Money 20/20 Day Three: Liberating cryptocurrency for an Internet-style revolution in payments

Money 20/20 Day Three: Liberating cryptocurrency for an Internet-style revolution in payments

Litecoin’s Charlie Lee contradicted popular belief on day three of Money 20/20 by stating that cryptocurrency encourages free movement of money and blockchain advocates should expect a positive change in privacy protocol, as fungibility is the only missing component for widespread adoption.

A trade-off between privacy and scalability exists because of the building blocks that cryptocurrencies are currently based on, but David Chaum from Elixxir revealed that his startup has privately developed new cryptography that eliminates these issues and can process thousands of transactions per second, on a quantum level of security.

Chaum suggested that for cryptocurrency to become dominant, consumer payments systems should match the functionality of WeChat, because messaging platforms are integrating remittance capabilities while digital wallets are prioritising communication.

“Privacy is the secret ingredient that can make this happen,” Chaum said and Lee added that this form of friction is always prevalent, but to attain the same revolutionary transformation as the Internet experienced when evolving to Mosaic will take some time.

In a later session on the future of cryptocurrency, the panel speakers honed in on the cross-border payments industry and attempted to eradicate the notion that blockchain is a ‘get-rich-quick’ scheme, which has recently dominated headlines.

Ripple’s Asheesh Birla highlighted that blockchain has the capability of altering payment services into frictionless and efficient platforms. “Money should move as fast as information does today,” Birla commented.

Victoria Liu Edison from Ant Financial added that while technology enables a speedy to market process, those implementing blockchain should proactively engage with regulators to educate them about what their products are.

Cross-border payment needs to undergo a development because as Birla explained, the way money is moved to different countries is being done today in the same way that it was back in the 1960s, so leveraging a digital asset exchange for this purpose would be a “game changer”.

Speaking to Raymond Qu, founder and CEO of Geoswift, on this subject, he summarised these considerations and said that “The future of payments is not just a simple money flow, moving money one side to another side. It’s a combination of the new technology, quality of service and better user experience for end users.”

Although blockchain technology is still in its early stages and while rapid developments have taken place, recent studies suggest that the blockchain value-add to business will be over $3 trillion by 2030.

In addition to this, despite being a week ahead of the ten-year anniversary of the publication of Satoshi’s bitcoin whitepaper, Bloq’s Matthew Roszak said that it “still feels like we are in the Stone Ages of blockchain.”

Following up on this point, Bobby Lee from BTCC explored how many companies are taking the idea of blockchain and running with it, but for the technology to be truly different from databases, there needs to be a real-world use case, which has not been seen as of yet.

In discussion with Vijay Sondhi, CEO of NMI and personal investor in cryptocurrency banknote provider Tangem, he addressed the appeal of a payments system not requiring a trusted third-party and said that there is great interest in breaking free from the Visas and Mastercards of the world.

“The challenge is not the technology, but it is in fact being able to scale while also complying with regulation in a non-stifling way,” Sondhi said. He went on to say that since following this sector since 2012, there has been little adoption in consumer use.

Alongside this, scaling crypto in the US is most problematic because this country’s financial services are regulated by multiple agencies, other fintech hubs such as Singapore, which has a single unified regulator, can use a sandbox to test out use cases of blockchain.

Sondhi believes that the way consumers transact in the US and Europe is a process that does not need to be fixed, there is almost no friction involved in paying with a debit or credit card and the costs are not that high. However, in the B2B space, systems like Swift are slow and expensive, and this is the area in which players have a better shot at introducing the intersection of blockchain and cryptocurrency.

He provided the B2B cross-border payment service Veem as a good example, because this company is solving real-life problems.


In the first keynote session of the day, Katie Haun said that cryptocurrency has the potential of helping the two billion unbanked people.

Coinbase’s Asiff Hirji backed this point by saying that we are on the cusp of Internet 3.0: the first stage being the distributed version which was followed by the adoption of mobile and cloud technology, and now a decentralised system will be welcomed.

In addition to privacy concerns, the volatility of cryptocurrency remains an issue but Haun stated that 2019 will be the year of the stablecoin because it operates while being pegged to another asset, for example, the US dollar.

Comments: (7)

A Finextra member
A Finextra member 24 October, 2018, 09:18Be the first to give this comment the thumbs up 0 likes

There are other questions that still remain unanswered. E.g. "decentralization" - most cryptocurrency payments are not pure P2P, they still rely on "validators" or some other third party element. How is that fundamentally different from the status quo?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 24 October, 2018, 19:12Be the first to give this comment the thumbs up 0 likes

Totally agree with Vijay Sondhi. Cross-border B2B payment is indeed broken although I wouldn't put the entire blame on SWIFT. Some of my customers in the US who bank with credit unions / community banks tell me that their bank doesn't know what SWIFT BIC code is or how to initiate a payment to an overseas supplier. When it comes to national banks, other customers who bank with them say they need to fill endless forms to initiate a cross-border payment (cost is not such a big deal, actually, at least for the ticket sizes involved in my examples). So, yes, B2B cross-border payments can do with a big shot of upending - by crypto or otherwise.

Philip Andreae
Philip Andreae - PA&A - Sea Island, Ga 24 October, 2018, 19:23Be the first to give this comment the thumbs up 0 likes

I have a question related to the concern of governemnt involvement, yet, an agreement on the need for  governance. 

In the design of these solutions, if two or more parties are going to be able to view and transaction on the ledger, then, there must be an agreement on the structure, processes, rules and method of concensus.  That sounds like a classic governance model.  This reality  leaves me wondering.  If there is a need for Governance then there is a governing body e.g. a government.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 October, 2018, 11:06Be the first to give this comment the thumbs up 0 likes

@Philip Andreae: Good question. I felt the same in Flight Delay Insurance - Why Blockchain?. I won't claim to understand much of it but I know Blockchain enthusiasts tout concepts like decentralized governance, DAO, etc., as a way to carry out governance outside of a centralized body. Then I keep hearing about "Core Devs", who are the programmers of a particular Blockchain. I wonder why they're not a manifestation of a centralized body. As things stand, at least to me, Blockchain has more questions than answers.

Russell Bell
Russell Bell - Fastbase Ltd - Wellington 25 October, 2018, 21:06Be the first to give this comment the thumbs up 0 likes

Regarding who controls the "core devs" of a truly decentralised blockchain. How it works is each operator of a mining node (who number in the thousands) decides which version of the blockchain software they want to run. The software incorporates a voting mechanism; whichever version of the software is used by the majority of nodes determines the behaviour of the blockchain as a whole.

Operating a mining node requires a considerable investment of resources; node operators have a substantial stake in the continued health of the blockchain so they tend to be conservative.

Any developer can take the software and change it as they please (it's open source) but doing so achieves nothing unless they convince node operators to use their new version.

In other words "core devs" means the group of developers who at any point in time have the trust of the mining-node operators.  To win that trust they must convince the node operators they have the long-term interests of the blockchain at heart.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 26 October, 2018, 15:55Be the first to give this comment the thumbs up 0 likes

@Russell Bell: 

TY for the detailed clarification. Maybe that's not your intention but it reinforces my belief that "core devs" resembles a secret cabal. While there may be hundreds or even thousands of core devs and nodes, they're likely to be outnumbered 100:1 or more by digital currency owners aka "normal users". The way the governance model appears to me, normal users don't seem to have any visibility into / control over what's happening to the Blockchain vis-a-vis mining rewards, bug fixes, hard forks, etc. Blockchain is surely more decentralized than one Microsoft taking all decisions on Windows but it's also not as decentralized or egalatarian as its enthusiasts portray it. 

While on the subject of governance, I just stumbled upon two interesting takes:

  1. Decred, which bills itself as an "autonomous digital currency", uses a censorship-resistant blockchain-anchored public proposal system called Politeia (Pi) as the bedrock of its governance.
  2. IDEX, a self-proclaimed decentralized cryptoexchange, blocks all trades from NY, which means it's not decentralized, per The Block.

Hope you find them interesting.

Russell Bell
Russell Bell - Fastbase Ltd - Wellington 26 October, 2018, 21:07Be the first to give this comment the thumbs up 0 likes

Indeed that wasn't my intention. There's nothing secret about the workings of the "core devs" for a truly decentralised blockchain, quite the opposite. Take bitcoin as an example; a great variety of controversies have arisen over the years, as various developer factions compete for primacy. These dramas take place under the public eye, they're documented and analysed in exhaustive detail.

When developers promote a possible change, they're trying to persuade the general audience of all interested parties - but the only audience that truly matters is the node operators, who only accept software changes they approve of. Changes they believe are in their best interests, and only changes that have been published openly and exhaustively analysed and tested by the community.

Typically the more radical and risky changes aren't accepted, only incremental, cautious changes.  Much to the frustration of some observers but that's the nature of the beast.

It's true the node operators aren't representive of all users of the blockchain.  However they're not centrally controlled, anyone can become a node operator if they wish to.  Their incentives are in the right place; they have a definite interest in the ongoing health of the blockchain, a strong incentive to encourage growth and stability.

Any blockchain where ongoing software development is controlled by a central authority - and carried out in secret or otherwise - is not a truly decentralised blockchain.

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