In the primary market, when debt is first issued through a syndicate of banks, there is not really much of a problem. There is a really great chapter about thi

In the primary market, when debt is first issued through a syndicate of banks, there is not really much of a problem. There is a really great chapter about this process I think in the "The new Market Wizards" book by Schwager, though it might be in the first book, "Market Wizards." The banks call all of their customers and get commitments for dollar amounts towards the deal. Then they put together the paperwork and issue securities. It's kind of like a bond, but it's technically a loan. Each of those investors receive some sort of documentation that they own some piece of that loan and the bank (or some administrator) distributes interest payments to the holders. The problem arises in the secondary market where initial holders want to sell their piece prior to maturity. There is a long process by which they have to prove ownership and transfer ownership. It's kind of like the process of closing on a home where there is a title search and deed transfer. During this period the buyer and seller are both open to shenanigans from the other party trying to back out of the trade or change the terms. It's also very labor intensive and archaic. If title was stored and transfered through a public trusted distributed ledger system then it could be done instantaneously with minimal effort. As I said above, there is much more potential here, which makes bitcoin way more promising than just a system for recording and transfering ownership of assets.