Blockchain and payment systems: What are the benefits and costs?

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.