According to Business 5.0 expert John Straw, the blockchain could well disrupt the City of London. And put paid to the taxes that the City generates.

An end to the stream of taxes from the City would effectively spell the end of the NHS. Blockchain-based financial services, based on technology such as Ethereum’s, could consign banks to the annals of history.

Blockchain-based financial services: disruptive potential

“Let’s say that somebody actually does produce a working blockchain peer-to-peer [financial] system,” said Straw. “It’ll be a lending system that actually scales, we won’t need banks anymore. So, at that point that we won’t need banks.”

What are the implications of that?

Blockchain-based financial services: Smart contracts

Smart contracts, as innovated by the Ethereum Project, are “self-automated computer programs that can carry out the terms of any contract.” These are applications “that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference.”

These contracts are unbreakable, and businesses can use them to reduce the cost of common financial transactions dramatically.

“I believe that this is the fundamental basis of Business 5.0,” says Straw. “Transaction capabilities within minutes, automatic remittances, no escrow, and the fact of the [low] cost of doing it manually, a virtual presence in the cloud.”

“And no lawyers necessary, which is obviously a bit of a joy,” he adds.

So, no bankers, no lawyers. What’s left of the City?

“That means we’ll have no central clearinghouses, which means that they don’t exist, and they don’t, therefore, pay tax. So who’s going to pay for the NHS?” asks Straw.

Note that the UK’s financial services sector, which is mostly based in London, raised about £75 billion in taxes in 2017-18, according to accountants PwC. Were this stream to vanish, it would create a huge hole in the UK’s budget for health and social care.

Not to mention the UK’s trade deficit, which would balloon further.

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