Blockchain could democratise banking, music but at what cost?
Few technologies have the potential to disrupt old institutions as much as blockchain a system that maintains records on huge networks of individual computers. As with any new technology, it could be used for social good such as supporting people who are priced out of the current bank accounts but the big challenge is how to limit its unintended consequences.
At its heart, blockchain is a list of ‘blocks’ of digital information any information that is not stored in one place, but copied to computers in numerous different places.
In principle, information stored in this way is accessible to anyone, and is also harder to corrupt, because corruption would need to occur simultaneously in a majority of the identical copies.
The most famous application of blockchain is bitcoin, a completely virtual currency that sidelines all banks and governments.
In 10 years bitcoin’s value has gone from almost zero to thousands of euros although in the past year or so it has been in decline.
Many people see bitcoin and other applications of blockchain as a freer, more egalitarian and more secure way of running services such as banking.
One of those people is Robert Kałuża, co founder of the Polish blockchain technology company Billon.
‘The expensive, centralised architecture of banking IT systems leaves many people behind migrants, temp workers or the underaged (under 18s), whose income is generated by gig economy jobs or micropayments,’ Kałuża said.
‘That income is too small or too irregular to be serviceable by (existing) banking technology, so banks consider those people as unprofitable.’
No cost Kałuża adds that the annual cost of servicing a current account is €100, which banks try to reclaim from customers one way or another.
According to a 2016 study by the Polish central bank, only 9% of under18s have a bank account. ‘This is the most technologically advanced group of the society with a huge need to get access to financial products adjusted to their situation,’ he said.
‘We want to give them that.’ Billon’s answer is a blockchain based platform to replace much of the backbone of current banking, coupled with a smartphone app that allows users to instantly send or receive money for free.
The platform involves every installed app acting as a node, securely checking the transactions not just of its own user but of every other user, too.
The process is a collective, decentralised version of what individual banks currently do and without the cost.
Unlike bitcoin, the monies involved are not virtual but conventional currencies such as the British pound or the Polish złoty, which provide a degree of trust. It also means that, unlike with bitcoin, users can buy things in regular shops and withdraw cash from ATMs.
‘From the end user’s point of view there is not much difference between Billon’s solution and a standard bank account,’ says Kałuża.
‘They can simply install a free app from (the new platform) and receive or transfer money just how they would do usually.’
Billon will ultimately make money from the platform by licensing it to banks and other service providers, such as utility companies.
It is currently moving from the concept to commercialisation phase, with a view to launch the product later this year.
That could be good news for people with irregular incomes.
But Dr Balázs Bodo, a socio-legal research scientist at the University of Amsterdam in the Netherlands, wonders whether the disruptive effect of blockchain applications such as Billon’s will always be positive.
In 2018, he launched a research project called Blockchain Society to look into this. In it, Dr Bodo is trying to answer three general questions: What makes a blockchain application successful? How does society adapt to it? And how can it be regulated?
At its heart, blockchain is a list of ‘blocks’ of digital information any information that is not stored in one place, but copied to computers in numerous different places.
In principle, information stored in this way is accessible to anyone, and is also harder to corrupt, because corruption would need to occur simultaneously in a majority of the identical copies.
The most famous application of blockchain is bitcoin, a completely virtual currency that sidelines all banks and governments.
In 10 years bitcoin’s value has gone from almost zero to thousands of euros although in the past year or so it has been in decline.
Many people see bitcoin and other applications of blockchain as a freer, more egalitarian and more secure way of running services such as banking.
One of those people is Robert Kałuża, co founder of the Polish blockchain technology company Billon.
‘The expensive, centralised architecture of banking IT systems leaves many people behind migrants, temp workers or the underaged (under 18s), whose income is generated by gig economy jobs or micropayments,’ Kałuża said.
‘That income is too small or too irregular to be serviceable by (existing) banking technology, so banks consider those people as unprofitable.’
No cost Kałuża adds that the annual cost of servicing a current account is €100, which banks try to reclaim from customers one way or another.
According to a 2016 study by the Polish central bank, only 9% of under18s have a bank account. ‘This is the most technologically advanced group of the society with a huge need to get access to financial products adjusted to their situation,’ he said.
‘We want to give them that.’ Billon’s answer is a blockchain based platform to replace much of the backbone of current banking, coupled with a smartphone app that allows users to instantly send or receive money for free.
The platform involves every installed app acting as a node, securely checking the transactions not just of its own user but of every other user, too.
The process is a collective, decentralised version of what individual banks currently do and without the cost.
Unlike bitcoin, the monies involved are not virtual but conventional currencies such as the British pound or the Polish złoty, which provide a degree of trust. It also means that, unlike with bitcoin, users can buy things in regular shops and withdraw cash from ATMs.
‘From the end user’s point of view there is not much difference between Billon’s solution and a standard bank account,’ says Kałuża.
‘They can simply install a free app from (the new platform) and receive or transfer money just how they would do usually.’
Billon will ultimately make money from the platform by licensing it to banks and other service providers, such as utility companies.
It is currently moving from the concept to commercialisation phase, with a view to launch the product later this year.
That could be good news for people with irregular incomes.
But Dr Balázs Bodo, a socio-legal research scientist at the University of Amsterdam in the Netherlands, wonders whether the disruptive effect of blockchain applications such as Billon’s will always be positive.
In 2018, he launched a research project called Blockchain Society to look into this. In it, Dr Bodo is trying to answer three general questions: What makes a blockchain application successful? How does society adapt to it? And how can it be regulated?
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