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Blockchain and payment systems: What are the benefits and costs?
Journal of Payments Strategy & Systems,
11
(3),
215-225
(2017)
Abstract
The discussions of how blockchain technologies (blocktech) will disintermediate or transform the payments business continue. To date, the discussion has largely focused on the possibility that, in the near future, the technology could enable a nominally priced, frictionless value transfer process. An examination of the benefits and costs indicates that, at the current level of maturity of technology and legal frameworks, blocktech is not superior to existing mechanisms, except in certain niche circumstances. This, coupled with the lack of viral adoption characterising recent successful adaptations (eg Facebook), indicate that major breakthroughs are required before there is wide adoption of this new paradigm in payment systems.
Keywords: blockchain; blocktech; digital ledger; payment system; cryptocurrency; Bitcoin
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Author's Biography
Gene Neyer is the Group Leader in Global Payment Product Management for D+H, responsible for industry engagement and long-term strategy. Prior to that, he was SVP of Product Management at Fundtech (acquired by D+H). Mr Neyer has also held leadership positions at EBS, FSTC, Deutsche Bank and Bankers Trust. He holds an executive master degree in technology management from Wharton/University of Pennsylvania and MS and BS degrees in mathematics from City College of New York.
Benjamin Geva is a professor of law at Osgoode Hall Law School, York University, as well as a payments consultant and legal counsel for Torys LLP, Toronto, specialising in funds transfers and payment instruments. He is the founding editor of Banking & Finance Law Review, and his books include Law of Electronic Funds Transfers, Bank Collections & Payment Transactions and The Payment Order of Antiquity and the Middle Ages: A Legal History. He has also advised the IMF and drafted payment laws in several countries.
