
THE END
 A New and Deadly Force is Introduced
In A Plot to Destroy
London.

The Three Days’

Terror
By J. S. FLETCHER
It was impossible for Lord Grandminster, Prime Minister of
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maddening suspense for the ministry that had disregarded
the ultimatum—a suspense that was only ended when the
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