Episode 83 – Settlement Systems in Detail – Carol Coye Benson, Glenbrook
Five Big Questions on Bitcoin and Blockchain
I’m headed to New York next week for the CoinDesk Consensus conference…”Making Blockchain Real”. I’m going because I’m trying to get my head around some big questions. I normally have a sense, even with new things, of the path forward. Not in this case!
Here are the questions I’m thinking about:
- Bitcoin technology: will the problems (versions, processing time, scalability) be resolved?
- Big banks: will they join hands in a single (or several) new blockchain-based networks? Will there be a new SWIFT? Will it be SWIFT? One of the currently formed consortia? Someone new?
- Central banks: will they issue digital versions of fiat? Other digital currency? Support Bitcoin? Support big bank blockchain networks? Is what is happening going to fundamentally change the role of central banks in the economy? Do we go back to pre-central bank economies?
- Private blockchains: how many are there going to be? Thousands? Millions? Just how different is a private blockchain from a plain old secure database?
- Interledger – incredibly cool, but how will it play out? Is this just a small (albeit important) bit of infrastructure, or does it fundamentally change the way payments systems work? The whole Bitcoin/blockchain conversation over the past few years has made everyone think about what money is – and realize that often (not always!) it is a ledger balance representing a claim on someone (bank, carrier, store…). An electronic transfer is simply an instruction that tells one ledger to go up, and the other down, in a way agreed upon by the ledger owners (and their accountants!) A settlement transaction is another version of the same thing. Can this all be restructured? What about the business rules? Do they need to migrate from their three ring binders into the transfer message itself?
I promise I’ll report back if I discover the answers to any of these questions….