Interview with the world leading expert Blockchain, the Italian economist, researcher, public speaker and author Paolo Tasca

This interview is with the world leading expert Blockchain, the Italian economist, researcher, public speaker and author Paolo Tasca.

In this interview we talk principally about the blockchain technology,  the UCL Centre for Blockchain Technologies (CBT) and the BARAC Project (Blockchain Technology for Algorithmic Regulation and Compliance) supported by EPSRC.

Paolo Tasca is a FinTech economist specialising in P2P financial systems. An advisor on blockchain technologies for different international organisations including the EU Parliament and the United Nations, Paolo is founder and Executive Director of the Centre for Blockchain Technologies (UCL CBT) at University College London.

You are welcome to read the interview and travel through the expert mindings by yourself:

Satoshi Nakamoto Blog : You are a FinTech economist specializing in P2P financial systems. An advisor on blockchain technologies for different international organizations including the EU Parliament and the United Nations, you are also is founder and Executive Director of the Centre for Blockchain Technologies (UCL CBT) a University College London.

Since then, you accumulate a lot of experience and you are recognized as a leader on many fields like FinTech, Blockchain, Economy, Banking and digital currencies. What made you take particular interest in making more accessible to masses Blockchain Technology and derivate? 

PAOLO TASCA : I think that for the first time in the history we have a technology that brings the promises to reduce the trust gap in our society. We are quickly moving toward platform base business models where community of users (or better prosumers) play an increasingly important role. Competition is replaced by cooperation.

In this new paradigm, trust is the new coordination mechanism. Together with markets and hierarchies which counts on prices and authorities as coordination mechanisms, our society will increasingly be organised around communities of prosumers and the trust between them will be the coordination mechanism.

As an organisational and coordination tool, blockchain can foster group co-operation and communitarian thinking making actions within the system independently verifiable by each participant, introducing or improving accountability, and dis-incentivising misbehaviour through public auditability. This can lead us to high-trust economies where selfish short-term opportunistic behaviors are sacrificed for long term interests to achieve common goals. These high-trust economies are characterised by low transaction costs for any type of business relationship and a wide common trust and confidence on the action of people: a new model of social-cooperation based on blockchain will emerge.

 

SNB: Can you give some advice to approach correctly and wisely Blockchain Technology?

P.T: First of all read the original Bitcoin white paper and the Blockchain white papers which have been created as a result of Satoshi Nakamoto's original effort. The Bitcoin white paper already changed the life of millions of people. Then, I would advise reading the reputable industry news websites, keeping abreast of the latest innovations from the business world as well as the latest research from the world of academia. When digging into blockchain try to keep always in mind that you can look at it as an ICT technology or through the lens of institutional economics. Under the first approach, you will learn that blockchain is a tool to record ownership of on/off platform assets and rights/obligations arising from agreements. Instead, under the second approach, you will learn that blockchain is a tool to decentralise governance structure for coordinating people and making economic transactions. This second one will have the most long-term impact on our society.

 

SNB: The UCL Centre for Blockchain Technologies (CBT), in which you are directly involved, provides a cross sectoral platform, which drives the adoption and integration of Blockchain and Distributed Ledger Technologies into our socioeconomic system. What is the main idea behind the project and why did you decide to work on it?

P.T: The idea behind it is adequately described in the description you provided in the question. That the CBT is cross-sectoral means that big issues, which may require commentary from across different fields, can be addressed by a welter of researchers from a range of backgrounds with relative ease. Our centre is the largest Centre on blockchain technologies in the world and thanks to the interdisciplinary expertise of its members can easily address either technical, business and legal or regulatory blockchain-related issues.

 

4. As one of the world's leading experts, you are best positioned to picture from various angles the ongoing technological revolution in banking and finance. As your opinion, how banking and money will look like in the new digital age?

P.T: Banking and money will change dramatically because new technologies like blockchain, AI, IOT, Big Data will change our consumer habits.  A recent survey run by Facebook in 2016, reveals that the 92% of Millenials doesn't trust the current banking system. But we need to keep in mind that by 2025 these Millenials will generate $24Tn of wealth. How they will use, spend and invest this wealth ?

In this respect, in the search of new areas of expansion I see an invasion of tech giants into activities that traditionally pertained to banks. This is pushing competition within the banking sector and new models of banks like Neo or Challenger banks are emerging: these banks don’t carry the weight of legacy technology, so they can leapfrog over traditional infrastructure and use new technologies like blockchain. Moreover, a global trend of open banking models already started where a myriads of tech startups are starting offering payments and other banking services connecting to banks’ customer accounts and other data. Commoditization of banking services is a trend. Banks are becoming the compliance providers of bank products that are unbundled and rebundled together such to be offered by a myriads of fintech companies in a novel way. By 2025, the 8bn of people on hearth will have internet access and 80bn devices will be all connected. We will also work and live more globally. In the new digital age, our mobile phone will be our bank, our financial planner and the custodian of our money. The friction businesses and consumers face when transacting money will be reducing to nil and the costs of financial services will be tailored-made and transparent. In perspective, the computing capacity of our devices and their interconnectivity will allow us to seamlessly access a variety of financial services and to become more independent from any financial intermediary.  Finally, also central banks are rethinking their role within the financial markets and have been researching the concepts of Central bank-issued digital currencies and stable coins both from a monetary policy and a payment system perspective.

 

SNB: Can loans and borrowings exist without the banks?

P.T: Yes. P2P pending platforms have already shown this can be done. Central bank-issued digital currencies may make this a reality on a larger scale where the only bank a consumer or business needs to deal with when taking out debt is a central bank.

 

SNB: How new forms of money can compete to better serve different society needs

P.T: I have always believed in the goodness of Friedrich Hayek theory of money competition. Economic theory shows also that any currency system consisting of both “good” and “bad” money quickly becomes dominated by the “good” money. In the absence of legal tender laws, if given the choice of what money to accept, people will transact with money they believe to be of highest long-term value. So new advanced forms of digital money are likely to replace cash and other forms of payment instruments. Traceability is also very important. Thus governments in the near future may impose the use some forms of blockchain-based money to reduce the incidence of fraud, tax evasion and other criminal activity due to cash's total untraceability.

 

SNB: Do you think it is possible, in the new digital age that we will interact with new self-organized and autonomous companies that operate without any human involvement, based on a set of programmed and incorruptible rules?

P.T: No. Humans are necessary and their involvement with machines is also desirable. A company’s success depends on its team and its culture much more than its assets: this is the so called “human capital” which is not replaceable by machines. Empirical evidence shows that liquid teams of people dislocated in different parts of the world, are not effective. The absence of a team is even more detrimental. It is true, in the years to come, firms will resort even more on autonomous devices that will exchange data and fulfil agreements via machine-to-machine M2M communications protocols. However, Groundbreaking results occur at the intersection of different cultures, industries, and disciplines. Thus, human component will remain fundamental to help companies to navigate complex business and explore unfamiliar territories.

 

SNB: In which industry, do you think, this technology will help the most. Which industry more than any other one needs Blockchain?

P.T: Blockchain can be practically applied across all industries. There is no single industry which I can state would need it more than any other. It is a matter of perception. While finance is the most obvious answer, it may be that in another industry, say, land registration, Blockchain proves a systemic component. Further, new use cases should crop up which may well change the focus of Blockchain technology entirely.

 

SNB: In your opinion what is the single biggest thing that will change because of Blockchain Technology in the next five to 10 years?

P.T: I think the biggest change will be the control of management of our data and our digital identity. End users will become in control of their own data and they can decide whether to directly monetise and benefit from their vast amount of transaction data bypassing the commercial (and sometimes abusive) surveillance of tech giants like Facebook or Google.

 

SNB: You are also directly involved in various research projects concerning different application fields of blockchain technologies. Among them, the BARAC Project (Blockchain Technology for Algorithmic Regulation and Compliance) supported by EPSRC. BARAC investigates the feasibility of using blockchain technology for automating regulation and compliance producing a proof-of-concept platform and facilitating knowledge transfer by means of a bottom-up cross-disciplinary approach developed together with industry and regulators. Can you tell us more about this?

P.T: The BARAC project investigates technical, legal and managerial aspects related to use of DLT in the services industry including the significance of new business models and their effects on industry structure.

If you’d like to find out more, please see our summary on this page: http://gow.epsrc.ac.uk/NGBOViewGrant.aspx?GrantRef=EP/P031730/1

 

SNB: Blockchain Distributed Ledger Technologies (DLT) are of great interest to the financial industry because they have the potential to improve efficiency, augment security, eliminate duplications, simplify compliance and increase settlement speed, transparency and verifiability while preserving privacy and anonymity. What will BARAC bring to this sector?

P.T:

 

SNB: Do you think that all this technology will change radically our way of life? Are we, as you called, at the down of the forth revolution?

P.T: Over the first years of this century we have witnessed the emergence of the Information Age characterized by the rapid shift from capital-intensive traditional industry to lighter forms of network-intensive industry based on information and communication technology. The onset of the Information Age is associated with the emergence of new technologies such as Internet, cognitive computing, robotics, cloud and fog computing, nanotechnology, Internet of Thing and blockchain to name a few.  The speed and scale of this innovation has been so disrupting that WEF started to call it the Fourth Industrial Revolution characterized by a fusion of these new technologies that is “blurring the lines between the physical, digital, and biological spheres”. In this regard, blockchain should be viewed as one of the many technologies that will form the foundation of the next-generation market infrastructures.

However, It is difficult to give an exact timeline of when we will see a widespread adoption of blockchain solutions in our socio-economic systems. Blockchain is a foundational technology and now is leaving the so called “era of ferment” to enter the “growth” era. This phase is represented by technological uncertainty, tech. variations, rivalry and competition. With regard to the level of blockchain adoption, we are still in an embryonic phase mainly populated by innovators and early adopters who still have unclear preferences. In this context, I can see different types of challenges that need to be overcame. These regard mainly the legal/regulatory aspects.

SNB: Thank you for this interview.

ABOUT PAOLO TASCA:
Paolo Tasca is a FinTech economist specialising in P2P financial systems. An advisor on blockchain technologies for different international organisations including the EU Parliament and the United Nations, Paolo is founder and Executive Director of the Centre for Blockchain Technologies (UCL CBT) at University College London.
Previously, he was Lead Economist on digital currencies and P2P financial systems at Deutsche Bundesbank, Frankfurt and Dean of Research of JBI Blockchain Research Institute for a short period. Paolo is the co-author of the bestseller FINTECH Book and the co-editor of the book Banking Beyond Banks and Money. In addition, he is author of various scientific papers about blockchain, which have been published by prestigious international scientific journals, such as the Harvard Business Review. As Executive Director of the UCL CBT, Paolo is also directly involved in various research projects concerning different application fields of blockchain technologies. Among them, the BARAC Project (Blockchain Technology for Algorithmic Regulation and Compliance) supported by EPSRC, and the P2P-IoET Project (The Internet of Energy Things: Supporting peer-to-peer energy trading and demand side management through blockchains) supported by Lloyds Register Foundation.
Dr Tasca holds an M.A in Politics and Economics (summa cum laude) from the University of Padua and a M.Sc. in Economics and Finance from Ca’ Foscari, Venice. He did his PhD studies in Business between Ca’ Foscari Venice and ETH, Zürich. His doctoral dissertation on systemic risk in financial markets was subsidized by the Swiss National Science Foundation with more than 500.000 €.

PROFESIONAL

Advisory Board Member, Inox.one
Advisory Board Member, IronX.io
Chairman of the Advisory Board, PhiToken
Advisory Board Member, RQMicro
Advisory Board Member, VINchain
Advisory Board Member, Nexo
Advisory Board Member, Space Decentral
Executive Board Member, OYOBA
Chief Strategist and Executive Board Member, Quant Overledger
Advisory Board Member, Gradbase
Advisory Board Member, SONM Project
Advisory Board Member,  CoinLion
Member of the Board of Directors, Cyprus Blockchain Innovation Centre
Senior Advisor, Beihang Blockchain&Digital Society Laboratory, Beijing
Steering Committee Member, Construction Blockchain Consortium
Advisory Board Member, LAToken
Advisory Board Member, Aston
Steering Committee Member, Accord Project
Member of the Blockchain Economics Working Group, COALA
Advisory Board Member, Swiss Innovation Valley
Research Advisor, World Food Program, UN
Permanent Member ISO TC307
Member DLT/1 Technical Committee, British Standard Institution, London

ACADEMIC:

Adjunct Fellow, Griffith University Law Futures Centre
Honorary Research Professor, Sogang University, Blockchain Research Centre
Research Associate, University of Cape Town Financial Innovation Lab
Honorary Research Fellow, University College London
Research Associate, London School of Economics
Research Fellow, SAGE’s Macro Finance Area at CFS Goethe Universität
Research Associate, Institut de Recherche Interdisciplinaire Internet et Société
Editorial Board, Journal of Digital Banking

Main

Executive Director, UCL Centre for Blockchain Technologies

Website : https://www.paolotasca.com/

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