Interview with Mark van Rijmenam on what the future holds for blockchain in the payments industry

Tuesday 3 July 2018 10:25 CET | Interview

Mark van Rijmenam, co-author of `Blockchain: Transforming Your Business and Our World`, explains how blockchain technology can gain a wider market adoption in the payments space 

Some say Blockchain is “an invention as big as the internet” while others get annoyed by the buzz of Blockchain being the silver bullet for all business challenges. What is your take on these two views?

I think that, indeed, blockchain is as big of an invention as the internet. It’s a unique way for the first time that we can make P2P transactions without a centralised party taking control. But, on the other hand, we have this massive buzz, not so much about blockchain, but more about cryptocurrencies.

At the moment, developments of blockchain are very young, it’s a very nascent technology, where we see that there are still aspects of the decentralised ecosystem that have not yet been developed. Therefore, yes, I think it is as big of an invention as the internet, and yes, I think it’s the silver bullet for not all, but for most business challenges. However, the technology is not finished yet, many developments still need to be made, which might take from 3 to 5 or even 7 years. You could say it’s like when we were joining the internet in the early days where everyone had the idea that it was going to be something very big, but the technology was not ready yet. I think we are at the same position at the moment.

Can you provide us some examples of successful widely implemented Blockchain-based solutions that improve payment processes (from both the cost and the speed perspective)? What other use cases do you currently see as being less explored?

There are many people trying and experiencing with solutions for the financial services industry and there is a lot of potential for blockchain being used. However, although there is a lot happening in the blockchain space, there are not that many use cases where blockchain is applied and used in business processes.

Many banks are experimenting and are trying things out. For example, De Nederlandsche Bank (DNB – The Dutch Central Bank), with the Dukaton project, concluded that blockchain is not ready yet for the financial industry. A good example of banks collaborating in a use case that is quite unknown is the “Utility Settlement Coin”, developed by UBS and 9 other banks. They created this utility settlement coin, a crypto-counterpart of the fiat currencies, so that they can be able to settle transactions nearly instantly.

A lot of banks are experimenting with blockchain, but there are not that many actual use cases where consumers/customers use blockchain technology to make transactions.

For many decades, the payments industry has been dominated by strict regulations. How is decentralisation, one of Blockchain’s promises, going to change this current state of affairs?

Decentralisation changes the way we collaborate, and the way companies make transactions, but this doesn’t mean that we don’t need the regulations anymore. Take for example ICOs. Investors are losing a lot of money because of some ICOs that are a scam. There is almost no regulation related to ICO’s and the regulation that is there, differs per country. What you see in financial services industry is that having fewer regulations doesn’t necessarily mean a good thing.

I think we do need regulations. It’s very important that there will be common regulations so that the financial industry knows exactly what to do with this new business, the ICOs. For example, it’s very difficult if you are a startup in the crypto world and you develop a token; even if you are doing everything by the book and you are a perfect example of a company following all regulations, it’s nearly impossible to get a bank account. I think that’s not how things should work, because the situation limits innovation. I believe regulations are important and will help improve the industry and foster innovation. 

What are the main challenges for blockchain technology to gain a wider market adoption in the financial space in general?

We could talk about quite a few challenge, taking into account the technical aspects, transactions speed, scalability. One of the most important technical problems is related to the fact that if you want to create decentralised ecosystems you need to have an entire set of different components, not only a network of miners, but also a decentralised storage. You might need decentralised main name service, you might need all kinds of other components that we have in the centralised world, and you also might need to implement them into the decentralised world.

Another challenge could be related to organisational aspects: the people building decentralised applications, the developers, are very few in the world. Due to the fact that the technology is so new, there’s a matter of scarcity among blockchain developers. That takes time because they need to be educated, they need to be trained, and they need to get experience.

A third problem is related to the consumer. Blockchain technology requires a different behaviour by the customer. For example, if you use bitcoin to make transactions, it works with a private key infrastructure; that means that you have to keep your privacy really private. All of a sudden, instead of having a bank account, you have this long string of numbers that you are solely responsible for. A single mistake could ruin everything, whereas in the centralised world things seem easier. The new technology would require a change in customer behaviour when dealing with decentralised ecosystems.

For our readers interested in your new book Blockchain: Transforming Your Business and Our World, could you please tell us what themes have you chosen to address and why?

Many books describe blockchain for financial services, or describe blockchain solutions, cryptocurrencies, Bitcoin, and so on. This is quite limited, because there is a lot more to it.

What we did in our book was to look at the United Nations’ Sustainable Development Goals and identify which of these goals can be solved using blockchain. We identified 7 problems which we think can be solved with blockchain. We explain, for example, how blockchain can contribute to solving poverty or climate change and how our identity systems can be improved. We then looked at corruption and fraud and what can blockchain do there, we looked at trade and how can we make trade fair, we looked at democracy, voting, and how blockchain can help creating a democratic process. We looked at censorship and fake news and see how can we solve those issues as well. As it seems, blockchain offers viable solutions for these wicked problems.

Apart from that, we also offer some advice for organisations related to how to start implementing blockchain. We explain how organisations can identify the potential use of blockchain, how they can start with it and how they can scale up their business.

About Mark van Rijmenam

Mark is the founder of Datafloq, an expert on AI, Blockchain and Big Data, a sought-after speaker and author of “Think Bigger” and co-author of “Blockchain: Transforming Your Business and Our World”. He is named a global top 10 Big Data influencer and one of the most influential Blockchain people. He is pursuing a PhD at the University of Technology, Sydney on how organisations should deal with Big Data, Blockchain and AI, and he is a faculty member of the Blockchain Research Institute.

About Datafloq

Datafloq is the one-stop source for big data, blockchain and artificial intelligence. We offer information, insights and opportunities to drive innovation with emerging technologies.

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Keywords: Datafloq, Mark van Rijmenam, blockchain, cryptocurrencies, startup, ICO, payments , P2P transactions, the Dutch Central Bank, Dukaton
Countries: World