“It Is Good to Be a Banker”
Marcos Eguiguren is Executive Director of the Global Alliance for Banking on Values (GABV). He explains in an interview how bankers foster social change.
Blockchain technology offers cheap, secure and easily available banking services and might revolutionize trade in the Global South.
Jörg von Minckwitz: It is a new technology used to store data by distributing it over a network of computers instead of on one central computer. It is fairly easy to hack an individual server. With blockchain, the same data is saved on millions of servers and when one is hacked, the others register it instantly and shut down the infected server. This makes blockchain very secure because hackers would have to attack millions of servers simultaneously.
Blockchain is also an innovative encryption technique. Anyone can download all the data from blockchain, but you need the right key to read them.
To illustrate the principle: Imagine there is a book you can buy anywhere in the world, but it is written in a language no one speaks anymore. We could still communicate if I told you, “Take the first letter from page one, the second from page two, the seventh from page three,” and so on. It would just look like nonsense though to anyone without the private key.
Right now the banks are very interested because it would no longer be hackable, unlike their current servers. It would make online bank robbery much more difficult. And it would also make online payments faster and more secure.
Soon it will even go one step further: the encryption and exact allocation of data will make smart contracts possible. These digital contracts discern when they have been fulfilled and then automatically set the agreed transactions in motion. This process can be designed to be considerably more accurate and, over the long-term, would make accountants, solicitors, and bankers superfluous as middle men.
It represents a massive opportunity for developing countries. In Africa, for example, many people have no access to banking. Their only recourse is expensive money transfers and microcredits because their personal situation and history prevents them from opening an account – they may have bad credit, not have forgery-proof identification, or lack a standardised residential address. Now along comes this forgery-proof system where everyone on the internet gets their own blockchain identity they can use to conduct financial transactions. This idea is already being realised in Ghana, Kenya and India.