Issuu on Google+

/ Seven Questions /


Blockchain author and investor William Mougayar says the fledgling tech could reboot financial services By Steve Cocheo, executive editor

Photo Courtesy William Mougayar


entralization makes many people, but especially bankers, comfortable, secure, and able to sleep at night. As much as bankers may beef about regulators and “inside the Beltway” thinking, the idea of federal regulation and supervision provides a magnetic north. The Federal Reserve itself is a “central bank,” and it and key private players, like The Clearing House, Visa, MasterCard, and NACHA, serve as key central points for the movement of what we consider to be real “money,” even though today it mostly consists of blips in databases. But blockchain technology and cryptocurrencies—founded on the concept of the distributed ledger, the opposite of a central database—are, to use the vernacular, messing with the centralized concepts about financial services that bankers grew up with. Steem is an example—one of author and venture capitalist William Moug ay a r ’s c u r r ent , blo c kc h a i n- ba s e d favorites. The Steem website (https:// defines itself as “a blockchain database that supports community building and social interaction w ith cyrptocurrency rewards.” “If you publish some content on Steem and somebody ‘up-votes’ it, then it earns you some money,” says Mougayar. Within the Steem community, there are ways to spend that money. “I call this approach a circular economy, where you can earn and spend money without leaving the marketplace,” Mougayar continues. “It looks like ‘funny money’ to outsiders. They’ll say, ‘How can you print money?’ But it’s the same as greenbacks. You earn it, get a paycheck, go spend it. It’s like going into a new country with a new currency.” What relates most to banking about Steem is the trust aspect of its blockchain, an illustration of a key element of this technology. “Blockchain solves the ‘double-spend’ problem,” Mougayar explains. “We can send value back and forth digitally without fearing that it’s been used twice. If I

send you value, I don’t have it anymore, in a blockchain, and the blockchain can be used to track all of this value because its records are immutable.” Not that the payments system that we live with was planned to be the way it is. “Business-to-business payments are full of inefficiencies,” points out Mougayar. He sees blockchain technology disrupting this sphere sooner than consumer payments. “Blockchain is a new set of rails,” he says. “And it is going to be a more efficient set of rails than the

multitude of proprietary solutions and spaghetti kind of integrations that we have today. We now have a chance to rethink all of this.” Mougayar has been on a personal voyage of discovery about blockchain technology. His quest became The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology, published in 2016. Next year, Mougayar will continue his thinking in the book Centerless: Rethinking Trust, Wealth, and Information in

December 2016/January 2017



December 2016 January 2017 Banking Exchange