Because of its associations with cryptocurrency, Blockchain is often viewed as an enabling technology for Fintech. That is certainly one use of distributed...
Blockchain
Because of its associations with cryptocurrency, Blockchain is often viewed as an enabling technology for Fintech. That is certainly one use of distributed ledger technology we are already seeing emerge in Asian mobile markets. One example is a trial being run between Hong Kong’s three main carriers, TBCASoft and Softbank to enable direct money transfers and payments via SMS.
The idea is that, via a simple text, a transaction can be automatically authorised using the Blockchain, so one person’s mobile operator would debit the amount from them and the recipient’s carrier would credit it to them without any third-party checks or authentication having to be made.
Blockchain is a type of advanced digital record keeping, with every record both immutable and fully visible (distributed) across a community of users. Via a complex process of cryptography and advanced algorithms, every new record (or ‘block’) has to be verified as consistent with the history of what has gone before (the ‘chain’) to maintain a coherent whole.
In practice, it removes the need for third-party authorisation of transactions, replacing them with a system that is direct and automatic. In the SMS payment example, the two mobile companies do not have to compare notes to check the transfer has been sent, or whether it was sent by an authorised party. Blockchain makes them aware of the transaction simultaneously, and the very fact that it is recorded verifies it.
This all sounds very financial, but in fact the possible applications for blockchain are incredibly diverse. For example, PLDT Hong Kong and Dent Wireless recently announced a plan to set up a blockchain-based ‘Mobile Date Exchange’ to allow consumers to trade unused mobile data. In South Korea, Samsung has been working with SK Telecom, LG Uplus, KT and banks KEB Han and Wooriand to build a “self-sovereign” ID authentication platform which, using Blockchain, effectively turns smartphones into a multipurpose digital ID card.
Dennis Meurs, VP and GM of Transaction and Clearing Services at Syniverse, believes that Blockchain could play a vital role in helping MVNOs and other mobile players adapt to take advantage of the opportunities brought about by 5G. Especially as 5G is expected to open up more IoT and enterprise markets for mobile service providers, MVNOs will find themselves in more complex, multi-party ecosystems. Adapting to more complex billing, clearing, settlement and payment processes will be a key challenge for many.
“5G will rely on interconnected networks plus hosted technologies and platforms,” said Meurs. “With its scalability and built-in transparency, Blockchain ledger-based billing and settlement offers a way for operators to accurately manage the logging, clearing, and settlement process for the vast increase in commercial exchanges between parties that 5G will create. Blockchain provides each participant in the 5G service chain with the same verifiable proof of events, billable usage, and executed transactions.”